As President Cyril Ramaphosa’s point person on defence, Minister Angie Motshekga – even though she had no part in defence related corruption, mismanagement and wasteful expenditure in South Africa’s sixth administration – now has to face the music following a comprehensive Special Investigating Unit (SIU) presentation to Parliament’s Standing Committee on Public Accounts (SCOPA).
Among others Advocate Andy Mothibi’s presentation showed State-owned defence and technology conglomerate Denel, the Department of Defence (DoD) and the Department of Military Veterans (DMV) were collectively responsible for billions of Rands being spent unwisely.
Political parties jumped on the damaging presentation, coming at the same time South Africans heard 13 of their soldiers died in Democratic Republic of Congo (DRC), calling for heads to roll in the wake of what one termed “unconfined corruption and mismanagement”.
Acquisitions under the SIU microscope ranged from computer programme licensing, through to the acquisition of personal protective equipment (PPE) at the height of the COVID-19 pandemic and an unregistered Cuban prophylactic drug to protect military personnel from the virus as well as information technology (IT) security services, steel fabrication and fabricated products, misappropriation of intellectual property (IP) rights in respect of air-to-air missiles, stand-off weapons, target missiles and unmanned aerial vehicles (UAVs).
An indication of just how wide-ranging the investigation was comes from Mothibi’s 59 slide PowerPoint presentation to SCOPA. It lists progress with litigation and prosecutions as well as other potential actions regarding criminal activity, recovery of money and disciplinary action.
Some of the amounts given in the SIU presentation are R38.6 million for Casspirs destined for Chad; IP misappropriation by Tawazun in the UAE valued at R325 million with royalties of R1.5 billion attached; R217 million paid for Heberon prophylactic drugs; and R273 million for personal protective equipment contracts.
On Denel, which former public enterprises minister Pravin Gordhan once cited as “a prime example of State capture”, the SIU, among others, peered into the nooks and crannies of contracts related to Project Hoefyster, the replacement infantry fighting vehicle for the SA Army and the acquisition of what was BAE Land Systems as well as the IP for the RG35 armoured personnel carrier (APC).
The SIU noted that in May 2007, the Armscor Board of Directors approved the placement of an R8.3 billion contract with Denel Land Systems for 264 different variants of the Badger vehicle under Project Hoefyster, with delivery to Armscor in 10 years. “As a result of various decisions taken at the Board and Executive level, DLS was unable to fulfil its contractual obligations (in relation to the Hoefyster Contract).”
The matter will be referred to the civil litigation unit for assessment. Former board members will be served with right of reply based on the findings the SIU investigation in terms of criminal referral.
Regarding Hoefyster, the SIU investigated a R229 million contract in November 2014 with VR Laser for the manufacturing of hulls “despite the strategic requisition of LMT by Denel for the manufacturing of the Hoefysters. The SCM processes were flouted to favour VR Laser and had it not been the manipulation of scores, LMT would have scored the highest points.”
Motshekga will, on an as yet not known date, be called to “please explain” to the Parliamentary financial oversight watchdog committee.
With this seemingly set to provide political parties, trade unions and other civil society organisations with more ammunition to take on the Minister, whose responsibilities now include Denel post the demise of the Department of Public Enterprises (DPE), calls for action have come from, not in alphabetical order, Solidarity, the EFF (Economic Freedom Fighters), ActionSA, and the Democratic Alliance (DA).
Responses cover the money spent on Cuban prophylactic Heberon, government bailouts totalling R9 billion to Denel, almost R500 million on software licences, the use of private email addresses to forward sensitive acquisition information, and a lack of consequence management, amongst others.
The EFF condemnation, in part, has it the SIU findings confirm what many South Africans have suspected for years –“ the deliberate and systematic looting and mismanagement of our defence sector from the misuse of resources to the outright theft of intellectual property.” South Africa’s defence capabilities, Julius Malema’s party has it, are in jeopardy and “threaten the lives of those in uniform”.
“The SIU report reveals that Denel spent millions of rands outsourcing the development of a white paper to establish a funding model for the company. This function could have easily be handled internally, but instead, Denel chose to spend millions of taxpayers money unnecessarily on an external contract.”
The EFF called the “massive scandal” involving the misappropriation of Denel’s IP as “treasonous behaviour.”
“The SIU investigations further revealed that the Department of Defence spent over R250 million Rands over two contracts to acquire software licenses, despite the department having an internal IT department capable of fulfilling this function. The decision to outsource this basic need was not only wasteful but also fraudulent.”
The EFF called on the National Prosecuting Authority to urgently take action on SIU referrals to hold those responsible for corruption and mismanagement in the Department of Defence, the Department of Military Veterans, and Denel to account.
The DA, via its appropriations spokesman, Mark Burke, notes it’s been almost 20 years since Project Hoefyster for new infantry fighting vehicles was signed, and “to date none have reached our troops”. Calling the non-delivery “flagrant looting” he maintain it is “tantamount to treason” as it “undermines our national security”.
“A shortage of armoured vehicles has been highlighted as a critical flaw leading to previous military disasters such as the Battle of Bangui,” he said.
“The Badger contract is just one of many horror stories at Denel. The SIU detailed how Denel was swindled out of the IP it generated in the design of two missiles. The missile IP was ultimately transferred to a firm in Dubai. The Denel staff involved also joined the Dubai firm.
“In a separate missile matter, Denel failed to certify the missiles needed to equip our Gripen fighter jets with strike power, making the jets impotent for DRC combat. So we’re leaking IP while failing to arm our troops,” a DA statement has Burke saying.
“These cases highlight the terrible lack of internal controls and consequence management at the SOE. Denel has also received R9 billion in fruitless bailouts over the last five years, yet its financial situation remains dire. There is no turnaround at Denel. Our soldiers are paying the ultimate price for the abhorrent mismanagement at Denel and the Department of Defence. The DA will reject any further bailouts at Denel,” Burke concluded.
ActionSA also climbs on the missile/IP bandwagon calling the treasonous misappropriation of sensitive missile intellectual property belonging to South Africa a nefarious move to aid foreign state-owned companies.
Its statement reads, in part: “As South Africans grapple with the tragic loss of 13 soldiers in the DRC, fighting a war that is not ours under dire resource constraints, leaving our troops under-equipped and outgunned, it is utterly unconscionable that Denel has been allowed to squander our critical resources, further undermining our war fighting and defence capacity”.
Centurion headquartered trade union, Solidarity, is no stranger to Denel, having taken it on when salaries went, in some cases, unpaid, and in others, not paid.
Quoting from its 2018 “Denel dossier”, Derek Mans has it mismanagement damaged Denel, the lives of employees affected by salary short payments and has now gone as far as “the tragedy unfolding in DRC”.
“Denel,” according to him, “has left South Africa’s national security vulnerable”.
The union’s “Denel dossier” was handed to government in 2018 “now it is also the responsibility of Minister Motshekga who will have to give feedback on the SIU finding to SCOPA” Mans said in a Solidarity statement.
Reform proposals for Denel submitted by Solidarity include earmarked funding for projects, as well as the end of cross-subsidisation and a commitment to partnerships with the private sector.
