Army generals, frustrated with the restrictive and strict legislation governing state procurement, want government to allow them to look after their own purse strings. This is the legislation that often leads to negative audit findings for the defence department.
The commanders, led by chief of the South African National Defence Force (SANDF) General Solly Shoke, went as far as producing a 29-page position paper. They want to free the defence department from having to follow normal procurement legislation and give commanders the power to do procurement however they see fit.
They also roped in procurement expert Teddy Daka in their bid for financial self-determination.
But the plan was cut short after it produced a chuckle from President Cyril Ramaphosa during his visit to state arms procurer Armscor in January.
“All he did was laugh after one of the generals raised it. He said ‘oh nifuna umosha, anifuni u-accounta’ and it was dismissed just like that,” said an insider with close knowledge of the plan.
Ramaphosa’s spokesperson, Khusela Diko, referred all questions to the department of defence.
The plan brought similar disdain from Finance Minister Tito Mboweni at a meeting in Cape Town.
Several sources confirmed that Defence and Military Veterans Minister Nosiviwe Mapisa-Nqakula dropped the idea after it became apparent it did not enjoy her Cabinet colleagues’ approval.
This week, the department of defence said the idea of creating a Defence Finance Management Act (DFMA), or amending the Public Finance Management Finance Act (PFMA), were mooted internally, but then canned.
In a statement on Tuesday, the department said: “As far as the minister is concerned, no external consultation took place as there was no need for such because the discussion was still at the level of officials.
“The discussion document was limited to and for internal purposes and never presented to any structure outside the department.”
It went on to say that the concerns are addressed by the PFMA, and all that is required are improved procedures in the department so that the commanders are not frustrated because the Act is not being implemented correctly.
Critics of the plan confirmed it was indeed canned by Mapisa-Nqakula, but questioned why she even allowed the generals to approach Cabinet members in the first place.
One insider said: “After that meeting where Tito blatantly said it would not happen, Shoke then took it to Ramaphosa because he said only he was commander of the armed forces. It was only then that Mapisa[-Nqakula] said ‘no ways’.”
“If you consider what they are proposing, it actually means they are trying to chip away civilian oversight over the military,” the insider said. “They would have never even dared approach [former ministers of defence] Lindiwe Sisulu and Charles Nqakula with those ideas.”
The insider added: “One of the auditor general’s biggest frustrations is that a division like military intelligence don’t want to account for their expenditure on their covert projects.”
Another insider said: “One of their [the generals’] biggest gripes is that when they have to deploy quickly, there isn’t enough time to follow processes and advertise for 21 days. But what they miss is that the law allows for deviation — but one must follow process to do so. So really they are to blame and that is why this idea got shot down.”
A third source said: “Tito even told the minister that she should not have brought the generals such a proposal by people who want to replace the PFMA. Even the defence’s chief procurement was not happy with this proposal.”
The generals’ proposal on creating a Defence Finance Management Act notes that the defence force and department have a tense relationship with the treasury and the auditor general, saying they perceive the SANDF as having a culture that resists oversight, invokes “principles of warfare” and introduces “excessively high” security classifications.
The report goes on to say that the oversight branches of government think that “defence unnecessarily questions the auditability of capital expenditure”. But it does admit that: “The obligation of the auditor general to do so [audit the defence department] is well established in law.”
The author of the document, Major General Michael Ramantswana, the army’s chief of military policy, strategy and planning, notes in the document that the defence force’s view is conjecture and not based on reports or interviews with treasury personnel.
In fleshing out why the department should be allowed to bypass normal procurement, Ramantswana writes: “The view of the defence force about NT [national treasury] and AGSA [auditor general] is that these two entities do not understand section 200 of the Constitution of the Republic of South Africa 1996. In addition, that NT and AGSA treat the defence force like any other organisation, negating the fact that defence is unique with no ‘right to life’ in combat missions as usually the ultimate price of being a soldier could be the ‘loss of lives’.”
The document states that procurement legislation does not recognise the chief of the SANDF despite commanding soldiers and “material for war worth billions of rands and accountable for the security of 57-million people in our country”.
“The fact that regulatory frameworks do not recognise his role as a strategist of South Africa’s national security is quite [an] abnormal situation that has to be turned around,” it says.
The proposal envisions a situation where the seven divisional army generals — and not the deputy director generals in the department — are accountable for safeguarding and use of resources.
“Strategic direction for the defence supply chain [procurement management] is centralised with a member of the military command [chief logistics], while the execution is decentralised through delegations to the lowest unit to facilitate local procurement and boosting the local economy.”
But critics of the plan argue that it is the department’s failure to plan procurement and follow the rules that sees it butt heads with treasury and the auditor general. They say that audit reports expose serious problems that go all the way to the top.
The department has incurred seven consecutive qualified findings on its annual financial statements from the auditor general, as well as R673-million and R55-million in irregular and fruitless and wasteful expenditure respectively for the year that ended in March 2018.
Among some of the qualifications is an inability to account for tangible and intangible assets, and for work in progress.
As an example, an insider said R5-billion had been spent on Project Hoefyster — to procure 242 infantry fighting vehicles to replace the aged Ratels — but had nothing to show for the expenditure. “The procurement function lies within the SANDF and falls under the command of chief logistics, who in turn reports to the chief of the SANDF. This is problematic because the PFMA requires that the accounting officer is responsible for supply chain management, and then recommends that the head of supply chain reports to the CFO [chief financial officer], who reports to the accounting officer.
The insider continued: “Here the accounting officer [in the department] has no visibility of the procurement function, let alone control, although he still has to account for the function in parliament.”
The insiders warned that army officials “are not qualified in the procurement/logistics environment” and were “merely placed there as part of personnel rotation that the military embarks upon regularly”. This, they said, enables corruption, with people “commanded by generals who instruct them to appoint certain companies without following process”.
Practically, this happens when “procurement files are tampered with to change supplier information in order to get a non-qualifying bid to qualify or a qualifying bid to be disqualified”, they added.