African National Congress MPs and Cabinet ministers deflected criticism of the industrial offsets linked to South Africa’s arms package in Parliament this week, insisting the deal was strictly a defence matter and the offset benefits merely a “bonus”.
At the time the deal was signed, the government referred to the R104-billion in linked trade and investment it would bring the country.
In its lead story last week, the Mail & Guardian suggested the government’s offset claims are grossly misleading.
Few of the promised heavy industrial projects have materialised, while in other cases credits have been claimed on materials that would have been exported anyway. Projects on stream so far include a condom factory, a beer plant, Scandinavian package tours and automotive parts manufacture.
At the end of Tuesday’s three-hour parliamentary debate on the report of the joint investigation into the arms deal, Minister of Defence Mosiuoa Lekota insisted: “Whether or not there was someone to invest in our economy, we would still have had to purchase equipment to defend our country.
“Defence packages were a bonus for this nation … It is therefore a distortion to try and twist the issue of strategic defence packages into the issue of offsets.”
Lekota said the Cabinet approved the strategic defence procurement package in September 1999 “fully satisfied regarding the offset arrangements attached to this package, which will benefit the economy and advance the socio-economic interests of the country”.
In a clear reference to the M&G story, Minister of Trade and Industry Alec Erwin said he found “specious” the argument that raw materials — such as gold — would have been exported in any event.
“The products being exported are being processed, and in the case of gold new investment in a range of processes increases the quality and variety of uses for the gold. To argue that this would have happened anyway is na”ve and does not take into account the very competitive environment for attracting investment.
“Potentially, any form of investment may happen. But our interest is in the fact that it has happened and been facilitated by the offset programme.”
Erwin said the aim was to use any major purchase by the public sector to support and strengthen industriali-sation and manufacturing capacity.
Speaking later on FM Radio, freed from the restraints of parliamentary accountability, Erwin was less measured. He said the M&G’s story was “grossly inaccurate and speculative nonsense”.
Initially the arms deal cost R29,7-billion, with an offset value of R110-billion, and 65 000 direct and indirect jobs. The cost has escalated to around R54-billion, with offsets increasing from R110-billion to R130-billion by 2010. These off- sets are split between one-third direct investments and two-thirds export promotion.
During the debate opposition parties argued that the report of the arms deal investigators was a whitewash. A proper inquiry had been hamstrung by the exclusion of Judge Willem Heath’s investigations unit, Parliament’s failure to exercise due oversight and ANC whip-cracking over its MPs, resulting in the paralysis of Parliament’s public accounts committee.
“South Africa’s parliamentary democracy was put to the test in probing this deal,” said Democratic Alliance MP Raenette Taljaard. “But most important of all, and most tragic, it failed the test of integrity. It damaged institutions and individuals and shattered public trust.”
The Freedom Front and New National Party alluded to bidders who were overlooked despite tenders that were less costly and militarily more suitable, and who promised better offsets.
In a nuanced opening address Thandi Modise, chairperson of Parliament’s defence committee, cautioned that “never, ever again” should so much time be spent on a matter that could have been avoided had the procurement policies been adequate and up to scratch.
It was Parliament’s job now to ensure the joint investigation team report’s recommendations were enforced and that where the recommendations were insufficient, they were improved.
“Oversight must be seen as a tool of democracy”, not as competition between Parliament and the executive, Modise said.
“We have no right to seek the media limelight at the expense of the security of this country. Something called pat-riotism must begin to say something in each and everyone’s breast.”