Report of the Portfolio Committee on Defence on the Armaments Corporation of South Africa, Limited Amendment Bill [B 14 - 2005] (National Assembly – sec 75), dated 21 June 2005:
The Portfolio Committee on Defence, having considered the subject of the Armaments Corporation of South Africa, Limited Amendment Bill [B14 - 2005] (National Assembly –sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, endorses the classification of the Bill and reports the Bill with an amendment [B 14A -2005].
The Committee further reports that the current situation is that the Secretary for Defence and the Chief of the SANDF are ‘ex officio’ members of the Board of Directors of Armscor, South Africa’s armaments acquisition agency. The Armaments Corporation of South Africa, Limited Amendment Bill [B14-2005] aims to remove the Chief of the South African National Defence Force (SANDF) from the Board of Directors of Armscor. This is to address the ‘conflict of interest’ of the Chief, who will be ‘player and referee’, i.e. he requests and uses the military equipment as head of the military establishment, but also approves the acquisition and supplier as a director of the board.
In addition the Committee and the Department of Defence believed that the Secretary for Defence as a member of the Board is also in a potential position where there would be a ‘conflict of interest’. As the head and the accounting officer of the Department of Defence (department), he has to oversee and account for Armscor, which receives a transfer payment from the department. If he is on the board, then he will not be able to objectively oversee and account for the activities of the Board. This would have adverse implications for corporate governance and adherence to the Public Finance Management Act. As such the Committee amended the bill to also remove the Secretary from the Armscor board.
Report to be considered.