DTI needs major policy overhaul to prevent sanctions busting by SA companies

The Minister of Trade and Industry, Rob Davies, should be complimented for ordering a forensic investigation into the provision of so-called letters of support by the Department of Trade and Industry (DTI) to 360 Aviation, a company doing business in possible violation of a United Nations arms embargo on Iran.

On 20 March 2012 the DTI's Deputy Director General: Trade and Industry South Africa, Pumla Ncapayi, commissioned a forensic investigation into letters of support provided by the trade and industry department to 360 Aviation.

This followed a report in the Sunday Times, published on 11 March 2012, which revealed inter alia that the DTI provided a company called 360 Aviation with three letters of support between 2008 and 2011 to do business in Iran.

One letter of support, dated 12 April 2011, which was signed by Riaan Le Roux, then Acting Deputy Director General: Trade and Industry South Africa, is of major concern since: The scope of the forensic investigation was limited to the provision of letters of support and did not extend to the allegations against Deputy President Kgalema Motlanthe's partner Gugu Mtshali.

The final report, entitled Final Forensic Report: Letters of Support to 360 Aviation, finds that Riaan Le Roux, who provided a letter of support to 360 Aviation on 12 April 2011, was "grossly negligent".

The report recommends that:

• Riaan Le Roux be subject to a disciplinary enquiry and be held accountable for bringing the DTI into disrepute and for possible reputational risk to South Africa;
• the Public Protector and the National Conventional Arms Control Committee (NCACC) should be informed about the outcome of the investigation; and
• a proper policy and standard operating procedure should be implemented in respect of so-called letters of support.

One cannot help thinking that Riaan Le Roux is being hung out to dry, since:

• no action will be taken against Victor Mathale, DTI's Director of Foreign Services Management, who recommended the letter of support be issued to 360 Aviation and interacted with Herman Moeketsi, who was an equity partner in 360 Aviation; 
• no action will be taken against Iqbal Meer Sharma, DTI's former Deputy Director General: Trade and Investment South Africa, who was responsible for issuing two letters of support to 360 Aviation, because he left the department in 2010; and
• the letters of support provided to 360 Aviation were not the only letters of support issued by the DTI to private companies doing business abroad.

The report also provides very worrying insights into the inner workings of the DTI.

There appears to be no proper control over the various divisions and sections within the DTI.

The DTI's Trade and Investment: South Africa division appears to have operated in isolation from the rest of the department.

The division provided letters of support to 360 Aviation:

• without consulting senior departmental officials or the Minister;
• without conducting a "due diligence' on the company; and
• without consulting the NCACC, despite the United Nations arms embargo on Iran.

Ironically, the division was bending over backwards to support 360 Aviation to do business in Iran at the very same time the department was closing its foreign economic office in Iran.

In the end, the letters of support risked drawing the DTI into what would have amounted to state-sponsored sanctions busting in Iran.

The report's recommendations do not go far enough. The report recommends that a policy and standard operating procedure should be put in place to deal with letters of support. However, the real problem within the DTI is not the letters of support, but how the DTI monitors trade with rogue regimes such as Iran. What is needed is a policy on how the DTI monitors trade with countries that have been placed under sanctions regimes, especially by the United Nations.

The DTI needs a major policy overhaul to prevent sanctions busting by South African companies.

The DA will therefore be writing to the Minister of Trade and Industry, Rob Davies, requesting him to:

• Extend the scope of the forensic investigation to include an investigation into all letters of support provided to private companies by the DTI between 2009 and 2012; and
• develop a departmental policy, not just on the provision of letters of support, but on how the DTI monitors trade with countries under sanctions regimes, especially arms embargoes put in place by the United Nations.

At a minimum there should be an obligation on the DTI to notify the NCACC of the export of any suspected "dual use goods" to countries under United Nations arms embargoes.

We cannot allow the DTI - or divisions and sections within the DTI - to become platforms for busting sanctions put in place against rogue regimes such as Iran.

Statement issued by David Maynier MP, DA Shadow Minister of Defence and Military Veterans, August 5 2012

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