IDASA
DEMOCRACY AND THE ARMS DEAL

Submission

Introduction and Statement of Purpose

  1. Since IDASA’S Interim Review on the Strategic Defence Procurement Package ("the arms deal") in May of this year, public interest in the arms deal has continued to be high as a result of the investigation initiated by Parliament [after much wrangling around Parliament’s intention in its 14th Report] and conducted by the Joint Investigative Team (JIT). The JIT consisted of The Public Protector, the Auditor-General and the National Directorate for Public Prosecutions. Finally, on 14 November 2001, the JIT released its long-awaited Report.
  2. With increased allegations in the media of conflicts of interest as well as the rising cost of the arms deal to the taxpayer, the controversy surrounding the arms deal continues to test the strength of our democratic institutions.
  3. Our Interim Review provided a checklist of issues which we believed were important for the JIT to consider during its investigation. While welcoming the JIT Report as a credible and comprehensive exercise in constitutional accountability, with this Report we offer a checklist of issues that we believe Parliament should attend to in fulfillment of its ongoing oversight role. The recommendations and findings of the JIT need to be carefully considered by Parliament and acted upon.
  4. In our Interim Review we raised and attempted to answer questions regarding four core democratic issues. Following on from this, we have again identified four democratic issues which we believe are fundamental to good governance in South Africa and which have arisen out of the JIT Report. These are:
    1. An evaluation of the level of effectiveness of the Chapter 9 institutions involved in the investigation, their independence in conducting their respective investigations and related to this, what the degree of their inter-connectedness with Parliament should be;
    2. An examination of the ongoing role of Parliament as regards this controversy, particularly the role of the Standing Committee on Public Accounts [Scopa]. We look at the current and prospective role which Parliament has to play in exercising oversight over the executive. We offer the view that it is crucial that Parliament exercises its oversight role thoroughly and without unnecessary haste. Furthermore, we examine the way in which Parliament may exercise its prospective oversight role by providing impetus for reforms in legislation on issues such as:

4.3 In our previous Report we asked whether Scopa could retrieve itself, given the tensions and political partisanship experienced within this Committee after the tabling of its 14th Report in October 2000. In this submission, we look at the current dynamics within the Committee and the role it will play in assisting Parliament to exercise its oversight role. Its role will be particularly important when engaging with the JIT.

    1. We finally ask whether there is a way in which Scopa – given the importance of its role in overseeing public expenditure – and the other principal institutions of accountability and oversight could insulate themselves from intense party political pressures? We attempt to look at constructive and creative ways in which such insulation could possibly take place.

We hope that this Report will stimulate public debate around these important issues.

5. What is our agenda?


Background:

The Standing Committee on Public Accounts (Scopa), in its Fourteenth Report raised very important questions which arose out of the Auditor-General's Report on the Strategic Defence Procurement Package. (SDPP).

As a result Parliament mandated the three agencies - the Auditor-General, the Public Protector and the National Directorate of Public Prosecutions to investigate the matter further. For reasons which are now well-documented, the Special Investigative Unit (formerly headed by Judge Willem Heath) was excluded from the probe.

So, if one uses a jigsaw puzzle analogy, it could be said that the process of investigating the arms deal was a four-piece one:

  1. In accordance with his constitutional obligations, the Auditor-General sought, and conducted, a Special Review of the arms deal released on 15 September 2000, in which he made certain findings and recommendations;
  2. The Special Review was subsequently the subject of hearings and deliberations of the Standing Committee on Public Accounts (Scopa);
  3. Scopa raised certain questions pursuant to its own deliberations and requested the 3 agencies to conduct a joint investigation. Parliament having received the JIT Report is now left the task of effectively exercising its oversight role;
  4. Beyond the response of Parliament, the way in which the executive seeks to implement the recommendations and findings of the Report is very important for the development of accountable governance in South Africa. The implementation and monitoring will, however be the task of the executive and the legislature respectively.

The Role of Chapter 9 institutions:

Chapter 9 of the Constitution establishes state institutions such as the Auditor-General and the Public Protector that are intended to strengthen constitutional democracy in South Africa. The Constitution provides that they be independent and subject only to the Constitution. The Constitution creates a formal link between these Chapter 9 agencies of accountability and Parliament by making them accountable to Parliament. s181 of the Constitution guarantees their independence. Through them, additional mechanisms of ensuring accountable democracy are created. They develop along-side the committee system within Parliament, the aim of which is to bring more specialized and detailed scrutiny to bear on government policies and actions.

The present case:

The three agencies appear to be clearly aware of the responsibility which they bear. In the Preface to the JIT Report, they state the following: "The challenge, presented by this investigation, goes to the raison d'etre of the institutions supporting constitutional democracy and those involved in the administration of justice. The impartiality, objectivity and independence of the 3 institutions involved are issues that have remained in the arena consistently. We hope that we will not be found wanting."

What remains to be asked then is whether these agencies have fulfilled their mandates in an objective and transparent manner?

No-one can deny that the level of independence of these agencies is dependent not only on their respective financial independence, the quality of officials who are at their helm but more particularly, the political culture within which they operate.

In the recent days after the release of the Report many political parties and members of the public have accused the JIT of being partisan and stated that the Report is a "whitewash" and a cover up. To ascertain whether our independent institutions have held up to the intense scrutiny and pressure of the past year one needs to look more closely at the content of the Report and its findings and recommendations. Idasa has always said that it is in the interests of the country that the investigation is a credible and comprehensive one.

The JIT in its Preface indicated the necessity to strike a balance between the need for a rigorous investigation, while at the same time respecting the rights of individuals involved not to be subject to a "witch-hunt". Has the Report therefore found this balance or the "golden mid-way" which the JIT speaks of in the Preface?

If one reads the JIT Report carefully and looks at its findings, it is impossible to dismiss it as a "white-wash". In fact, the Report is, in some areas, damning.

It is explicit about areas and departments in which controls have been non-existent and checks and balances have been ignored. Nowhere can this be more evident than in the findings concerning the acquisition of sub-marines and corvettes.

Procurement of submarines:

In this respect the JIT found as follows:

*evaluation systems for companies tendering for the contracts were at best not uniform and at worst, non-existent.

* despite the fact that preferred bidders were to submit business plans prior to offers being submitted- this, in may cases, did not happen. This could in fact have led to serious prejudice to some bidders.

* the value system which was to assess the level of National Industrial Participation (NIP) commitment by preferred bidders and the implementation of which was in the remit of the Department of Trade and Industry, was not in existence. It is evident that the evaluation was made on an ad hoc, case by case basis. The ability to manipulate decisions was raised.

Procurement of Corvettes: Similar findings and conclusions were reached: they were, inter alia that:

Cost:

It is clear that the Cabinet was aware of the cost of the deal and that there would be an escalation. In this regard, the JIT finds that:

Conflicts of Interest:

In this regard, the JIT found, inter alia, that:

From the above, it is not possible to dismiss the investigation as a cover-up. It may, however, be that there were certain elements which were over-looked and which were not as thoroughly dealt with as many would have liked, including:

  1. Former Minister of Defence, Joe Modise [or members of the International Offers and Negotiating Team- IONT] had initialled the contracts for the procurement of corvettes prior to the outcome of the Affordability Team’s Report. The JIT further find that this initialled agreement did not appear to have any force or effect. It is uncertain from the Report why in fact this initialing was allowed to take place. No comment is made in the Findings and Recommendations about this curious incident.
  2. The Prime Contracts and Sub-contracts: The JIT is very clear when it says that government’s contracting position is in no way flawed. However, questions are still being raised with regard to the tainting of the contracts by corruption and fraud. The question which must be asked is: if the sub-contracts are ostensibly tainted by fraud as a result of these conflicts of interest, is there not a case to be made for saying that the main contracts are flawed? It was clearly revealed in the Report that evaluation criteria were inconsistent or non-existent, that bidders were allowed to take corrective action and in order to proceed to the next round of the DIP evaluation. In addition, it appears that the NIPs were evaluated in a haphazard manner. In addition, the JIT’s confident pronouncement on the contracting position of government may be premature given that there are a number of allegations which are still under investigation by the Directorate of Special Operations. As such uncertainty about the validity of the contracts will remain until these investigations have run their course.
  3. As regards cost, no conclusions are drawn from government’s conduct in persisting with the deal, save to say that the choice was a "political one". In this regard, the government remains accountable for its choice and the onus lies not only on Parliament to ensure that the benefits of the arms deal are realised. The onus also rests with civil society organisations to hold government accountable for its political choice. In this regard, Idasa will be publishing a report early next year in which we detail the opportunity costs of the arms deal and the possible consequences which government's political choice may have on future levels of spending aimed at eradicating socio-economic inequality. In our Interim Review we questioned whether Parliament in fact approved the arms deal or not? What we do know from the JIT Report is that in 1998 Parliament approved the Defence Review, a wide-ranging document which set out the "vision" of a force design. The Defence Review however acknowledged that any reshaping of the Defence Force would have to be done with due regard for South Africa’s many other competing priorities such as socio-economic spending. Parliament was therefore never granted the opportunity, as it ought to have been, to approve the present arms deal. Part of holding the executive to account would be to ask whether it did not in fact exceed its powers by failing to refer the matter to Parliament for approval? This is one of the most important questions that parliament, though its relevant committees, must now answer if the arms deal issue to be laid to rest.
  4. The National Directorate of Public Prosecutions however will be following up on the criminal aspects of the investigation.

These are but a few of the question marks which still hang over the investigation and which will, hopefully be answered in time. Parliament’s role in this will be key.

Neither the Auditor-General nor the Public Protector have executive or political power and cannot ensure that the recommendations made are carried out. This will remain the responsibility of Parliament, which through its respective committees [particularly Scopa] will play a crucial role in implementing the Report’s Findings and Recommendations.

It is in this respect that the inter-connectedness of the Chapter 9 agencies and Parliament is of especial value and importance.

THE WAY FORWARD

So if it is accepted that the JIT has produced a credible Report, the pressing issue then must be the way forward. The crux becomes the weight that will be attached to the findings of the JIT. We believe that Parliament is presented with an exciting opportunity to carefully examine the recommendations made by the JIT and to put them into practice. However, before this happens Parliament needs to exercise its oversight role by not only engaging with the Report and interacting meaningfully with the JIT but also in establishing a dialogue with the Executive.

From the outset, Idasa has argued that the investigation into the arms deal and the way in which it is dealt with by the JIT and Parliament will be a litmus test for democratic accountability. Because Parliament still needs to exercise its oversight role thoroughly and completely, it is too early to say that the litmus test for democratic accountability has been passed.

PARLIAMENTARY OVERSIGHT

In the present case, we see Parliament's oversight role as being a two-fold one, viz, both current and prospective.

The concept of "oversight" is often conceived in terms of an implicit "watch-dog" role played by the legislature over activities and functions of the executive. Many MP’s see oversight as the role of the opposition inevitably criticising the policies of the government. We would however argue that to view oversight in such a way is limited and insufficient. Oversight has as much to do with Parliament scrutinising legislation and policy as it has to do with ensuring delivery and a better quality of government. In dominant party democracies such as South Africa the way in which one exercises oversight is often an even more vexed question. The strong party system and the close links which MP’s have with the executive make it difficult and often problematic for MP’s to exercise oversight effectively. MP’s often find it hard to separate their party political role from their parliamentary role. We have seen this especially in Scopa where party political differences and considerations have this year threatened to leave the Committee entirely ham-strung.

DEFINING OVERSIGHT

The issue of oversight is rendered all the more complex in that this oversight role takes place within a Parliamentary type system. It clearly requires us to think about oversight in a novel and innovative manner.

Current role:

  1. Parliament currently, via the 7 Committees scrutinising the JIT's Report is exercising its oversight role. But what does this mean in practice?
  2. The Committees of Parliament in their reactive role must reflect on the government policies which are currently in place and the actions which have taken place as part of the arms deal. So, for instance, the following Committees will be exercising their reactive role as follows:

    Part of the current, reactive oversight role that Parliament must play will necessitate the location of accountability and responsibility at the door of the executive. If oversight and accountability are two sides of the same coin, someone within the executive has to be accountable for the grave deviations from sound practices and procedures which occurred. A minister’s duty to account to Parliament means that the executive is liable to be held to account.

    MINISTERIAL ACCOUNTABILITY VS MINISTERIAL RESPONSIBILITY

    The JIT Report exonerated "government" from all "improper or unlawful conduct". It is evident that the JIT took as its starting point a very narrow, weak concept of "government", i.e. one which excludes officials working in respective departments and ministries. It is our view that the definition used by the JIT will be crucial to the way in which Parliament deals with the Report and deals with the consequences of the actions of certain public officials. Its narrow conception of "government" may well serve to limit Parliament in its oversight role.

    If oversight places the initiative with the legislature, practice has always located the duty to account and accept responsibility for function and conduct with the executive. Parliament in exercising its oversight role could begin to unpack exactly how the narrow definition of "government" provides inadequate direction for a debate about ministerial accountability.

    In this regard, the UK Scott Report into arms sales to Iraq is instructive. The Report focused particularly on the distinction between the notions of ministerial accountability to the legislature and the ministerial responsibility (liability) accepted by ministers for their own and their department’s action or inaction.

    If we accept as the Scott Report eventually did, that in modern governments, it would be unrealistic to expect the minister to be personally liable for every occurrence within his department even if he was unaware of it, then we can begin to expand our concept of oversight. Modern governments are simply too large and complex for such a requirement to be reasonable.

    Ministerial accountability is therefore a far more practical concept engendering the unqualified principle that a minister is accountable for everything which happens (or does not happen) in his/her department, in the sense that he or she owes a duty to explain and account to Parliament and the public for departmental policies, for what has or has not taken place within those departments or agencies and for the conduct of officials. It goes further in that it requires the minister to explain to Parliament what corrective action will be taken to ensure that such actions do not occur again. We would go further and say that the continuous dialogue between the executive and the legislature ought to see Parliament intermittently calling ministers to account regarding the way in which these policies and rules are being implemented.

    This revised notion of ministerial accountability moves away from the narrow concept of ministerial responsibility which would mean that the minister is personally responsible to Parliament and the public and that he or she should bear personal blame for the acts and omissions of officials. Such a show of ministerial responsibility normally manifests itself in the minister’s resignation. All too often however, resignation is used, in other democracies at least, to evade accountability to Parliament and the public for actions.

    So what more does this mean for Parliament’s current oversight role in the arms deal investigation?

    Simply put, it would mean that ministers such as the Minister of Trade and Industry should explain/account to Parliament as to why deviations from basic tendering procedures took place within his department; why the evaluation systems were not uniform? It could further mean that the Cabinet needs to collectively explain why it is that despite the fact that the Affordability Report indicated that there were risks involved in the deal, it went ahead with the decision to purchase arms; why despite the fact that it was ascertained that COEGA was "risky", the deal went ahead anyway? The more sophisticated notion of ministerial accountability would require Parliament to seek clarification from Cabinet as to why it took the specific political choice when the information before it clearly indicated that this may not be the best option for the country.

    What ministerial accountability also means is that ministers should allow civil servants to give an account of their actions to Parliament in cases where ministers have specifically delegated functions to them. Such a display of accountability would not only enhance public confidence in the political process but would also ensure that government is close and responsive to the people it governs. In the particular instance of the arms deal there is a need for government to explain to the electorate where and why things went awry.

    PARLIAMENT'S PROSPECTIVE ROLE

    Oversight will require that the legislature also reflects on actions and policies not yet initiated and which should potentially be undertaken and suggests ways in which Parliament can ensure that such mistakes are not made again. A few suggestions we would offer are:

    1. That a Code of Conduct and Accountability be drafted determining the duties and responsibilities of members of the executive and public servants to the legislature. In this way officials will be able to be held accountable through a specific mechanism as opposed to what is often vague convention. The "Corder Report" commissioned by Parliament recommended an Accountability Standards Act which would give MP’s a legal basis for the exercise of their oversight role. In our Interim Report we offered the view that institutions were only as strong as their greatest political challenge. The arms deal has, indeed placed a strain on the efficacy of our institutions. Parliament particularly is bearing the brunt of this strain at present. Perhaps the time has come for such legislation or Codes of conduct to be adopted.
    2. Alternatively, that a Code of Conduct for Public Officials be drafted. This could take the form of the United Nations General Assembly Resolution on Action against corruption and International Code of Conduct for Public Officials- 1996. Such a Code of Conduct could be made law by Parliament. The Code deals with, inter alia,
      1. Conflicts of interest;
      2. Disclosure of Assets;
      3. Acceptance of Gifts and other favours and
      4. Public officials are required to comply with certain measures established by law or administrative policies so that when they have left office they do not attempt to take improper advantage of their previous office.
    3. Parliament’s role in monitoring the implementation of these Codes of Conduct and these pieces of legislation would be crucial.
    4. The Ethics and Justice Portfolio Committee need to urgently look at initiating legislation which will deal with the way in which ministers can be prevented from being involved personally or as part of a private enterprise for a reasonable period of time after they leave public office.

    In this regard we welcome the recently published Public Service Regulations and the Public Finance Management Act passed last year, which seeks to increase the degree of accountability with regard to government expenditure.

    THE ROLE OF SCOPA

    In our Interim Report we asked whether Scopa could retrieve itself from the situation where party political pressures influenced the way in which it was operating? If not, how is it possible for Scopa to insulate itself from such party political pressures and influences to carry out its mandate as a committee effectively and efficiently?

    The role of Scopa cannot be under-estimated- being the committee which oversees expenditure and which initiated the investigation by the JIT. Over the past months the committee has been through a trying period. Party political interests on all sides continue to threaten the efficacy of this important committee. The role of the Chairperson has recently become even more tenuous and a question has been looming as to whether or when the ANC component on Scopa will use its majority muscle to oust the Chair. Perhaps this would be a step too far, however it cannot be denied that relationships within the committee, on the arms deal issue in particular have remained frosty. This was evident at the Scopa meeting of 20 November 2001 when members of Scopa deliberated painstakingly about the process to be followed when scrutinizing the JIT Report. Members of the ANC felt that it was adequate to only concentrate on the recommendations of the Report. They were of the view that the JIT had done the task set for it and it was not within Scopa’s remit to now question the JIT as this would constitute a reopening of the investigation. Members of the opposition thought it was necessary to interrogate the Report fully, to engage with the JIT adequately and to concentrate on not only the recommendations and findings but also on the merits of the matter. It remains to be seen whether the JIT’s engagement with Scopa and the other 6 committees will be useful and thorough when they meet the JIT on 5/6 December 2001. Scopa’s role in overseeing expenditure is a vital one and the mistrust which presently exists amongst members does not bode well for the future. It is highly unlikely that Scopa will, for instance be in a position to obtain consensus on a response to the angry letter which deputy President Jacob Zuma addressed to Scopa earlier this year. The fractures within Scopa are clear as it was decided all political parties should pursue their own line of questioning. This breaks with the Scopa "tradition" of forming study groups across party political lines to deal with Reports. It is also a cause for concern that the souring of effective working relationships seems to have over-flowed into other matters being considered by Scopa. This was evidenced in the public spat earlier last month between DA MP Raenette Taljaard and ANC MP Neo Masithela regarding the controversy surrounding the validity of the contract of the Director-General of Home Affairs. The Chair was inevitably drawn into the disagreement.

    It is evident that the concept of oversight and the role which Parliament/Scopa ought to play is influenced by party political considerations. MP’s with close links to the executive are reticent about calling their colleagues to account. What we have effectively seen within Scopa is a closing of the ranks by the majority component. This is also evident in the pressure that has been brought to bear on the rest of Scopa to complete its deliberations by latest 10 December 2001. Earlier we looked at the way in which the Parliamentary type system within which we operate exacerbates this. If we are forced to accept that party political differences will, especially in moments of political crisis, be an impediment to effective and constructive oversight, we need to look at ways in which Scopa can insulate itself from party political pressures? As we have said previously, Scopa's role is unique overseeing as it does, expenditure. As such, Scopa's role is distinguishable from that of other Parliamentary Committees which exercise oversight over specific areas of policy and also by scrutinising legislation. In such instances, it would be unreasonable to expect the majority party not to exercise its dominance- given the direct mandate from the electorate to implement its proposed laws and policy. We acknowledge that the question is a vexed one and have attempted to address the complexities in a novel and creative way.

    Here we offer a few suggestions which Parliament, via its ad hoc Committee on Parliamentary oversight and accountability may wish to consider:

    1. Maintaining the non-ruling party chair;
    2. Members of Scopa could because of their increased responsibility be paid a higher salary. This would encourage members to forge a career path within the committee;
    3. Special protection for members of Scopa- ie they are not able to be removed by the party hierarchy other than under exceptional circumstances. This would ensure that there is not a repeat of the situation within the ANC around the removal of Andrew Feinstein;
    4. An inclusion of non-MP’s on Scopa for example members of the Auditor-General’s office. Useful relationships could be forged with the Auditor-General’s office in this way;
    5. As far as voting within Scopa is concerned, the majority could be limited to a 50% threshold which would ensure that the majority party component does not always prevail;
    6. Increased research resources for Scopa as well as training for members prior to their joining Scopa regarding the importance of their oversight role;
    7. A greater understanding and more developed relationships between Scopa and the various government departments.

    CONCLUSION:

    We are encouraged by the Speaker's statement in her letter to deputy President Jacob Zuma earlier this year in which she said: "We are still developing our understanding and trying to give effect to the constitutional relationship between the executive and the legislature…..and we need to continuously review and improve communication between the executive and the legislature."

    We await the outcome of the deliberations into the JIT’s Report and the degree to which the legislature will be prepared to exercise its oversight role in dealing not only with the Report’s findings but also implementing its recommendations urgently and effectively. Only then can we determine whether the litmus test has been passed. It is because this major challenge still lies ahead for Parliament that we cannot agree with Minister Lekota when he says that he accepts the JIT’s Report "without reservation" and that it is "time to move on".