Some exhibitors at the recent Aerospace and Defence expo (AAD) held at Waterkloof Air Force Base have expressed concern over the high rate of corruption they perceive in South African business and government circles.
One of the anonymous sources said they were concerned at the increase in corruption in South African firms and indicated that they would watch trends closely until the next iteration of AAD, then they would decide whether to reduce their ties with certain SA companies or even start cutting back on doing business in SA.
Corruption is on the increase in South Africa, according to Transparency International’s annual Transparency Index. Where low numbers mean less corruption and high numbers mean more, South Africa scored 42 four years ago, but in 2015 dropped to 44.
Transparency International’s 2015 Government Defence Anti-Corruption Index cautioned that South Africa faces a high risk of corruption when it comes to defence, with particular risk of corruption on operations. Regarding political power structures and favouritism, Transparency International noted that political considerations play a strong role in the promotions of personnel and alignment to the ANC appears to increase one’s chances of selection and promotion, even when there is no position to be filled.
According to Transparency International, defence procurement transparency and accountability is severely limited by secret budgets, such as the Special Defence Account. Other issues it highlighted include the Seriti Commission of Inquiry, set up to investigate allegations of fraud, corruption, impropriety or irregularity in the Strategic Defence Procurement Packages (SDPP), commonly referred to as the Arms Deal. Transparency accused the Commission of bias and not being independent while opposition parties and critics have called the Commission’s findings, that there was no wrongdoing in the arms deal, a whitewash.
A well-placed industry source expressed concern to defenceWeb about state capture and influence, particularly with regard to political and business interference in Denel. The source said that when Denel was mentioned, potential customers became very wary, as they were concerned about doing business with Denel or even having Denel components on their equipment.
This comes after the establishment of Denel Asia together with VR Laser, which has connections to the controversial Gupta family, which has links to President Jacob Zuma. Another area of concern is the suspension and dismissal of Denel CEO Riaz Saloojee due to his apparent resistance to establish Denel Asia and award Badger infantry fighting vehicle contracts to VR Laser instead of Denel subsidiary Land Mobility Technologies.
The Institute of Security Studies (ISS) in Pretoria warned that “corruption cheats the continent’s governments of some $50 billion, and stymies successful cities, sustainable economies and safe societies,” while Transparency cautions that corruption undermines public trust in the government and the armed forces. Corruption, and the perception of the corruption, is clearly a concern for many local and international defence companies and is something that needs to be addressed for the health of the industry.