DoD & DMV Budgetary Review and Recommendation Reports

Meeting report

The Chairperson said the agenda for the meeting included the consideration and adoption of the Budgetary Review and Recommendation Reports (BRRRs) of the Department of Defence (DOD) and its entities -- Armscor and the Castle Control Board (CCB) -- and the BRRR of Defence and Military Veterans (DMV). The agenda would also include a draft programme for the next term and the consideration and adoption of the report on engagements with the Khoisan Nation Self Defence Unit and South African Cape Corps Military Veterans Association (SACCMVA).

Budgetary Review and Recommendation Report of the Portfolio Committee on Defence and Military Veterans on the 2019/20 Annual Report of the Department of Defence (DOD)

Committee Observations

Dr Wilhelm Janse van Rensburg, Researcher: Defence Committees of Parliament, said that the first additions were made to the BRRR of the DOD because the preliminary report did not have the input of the Auditor-General (AG). The additions included the following:

-Members expressed concern around the funding to finalise the SA Navy’s Projects Biro and Hotel, and the funding would now be dependent on savings in other projects. Members further expressed the need for the projects to remain funded and be finalised as contracted, to avoid penalties being imposed and irregular expenditure being incurred. Both these projects were central to the maintenance and integrity of South Africa’s territorial waters, which was closely linked to the Constitutional mandate of the South African National Defence Force (SANDF) to protect the country’s territorial integrity. Maritime patrol capabilities were required to ensure effective control of South Africa’s waters, prevent crime at sea and protect natural resources.

-Members raised concern around the slow finalisation of disciplinary cases in the Department, as it relates directly to the lack of consequence management identified as a concern by the Auditor-General of South Africa (AGSA).

-Given the urgent need for the DOD to develop means of generating additional revenue, the Committee expressed concern around the fact that, at least for the past two financial years, an auctioneer had not been appointed to ensure the auctioning of redundant or obsolete equipment.

-Members noted the rapid decline of the Special Defence Account (SDA) and the impact that this would have on the DOD’s ability to facilitate capital acquisition. The Committee also noted the indication by the DOD’s chief financial officer (CFO) that negotiations with National Treasury on the feasibility of maintaining the SDA were ongoing.

-Members raised questions around the affordability of South Africa’s 44 military attachés, and enquired about the value that they were adding.

-The Committee noted the AGSA’s observation that the supply chain management (SCM) function did not fall under the CFO, as required by the Public Finance Management Act (PFMA), nor does the risk management function reside under the Accounting Officer. In this regard, the Committee took note of the Secretary for Defence’s statement that they were working to realign the DOD’s procurement environment and risk management function to ensure that SCM reports to the CFO, as required by the PFMA. These realignment initiatives were crucial to the effective and efficient management of the DOD.

Committee Recommendations

Dr Janse van Rensburg said that the following additions were made to the Committee recommendations. The additions include the following:

-The DOD should brief the Committee on a quarterly basis on the status of funding for Projects Biro and Hotel, including from which other capital acquisition projects funds were moved in order to pay for these projects.

-Measures to return the DOD to a Level 5 enterprise risk management maturity level rating in 2020/21 should be implemented. Progress in this regard should be presented to the Committee on a quarterly basis.

-The DOD should urgently appoint new auctioneers to ensure that revenue could be generated from the sale of approved obsolete assets. While the Committee understands that Project Thusano was ongoing to realise the utilisation of old vehicles, the auctioning of equipment that was already found to be unserviceable should proceed without delay, as the Committee was informed that some of these vehicles dated to the 1980’s.

-The Committee encouraged the Minister of Defence to speed up plans to generate revenue for the DOD, and quarterly updates on progress in this regard should be provided to the Committee.

-The Committee urged the DOD to ensure that SCM functions were realigned to resort under the control of the CFO, and the risk management under the accounting officer.

Discussion

Mr S Marais (DA) commended the DOD on the work they had done on the BRRR. He could not find fault with the report because everything Members had suggested was in it. He would support this report.

The Chairperson said it was fine that the SCM was under the control of the CFO, because the SCM dealt with procurement. The AG had said that the Internal Audit (IA) should be risk-based, which suggested that the IA and risk management should be grouped together and both should report to the accounting officer (AO). Currently, the risk management was under the planning section and this was what caused an increase in irregular expenditure because risk management was not being dealt with properly.

Dr Janse van Rensburg noted the comments of the Chairperson, and said that the SCM would be under the control of the CFO, and the SCM would resort to the AO.

Mr Marais agreed with the Chairperson, and said one should take risk management away from the CFO because the risk lay there. If one took the CFO out of it, then one would have two centres of power.

The Chairperson asked if Mr Mafanya’s issue was addressed in the report.

Mr W Mafanya (EFF) replied that his issues were addressed in the report.

The report was considered and adopted with its amendments.

Budgetary Review and Recommendation Report of the Portfolio Committee on Defence and Military Veterans on the 2019/20 Annual Report of the Department of Military Veterans (DMV)

Committee Observations

Mr Peter Daniels, Committee Content Advisor, said that additions were made to the Committee observations of the DMV’s BRRR. The additions included the following:

-Concerns were expressed around the accessibility to sick bays and military hospitals for military veterans residing in rural areas, or far from these facilities, and whether they could utilise the nearest public and/or private hospitals based on referrals from doctors at sick bays. It was explained that it was difficult to arrange preferential treatment for military veterans at public facilities due to the oath and ethical considerations applying to doctors, and military veterans were often reluctant to go to public health facilities.

-The Committee raised the concern of the AGSA that if the claims against the Department were to be realised, that they would amount to around 85% of the DMVs annual allocation, and requested more clarity on the issues. It was indicated that many of the claims were related to medical expenses, and that the SA Military Health Service (SAMHS) had been dealing with it. The Department was very positive that they could successfully defend other claims, especially the case related to the Zeal contract.

-The Committee enquired about the process of prioritising housing for military veterans as announced by the national Department of Human Settlements, Water and Sanitation, which had created expectations from military veterans that they would soon be assisted in this regard.  It was explained that part of the challenge was the “reluctance” of provincial housing departments to request funding or top up for housing for military veterans, and that they were investigating measures to address this situation.

-The illegal occupation of houses built to shelter military veterans was very concerning to the Committee, and it requested more information in this regard. The DMV had responded that access to the houses was gained by getting the keys to the houses at the specific site by force, after which occupation took place. The Department had quarterly meetings with the relevant national and provincial stakeholders to address this situation, as well as allocating sites to military veterans, who then followed the building of the houses and in this manner prevented illegal occupation.

Committee Recommendations

Mr Daniels indicated that the following additions were made to the Committee recommendations on the BRRR of the DMV:

-The Committee recommended that the issue of access to nearby public and private hospitals via sick bays and military hospitals should be enhanced, especially the speeding up of processes to authorise treatment for specialised services based on referrals by military health practitioners.

-The Committee recommended that the Department should, on a quarterly basis, inform the Committee of the status of legal claims against the Department, including the fiscal implications of each claim.

-It was recommended that the DMV should keep the Committee abreast of their measures to speed up housing for military veterans against the background that there appeared to be a lack of eagerness on the part of provincial housing departments, to request such funding from the DMV.

-Given the Committee’s concern about the illegal occupation of houses earmarked for military veterans, it stressed the importance of addressing this situation and expected quarterly feedback in this regard.

Discussion

Mr M Shelembe (DA) said that the BRRR of the DMV was exceptional, and that good work had been done, especially in tackling the issue of hospitals for military veterans. He raised concern about the poor communications between military veterans and the DMV, because veterans waited a long time for a response from the DMV when information was required. He asked if the Department would address this issue in the report.

The Chairperson said that this was a very important issue, because the regulation process took longer than 30 days, and the DMV did not advise applicants that they could appeal in the appeal court.

Mr Daniels indicated that the issue was addressed in the BRRR, and was in regulation 15 that it should take 30 days. If they did not get accepted, then they could appeal.

The report was considered and adopted, with its amendments.

Budgetary Review and Recommendation Report of the Portfolio Committee on Defence and Military Veterans on the 2019/20 Annual Report of Armscor and the Castle Control Board (CCB)

Armscor

Committee Observations

Dr Janse van Rensburg said that the following additions were made to the Committee’s observations on the BRRR of Armscor:

-Specific concerns were raised by Members around the ongoing delays with regards to Project Hoefyster that had led to questions on the ongoing viability of the project. The Committee took note of Armscor’s indication that options on the way forward had been presented to the Minister of Defence, and concrete decisions would be made at the next Armaments Acquisition Council meeting chaired by the Minister.                                                                                

-Members noted that bonuses paid in 2019/20 were based on existing contractual agreements, and that the payment of bonuses was approved by the Armscor Board.

-Members noted that previous spending on consultants had come at a significant cost and that the implementation of revenue-generation initiatives identified by such consultants were slow to show results.

-The Committee welcomed the announcement that Projects Biro and Hotel were fully funded, despite indications by the DOD’s CFO that funding was not available. The Committee would continue to monitor these projects closely.

-The Committee noted that there were currently no public-private partnerships involving Armscor, but that service-level agreements (SLAs) had been signed with other state entities such as the South African Police Service (SAPS).

-The Committee had received an explanation about the legal claims against the entity, and would continue to monitor progress in this regard.

Committee Recommendations

-The Committee congratulated Armscor on achieving a clean audit from the AGSA for 2019/20.

-The DOD, Armscor and Denel should jointly re-evaluate the feasibility of Project Hoefyster and present a way forward to the Committee. Key to this outcome should be a focus on the SANDF’s capability as well as fiscal stability. The Minister, subsequent to the Armaments Acquisition Council (AAC) meeting, where a decision would be taken on Project Hoefyster, should provide detailed written feedback to the Portfolio Committee on the outcome and the way forward.                                          

-The Committee urged Armscor to be fiscally responsible and, in the context of current financial constraints, maintain its undertaking that it would not pay bonuses in 2020/21.

-The Committee welcomed the appointment of a new Armscor Board, and urged the members to ensure the sustainability of Armscor, the promotion of the broader defence industry, and the provision of quality service to its main client, the DOD.

Discussion

The Chairperson made reference to the second recommendation, and asked why the Minister was involved.

Dr Janse van Rensburg replied that the Minister was the head of AAC and Armscor, and the final decision lay with the Minister.

Mr Shelembe made reference to the third addition of recommendations of the Committee, and asked if it was the mandate of the Committee or the Minister to deal with the issue of the senior officials of Armscor receiving bonuses.

Mr Marais replied that it was the mandate of the Committee, and in terms of what Armscor had committed to the Committee on record.

The Chairperson asked Mr Marais what Armscor had committed to in 2020/21.

Mr Marais replied that it was on the Parliamentary Monitoring Group’s (PMG’s) records that Armscor had put measurements in place not to pay the bonuses of senior officials.

The report was considered and adopted with its amendments.

Castle Control Board (CCB)

Committee Observations

Mr Daniels indicated that the following addition was made to the Committee observations on the CCB’s BRRR:

-The Committee noted the remarks by the CCB that the year under review was the first time that the Office of the AGSA had audited the entity, as opposed to the private intermediaries which had performed it in the previous six years.

Committee Recommendations

Mr Daniels said that the following addition was made to the Committee’s recommendation on the CCB’s BRRR:

-The Committee urged the CCB to address the audit challenges as pointed out by the AGSA. It should not matter who audited the entity, in that they had to ensure that their submitted reports met the expected requirements and standards, especially given that they were a relatively small entity that was operating with a relatively small budget.

The report was considered and adopted with its amendments.

Consolidated Report of the Portfolio Committee on Defence on Engagements with the Khoisan Nation Self Defence Unit and the South African Cape Corps Military Veterans Association (Saccmva)

Dr Janse van Rensburg took the Committee through the draft consolidated report of the Portfolio Committee on engagements with the Khoisan Nation Self Defence Unit (KNSDU) and the SACCMVA, and highlighted the important sections of the report.

The aim of the report was to provide an overview of the Committee’s engagements with the KNSDU. It contextualised the KNSDU request to the Committee by providing a background to the integration process. It highlighted concerns raised by the KNSDU as well as by Members of the Committee, and aimed to propose a way forward in dealing with the plight of former South African Cape Corps (SACC) members. The second engagement with the SACCMVA was based on the overlap between the KNSDU and SACCMVA membership, as well as the SACCMVA’s request for an audience with the Committee to raise their concerns and request its assistance to address these concerns.

Background to integration process

The integration process was complemented by a parallel demobilisation process mandated by the Demobilisation Act (No 99 of 1996). The Act limited “demobilisation” to mean the “disbanding of members of the former non-statutory forces who do not enter into agreements for temporary or permanent appointment with the South African Defence Force.” The process focused on the reintroduction of ex-combatants into society, and had commenced 16 months after the integration process began. The secondary aim was to reduce the overall SANDF headcount, while the main aim was to minimise the risks and security concerns relating to ex-combatants not eligible for integration. By February 1997, a total of 3 770 ex-combatants had been demobilised.

The demobilisation process was also not free of criticism. It was accused by some scholars of being poorly planned and that it failed to meet the needs of ex-combatants, leaving some of them without skills or education relevant to the marketplace. Insufficient financial advice also resulted in the demobilised soldiers rapidly depleting their funds.

The 1996 White Paper on Defence provided further policy clarity on the demobilisation process and its aims, as it stated that as a result of integration, force levels had been greatly inflated. The current size of the SANDF was neither cost-effective nor appropriate to the security situation. A process of demobilisation and rationalisation was therefore being planned, and in certain respects was already under way. Demobilisation referred to the voluntary release of members of the former non-statutory forces who were constitutionally part of the SANDF, but who either did not wish to serve in the Defence Force, or were unable to do so for reasons of age, ill-health or aptitude. Since these people contributed to the struggle against apartheid, it would be unjust to end their military careers without compensation, especially in the case of aged and disabled military veterans. They would consequently be assisted financially, as well as through the Special Pensions Act envisaged by the Constitution. It was a matter of great importance that this Act was now promulgated.

The integration of soldiers into the newfound SANDF was a key element of the negotiated political settlement prior to 1994. To ensure the success of the process, several systems of checks and balances were put in place to limit risks to the process.

Negotiations

As already noted, military negotiations commenced in May 1990. This was essential in ensuring top-level buy-in and guidance of the integration process.

Placement Boards

These boards consisted of members of both statutory and non-statutory forces (NSFs) to oversee the placement of NSF members in the various divisions of the SANDF.

British Military Advisory Teams (BMAT)

The BMAT acted as a neutral external observer to ensure the process was fair.

Integration Oversight Committee

This Integration Oversight Committee was established as a sub-committee of Parliament’s Joint Standing Committee on Defence, and ensured further political buy-in and Parliamentary oversight of the integration process.

Committee observations

Acknowledgement of the main KNSDU request

The Committee acknowledged that the main request from the KNSDU was for a legal framework (Bill) to be drafted to ensure the integration of those represented by the KNSDU into the SANDF, notably former SACC members. This request framed discussions between the KNSDU and the Portfolio Committee.

Clarity on KNSDU representation

The Committee noted the challenges around the representation claims of the KNSDU. The initial personnel list submitted to the Committee laid claim to thousands of individuals being put forward for integration. The final revised list submitted by the KNSDU revealed that it had acted on behalf of 713 former SACC members claiming integration.

Legal basis for integration

The Committee observed the importance of the Transitional Executive Council Act (No 151 of 1993) and the specific requirements it laid out for the integration of military forces. It also noted the establishment of the KNSDU in June 2014 and that this establishment date excluded it, as a collective entity, from any rights provided for under the Transitional Executive Council Act (No. 151 of 1993).

Acknowledging the contractual status of SACC members

The Committee noted that the majority of the 713 individuals, as per the ‘refined’ KNSDU personnel list, had left the employ of the SADF prior to 1992.  At least 172 individuals on the list served in or beyond 1994, thus excluding them from any claims to integration. Furthermore, at least 42 members left the service in 1992, serving either from 1990 or 1991. This reflected a two-year contract coming to an end in 1992 which coincided with the disbandment of the SACC. At least 38 other members on the list left the service in 1993 after having started service in 1991. This reflected adherence to the contracting periods entered into between SACC members and the SADF at the time.

Voluntary service of SACC

The Committee further noted the concession by the KNSDU that SACC members served in the South African Defence Force (SADF) on a voluntary basis -- they were not permanent members of the Force. The Committee agreed that this further limited their claim for integration.

Existing findings

The PCDMV took note of the North Gauteng High Court (Case 41202/2010) that dismissed claims for integration of former Khoisan soldiers. The Committee also acknowledged the Public Protector’s findings that the refusal of the SANDF to integrate the members of the KNSDU into the SANDF was lawfully justified. The Committee was also cognisant of the Termination of Integration Act (No 44 of 2001) that brought the integration process to an end.

Late-stage integration

The Committee noted that given the SANDF’s current constraints in terms of rejuvenation, any integration of former SACC members into the SANDF would not be feasible more than 20 years after the integration process was completed.

Need for assistance to military veterans

The Committee acknowledged the need for former SACC members, as part of the broader legitimate military veterans’ community, to be eligible for support from the DMV.

Relations between DMV and SACCMVA

The Committee noted with concern the claims by the SACCMVA that it was being side-lined by the DMV and the SANMVA.

Recommendations

Based on the observations above, the Committee made the following recommendations:

Integration

The Committee acknowledged that the main request from the KNSDU was related to the integration of those it represented into the SANDF. It did not find any justification for the re-opening of the integration process to accommodate former SACC members, including those who represented the KNSDU. This finding was based on the guiding legal principles at the time of integration, notably the Transitional Executive Council Act; the legal findings by the North Gauteng High Court; the recommendations of the Public Protector; the Committee’s own concerns raised around the KNSDU personnel list; contracting between SACC members and the SADF at the time; the fact that most SACC members on the KNSDU personnel list had left the employ of the SANDF well before 1992; and further observations noted by Members of the Committee contained in its observations.

Assistance to SACC veterans

While the Committee did not recommend the reopening of the integration process, it urged all former SACC members, including those represented by the KNSDU, to approach the DMV to be registered as veterans on the military veterans’ database. Based on this registration, deserving military veterans would be allowed to access benefits through the Department, thus providing the necessary assistance to military veterans in need.

Cooperation to assist SACC veterans

The Committee urged closer cooperation between the KNSDU and the SACCMVA to ensure that all former SACC members received adequate representation at the DMV. The Committee further encouraged the SACCMVA, the SANMVA and the DMV to strengthen cooperation to ensure that services were provided to former SACC members.

Responsiveness from the DMV

The DMV was urged to ensure a quick turnaround time on applications from all military veterans, including former SACC members. Efforts to finalise the military veterans database should be enhanced.

The Portfolio Committee wished to extend its gratitude to the DOD for its assistance in the verification of the names submitted to it by the KNSDU.

Discussion

Mr Marais said that it was a great report, which included all the necessary aspects.

The Chairperson said that what was important was that the Committee had listened to them and weighed the evidence and made its findings based on what had been presented to it.

Mr Shelembe asked if there had been a meeting between these Units and the Deputy President (DP), and what the implications of this meeting were.

The Chairperson replied that there had been a meeting, but there was nothing conclusive thus far and the process was a work in progress. The presentation today would not impact the process, and if it did, it would enhance the process of the DP. This was why he had wanted to finalise the engagements of the Committee with the KNSDU and SACCMVA report so that the Committee could forward it to Parliament and then the DP could have access to it.

The report was considered and adopted.

Committee’s 2021 first term outline

The Secretary of the Committee noted that the first engagement of the Committee should be a strategic planning session which would take place over two days. The first official meeting would include the following agendas:

• The consideration and adoption of the 2021 first term programme;
• Briefing by the DOD on its Human Resource (HR) action plan and measures put in place in order to contain the budget over expenditure;
• Follow-up with the DOD and National Treasury on the implementation and funding of the HR action plan and measures to develop and fund a humane exit mechanism to ensure force rejuvenation.

The second meeting would include the following agenda:

• Briefing by the Advisory Council on Military Veterans (ACMV) on its report for the term (December 2015 to June 2020).

The third meeting would include the following agendas:

• Briefing by the DMV on the progress on the finalisation of the national database of the military veterans;
• Meeting with SANMVA on its functioning;
• Briefing by appeal board of the DMV on its functioning (follow up meeting).

The fourth meeting would include the following agenda:

• Briefing by the DOD on its second quarterly report.

The fifth meeting would include the following agenda:

• Briefing by the DMV on the second quarter report.

The sixth meeting would include the following agendas:

• Briefing by the DOD Audit Committee (AC) and Internal Audit (IA) on measures to detect and prevent financial irregularities;
• Briefing by the DMV AC and IA on measures to detect and prevent financial irregularities.

Discussion

The Chairperson told the Committee that this was not a draft programme. It was only items that had been flagged for next year’s programme, and he asked Members for any inputs.

Mr Marais replied that this was a good start for next year’s programme, and if any other urgent matters arose the Committee was flexible and would be able to deal with them.

The Chairperson said that the province of KwaZulu-Natal (KNZ) had started the implementation of a Jersey Barrier Wall (JBW) to prevent stolen cars from crossing the border to Mozambique. The total value of recovered stolen cars for this year amounted to R48 million. He requested that the Committee engage early next year with KZN and the Department of Transport, to brief the Committee on the value of the JBW.

Secondly he wanted to invite stakeholders of the tracker industry and insurance companies to brief the Committee on the stealing and smuggling of cars across the borders, and what they were doing to address the issue. If the Committee we could get them on board, that would address the issue of funding. He noted that even though the JBW might not stop people from crossing the border, it would stop cars from crossing the border and would regulate access to the border, because 172 people from the Defence Force could not cover 81km. He asked for the inputs of the Members on having these meetings early next year.

Mr Marais replied that it was about the best interests of South Africa, and if they could get ideas from other departments, they should use them. He made reference to the Zimbabwe border, and said that a border should not have barriers with gaps, but this might be acceptable in the north of KZN.

The Chairperson said that the Secretary should include the meetings he had mentioned in the programme for early next year.

Closure

Mr Marais commended the work of the Chairperson, support team and the Committee and wished the Members well. He said that in all his years in Parliament, this team was the best. He requested that the Committee rest well over the festive season and come back next year energised to tackle the issues it would face.

The Chairperson commended the support team for their hard work, and wished them well over the festive season.

The meeting was adjourned.