Offsets in practice: The experience of South Africa

Paul Edward Holden

Abstract


Numerous countries require that defense manufacturers commit to substantial offsets when defense materiel is purchased. However, there is extremely limited data regarding the economic efficacy or rationality of offsets. Recent disclosures related to South Africa’s controversial 1999 “Arms Deal” about the economic performance of its sizeable offset obligations provides solid evidence that the manipulation of offset scoring systems allowed defense manufacturers to invest far less than originally contracted. The South African experience indicates that there are likely to be structural features inherent in all civilian offsets flowing from defense contracts that exert a downward pressure on the actual economic investments delivered by defense manufacturers.

Keywords


Offsets; economics; defense; South Africa; corruption

Full Text:

 Subscribers Only

References


[Arms Procurement Commission] Commission of Inquiry Into Allegations of Fraud, Corruption, Impropriety or Irregularity in the Strategic Defence Procurement Package. 2016. “Final Report: Volume 3.” Pretoria, South Africa: DoJandCD.

https://www.justice.gov.za/comm-sdpp/docs/20160624-gg40088_gon742-ArmsCommReport.pdf [accessed 10 December 2019]

Crawford-Browne, T. 2007. Eye on the Money: One Man’s Crusade Against Corruption. Johannesburg, South Africa: Umuzi.

Debevoise and Plimpton LLP. 2011. “Ferrostaal: Final Report, Compliance Investigation.” European Citizen’s Logos [Athens]. https://kassios.files.wordpress.com/2012/10/confidential-secret-report-findings-re-ferrostal-greek-gov-case-pribes1.pdf [accessed 3 August 2019]

Dunne, J.P. and G. Lamb. 2004. “Defence Industrial Participation: The Experience of South Africa,” pp. 284–298 in J. Brauer and P. Dunne, eds. Arms Trade and Economic Development: Theory Policy and Cases in Arms Trade Offsets. Oxford, U.K.: Routledge. https://doi.org/10.4324/9780203392300_chapter_19

Dunne, J.P., E. Nikolaidou and G. Lamb. 2019. “South Africa and its Defence Industry.” pp 547–570. in K. Hartley and J. Belin, eds. The Economics of the Global Defence Industry. Oxford, U.K.: Taylor and Francis. https://doi.org/10.4324/9780429466793-26

Erwin, A. 2014. “Witness Statement: Commission of Inquiry into Allegations of Fraud, Corruption, Impropriety or Irregularity in the Strategic Defence Procurement Package.” Author’s personal collection.

Feinstein, A. 2008. After the Party. Jeppestown, South Africa: Jonathan Ball.

Holden, P. 2008. The Arms Deal in Your Pocket. Jeppestown, South Africa: Jonathan Ball.

Holden, P. and A. Feinstein, A. 2017. “Joint Submission to the People’s Tribunal on Economic Crime.” Johannesburg: The People’s Tribunal on Economic Crime. https://corruptiontribunal.org.za/site/wp-content/uploads/2018/02/AD1-Joint-Submission-to-the-Peoples-Tribunal-Paul-Holden-and-Andrew-Feinstein-final.pdf [accessed 20 January 2020)

Holden, P. and Van Vuuren. 2011. The Devil in the Detail: How the Arms Deal Changed Everything. Jeppestown, South Africa: Jonathan Ball.

[IFBEC] International Forum on Business Ethical Conduct. 2016. “Offsets in the Aerospace and Defence Industry.” Amsterdam: Global Kinetics. http://www.global-kinetics.com/wp-content/uploads/2016/02/IFBEC-Offsets-Report.pdf [accessed 23 July 2018]

Jourdan, P. 2014. “Witness Statement.” Author’s Personal Collection.

Mlambo, Davis and Leeuw. 2019. “Judgment in Corruption Watch and Another v Arms Procurement Commission and Others.” Cape Town, South Africa: SAFLII. http://www.saflii.org/za/cases/ZAGPPHC/2019/351.html. [Accessed 12 December 2019]

South African Department of Defence. 1998. “South African Defence Review.” GCIS Document 201409. Pretoria, South Africa: DoD. https://www.gov.za/sites/default/files/gcis_document/201409/defence-review1998.pdf [accessed 10 April 2010]

South African Department of Justice. 2011. “Terms of Reference of the Commission of Inquiry into Allegations of Fraud, Corruption, Impropriety or Irregularity in the Strategic Defence Procurement Package (SDPP).” Document GG 34731, Notice R926. Pretoria, South Africa: The Arms Procurement Commission. https://www.justice.gov.za/comm-sdpp/docs/20111104-gg34731-r926-terms-comms.pdf [accessed 20 January 2012]

Taljaard, R. 2012. Up in Arms: Pursuing Accountability for the Arms Deal in Parliament. Johannesburg, South Africa: Jacana.




DOI: http://dx.doi.org/10.15355/epsj.15.1.20

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.