Major failures in arms deal offsets according to a devastating internal audit report

The Minister of Trade and Industry, Rob Davies, has finally tabled a copy of a devastating internal audit report on the arms deal offsets in Parliament. This follows a four-month political battle to crowbar the report out of the Department of Trade and Industry. 

The final report, entitled Strategic Defence Packages Performance Review Report, together with a final audit report, entitled Final Internal Audit Report: NIPP Performance Review: Strategic Defence Package, makes devastating findings about the arms deal offsets.

The internal audit, which audited 40 of 121 arms deal offset projects found inter alia that: 

Some companies obtained more credits compared to the investments and sales created or caused by them; 

Whether economic growth, access to new markets, establishing new trading partners and technology transfers took place as a result of the arms deal offsets, could not be determined; 

The total number of jobs which were created, and whether the jobs were sustained or not sustained, could not be verified; and 

Documents were missing from the project files held by the Department of Trade and Industry.

The findings of the internal audit report are particularly devastating when it comes to job creation. One of the primary justifications for the arms deal was that it would create jobs. However, the internal audit finds:

Some arms deal offset projects did not include an obligation to deliver on job creation;

The actual contribution of some arms deal offset projects were not described in terms of sustaining existing jobs or creating new jobs;

Baseline employment figures were not provided at the beginning of some arms deal offset projects so as to be able to determine whether additional jobs were created; and

Evidence of jobs created, in some arms deal offset projects, was simply not collected.

In fact, of the 40 business plans audited, only 24 business plans included estimates of the number of jobs to be created.

I will, therefore, be requesting the Chairperson of the Portfolio Committee on Trade and Industry, Joanne Fubbs, to schedule a hearing on the findings of the internal audit report on arms deal offsets.

Statement issued by David Maynier MP, DA Shadow Minister of Defence & Military Veterans, February 12 2014

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