1.2 When Cabinet approved the tabling of the Armscor Bill (as it was then) before Parliament for consideration it (Cabinet) specifically had stipulated that the Chief of the South African National Defence Force should not sit on the Board of Directors of Armscor.

1.3 The decision was premised on the rationale that membership to the Board of the Chief of the South African National Defence Force constituted a potential conflict of interest. Such a conflict would arise in that the Chief of the South African National Defence Force would have been part of the decision to determine the requirements of the South African National Defence Force as well as being part of the decision to determine which supplier should provide the requirements.

1.4 Parliament however, when passing the Bill decided that the Chief of the South African National Defence Force should form part of the Board.

1.5 With the Bill so passed the concern of potential of interest was not accommodated. I therefore approached Cabinet again and requested that the Act be amended to accommodate the concern, hence the Bill that is before the Portfolio Committee.

1.6 After Cabinet had approved the amendment I became aware that the Secretary for Defence is also in a similar position as the Chief of the South African National Defence Force. A potential conflict of interest may occur in this instance in view of the support and role the Secretary for Defence plays as head of the department in exercising political oversight over the department. In this regard, decisions taken at the board of Armscor may have to be ratified by the Minister or Cabinet.

1.7 Similarly a head of a Department as the accounting officer of that Department is also responsible for ensuring compliance with any prescribed conditions if the department gives financial assistance to any entity. The Secretary for Defence, if he continues to sit on the board of Armscor, cannot be accountable for ensuring the effective and efficient utilization of funds the Department transfers to Armscor or any financial assistance that may be rendered to Armscor by the Department and also be accountable in terms of his/her membership to the board of Armscor. It would be inappropriate for the Secretary for Defence to be referee and player.

1.8 Since this amendment was not brought before Cabinet it could not be included in the Bill that is before the Portfolio Committee. The Portfolio Committee is in terms of the Rules of Parliament able to amend a Bill, which serves before it.

1.91 therefore request that you intervene in this matter and amend the Act accordingly so that the concern of possible conflict of interest of the Secretary for Defence is accommodated.

Your assistance herein will be highly appreciated.

Yours sincerely

M G P LEKOTA: MINISTER OF DEFENCE