The military spends billions of rand from a special account, but you won’t be told what it’s buying.
Last week, Minister of Finance Pravin Gordhan exempted three years of spending on the Special Defence Account (SDA) from part of the Public Finance Management Act, apparently to make sure the spending stays secret. The three years are from 2010/11 to 2012/13, and involves R13 billion.
The account is for buying weapons and equipment and for funding covert activities.
The Department of Defence would not comment to The Star, referring comment to the National Treasury, which said exemption was an accounting issue.
Treasury spokesman Jabulani Sikhakhane said the introduction in 2010 of new accounting practices meant the SDA would have had to publish separate financial statements, but the activities of its funds “are such that they cannot be disclosed” .
“The exemption allows the Department of Defence time to find a more appropriate solution to the problem,” said Sikhakhane.
“The SDA is not a slush fund. Its funding is appropriated in the Appropriation Act and the SDA is accountable to Parliament for the use of the funds. In addition, the SDA is subject to audit by the Auditor-General,” he said.
A-G reports on the account have not been tabled in Parliament for the past two years due to delays, said the A-G’s office.
The account was set up in terms of the Defence Special Account Act of 1974. The act is a leftover from the apartheid years.
The Department of Defence’s 2010/11 annual report said the account was “to acquire, procure and develop armament and technology”. The A-G has previously described the account as “expenditure and purchases incurred for special defence activities”.
According to the A-G, income is derived from interest received and proceeds from the sale of armament, and money allocated from the vote of the Department of Defence annually.
Budget documents indicate how much money goes into the account, but give only broad indications of what it’s for. It includes, but is not limited to, the spending on the arms deal, the Strategic Defence Procurement Programme. It’s not clear if the full amount is spent each year as, unlike most government accounts, the law allows unspent SDA funds to be rolled over each year.
Defence budgets show that in the seven years from 2008/9 to 2014/15, more than R43bn was allocated to the account. That includes nearly R19bn due to go in over the next three years.
During 2012/13, a R5.26bn deposit will include R2.3bn for landward defence and R1.8bn for air defence.
The transfers to the account are listed as “acquisition and upgrading of main weapon systems and technology”, except for R421 million for “executing defence intelligence activities”.
In 2008/09, at least 15 percent of the R8bn transferred to the account was for unspecified operating costs, about a third was for the arms deal but nearly half was unspecified other “procurement”.
MP David Maynier, the DA’s defence spokesman, has “serious reservations” about the account. He said money was channelled through it for “a wide variety of purposes, including capital acquisition projects, that should not, for the most part, be kept secret”.
He said it was used to hide money from Parliament, with about R1.3bn apparently “warehoused” in it “despite the Defence Department pleading poverty”.
Maynier said there was “absolutely no accounting to Parliament” on how the money was spent. “The only comfort is that the Auditor-General conducts an annual audit of the Special Defence Account,” he said.
“My research shows that between 1999 and 2009 nearly R73bn was channelled through the Special Defence Account,” he said, adding that less than 2 percent of that was for so-called sensitive projects.
The Star