South Africa is owed billions of rands in industrial participation agreements signed with international arms suppliers, and the government should explain why this investment has not happened, Democratic Alliance (DA) leader Tony Leon said on Friday.
The agreements, termed ”offsets”, were mooted as a primary motive for the arms deal at the outset of the government’s plans to spend tens of billions of rands on military ships, aircraft and other hardware, he said in his weekly newsletter on his party’s SA Today website.
”When the government signed the initial R30-billion deal with five major European companies, it claimed South Africa would receive a staggering R104-billion in complementary investment, and some 65 000 jobs would be created.”
According to this, for every R1 spent on armaments, R3 to R4 would in effect be gained in offset benefits, Leon said.
”Yet last week, [Minister of Defence Mosiuoa Lekota] admitted that only a fraction of this bread-for-guns bounty had been realised.
”Answering questions in Parliament, he conceded that a mere 13 000 jobs had in fact been created for the R29 billion South Africa has already paid for the weaponry — a staggering shortfall of 52 000 jobs.”
Leon said if the non-compliance of the successful bidders in South Africa’s arms deals with their offset agreements was added up, ”we get to a truly alarming figure of R5-billion”.
This had been quantified at the time of the first milestone deadlines in 2003/04, when three of the contractors had already defaulted on their offsets commitments: Ferrostaal, with a shortfall of R4-billion, BAE/SAAB (R840-million) and Thales (R262-million).
”This yawning gap between promise and fulfilment should have been a source of national outrage; instead, the compliance dates came and went with hardly a murmur from the government.
”It is now time that we took up the cry and demand action — and credible explanations,” Leon said.
The terms of the offsets agreements allowed the state to charge penalties of between 5% and 10% of the total value of a specific contract. However, the government ”has apparently refused to implement the breach-of-contract fines which they are entitled to impose”.
As a matter of urgency, it should explain this.
”Have such fines been imposed? Have they been held over; if so, on what grounds? Have the companies who have defaulted on their offset commitments been called to account?” he asked.
”The government cannot be so careless with taxpayers’ money. If the state has a strategy to force the company to comply, it is duty bound to take South Africa into its confidence,” Leon said. — Sapa