Strengthening South Africa's Defence Industry for National Security

1. AMD PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON DEFENCE ON THE NATIONAL CONVENTIONAL ARMS CONTROL AMENDMENT BILL 13 AUGUST 2007 by Simphiwe Hamilton, Executive Director – AMD A STRONG DEMOCRACY NEEDS THE SUPPORT OF A STRONG DEFENCE INDUSTRY

2. PURPOSE & SCOPE OF PRESENTATION • PURPOSE • To articulate the response of the SA Defence Related Industries (SADRI) to the proposals contained in the National Conventional Arms Control Amendment Bill. • SCOPE • Introduction to AMD; • Engagement with DCAC on Arms Control issues; and • SADRI submission on National Conventional Arms Control Amendment Bill. AMD, THE VOICE OF THE SA DEFENCE RELATED INDUSTRIES!!!

3. AMD VISION & MISSION • AMD’S VISION • A reputable, reliable, sustainable and profitable industry that supplies world class defence equipment and services to local and international customers whilst contributing to the Government’s economic and social imperatives • AMD’S MISSION • To promote the common interests of members in particular and the SADRI in general by: • Building & maintaining effective working relations with SADRI stakeholders; • Promoting the capabilities and image of the SADRI; • Promoting the establishment of a ‘home market’ & government support for exports; and • Promoting the transformation and development of the SADRI. ONE VOICE FOR A UNIFIED SADRI

4. THE SA AEROSPACE MARITIME AND DEFENCE INDUSTRIES ASSOCIATION • AMD is an industry funded association representing the common interests of its members and strives to ensure a sustainable and responsible SADRI. • The AMD Board of Directors, which consists of representatives from SADRI, directs the activities of the association on behalf of the members. • The dti and the DoD recognise AMD as the only defence industry representative association. • 92% of local defence material acquisition spend and 97% of the SADRI’s exports are attributable to AMD members. • SADRI is a significant and impactful contributor to the SA economic landscape (jobs, technology, exports, spin offs, etc.). • AMD is the organised voice of SADRI and point of entry for all communications with / enquiries to industry. TOWARDS A SUSTAINABLE SADRI

5. SADRI – DCAC RELATIONS & INTERACTIONS • Robust engagement (post CCW) between organised industry and DCAC culminating in a July 2007 SADRI Survey on arms control & industry wide workshops. • Time taken to issue permits; • DCAC resources; • Policy framework; and • Feedback & pre-marketing guidance. • Successful implementation of any envisaged improvement is acutely dependent on the implementation of the recommendations of the abovementioned survey and continued SADRI – DOD engagement. SADRI IS REGULATED & SUPPORTS THE ARMS CONTROL PROCESSES & RELATED LEGISLATION Page 18

6. SADRI RESPONSE TO NCAC AMENDMENT BILL As a reputable industry and responsible corporate citizens, the SADRI fully supports and complies with the provisions of the various legal instruments that codify the SA government’s intentions and obligations. Arms control is single most influential and important contributor to the SADRI’s efforts in the export (and import) of defence equipment. The SADRI broadly supports the proposed amendments as tabled, especially the provision for the Scrutiny Committee to have legal standing and the introduction of an internal industry compliance programme. SADRI – COMMITTED TO A SAFE, SECURE & DEVELOPING SOUTH AFRICA

7. SADRI RESPONSE TO NCAC AMENDMENT BILL, cont. • Clause 7 on section 9 of the Principal Act: in relation to (6) (a), on “designating any employee of the State as an inspector.” Employee should rather be replaced with ‘competent official”. • Clause 9 on section 12 of the Principal Act: : in relation to (2) “audits”... the reports to which the Auditor General has access should not be limited to financial records but should also include various registers, and processes as previously provided for in the principal act. • Clause 11 on section 14 of the Principal Act: in relation to (4) (a) a permit “must prescribe the quantity, type and value ...”. ‘Value’ needs to be defined properly to discriminate between cost, sales or intrinsic values. • Clause 11 on section 14 of the Principal Act: in relation to (4) (b) which reads that a permit “may prescribe the... controlled items in question must be transferred or destroyed domestically, exported...”. Does this imply that permission will also be granted for the importation of controlled items for the destruction in the RSA? IN SUPPORT OF PEACE AND SECURITY IN AFRICA

8. SADRI RESPONSE TO NCAC AMENDMENT BILL, cont. (2) • Clause 16 on section 22 of the Principal Act: the release of any information should be in line with existing regulations (e.g. PAIA & PAJA) but also should not contravene commercial / contractual confidentiality that such information is subject to. • Clause 17 on section 23 of the Principal Act: in relation to (3) (a) the envisaged annual report by the Committee to Parliament include the re-export, imports, destruction and change of ownership. • Clause 19 on the insertion of section 24A in the Principal Act: the envisaged fine should always be relative to / as a percentage of the offending entity’s defence related turnover (internal and exports combined). Further, the offending entity should be clearly defined to differentiate between a holding company and its subsidiary. • Clause 20 on the insertion of section 25A in the Principal Act: in relation to 25A (1) this provision should expressly exclude the sourcing of capital equipment except if it is in the replenishment of existing stock. IN SUPPORT OF A RESPONSIBLE DEFENCE INDUSTRY

9. SADRI RESPONSE TO NCAC AMENDMENT BILL, cont. (3) • Internal industry compliance programme; • Multiple export/import of controlled item; and • Delineation of and participation in requisite Regulations. • Regularity of Committee meetings: it is suggested that the schedule of the regular / monthly meetings of the Committee should not only be strictly adhered to but also made public with a standing method of communicating its outcome / decision. • Structural relationships: it is recommended that clarity be attained about the exact nature of the relationship between each of the following – Committee, Sub-Committees (how many and in which areas), Scrutiny Committee, Inspectorate and Secretariat. This includes their roles and responsibilities as well as their composition / constitution. DEFENDING DEMOCRATIC GOVERNANCE AND PARTICIPATION

10. SUMMARY & CLOSURE QUESTIONS!!! THE SADRI... READY TO SERVE!