Defence audit reveals deep-rooted failures and accountability crisis - IOL

According to Carl Niehaus, this sobering audit exposes a defence sector plagued by failures and a worrying culture of impunity, threatening not just financial integrity but the country’s very sovereignty. Are we prepared to let our military fall into disarray?

Yesterday, 30 September 2026, the Portfolio Committee on Defence and Military Veterans sat through two briefings that should have ended any remaining pretense that the crisis in this portfolio is a matter of paperwork. The Auditor-General of South Africa tabled the 2025/26 audit outcomes, the material irregularities and the accountability failures across the Department of Defence, the Department of Military Veterans, Armscor, Denel and the Castle Control Board.

Later the same morning, the Minister's office offered this Committee what it called a briefing on the Regular Force Medical Continuation Fund. The first document described a force that has stopped accounting for the money it spends and stopped delivering the capabilities it exists to deliver. The second was not a briefing at all. It was a one-slide evasion, stamped Restricted, whose closing sentence the beneficiaries of that Fund already know to be untrue.

I said it in the Committee, and I say it again. These documents do not describe a department that is merely under strength. They describe a portfolio that has stopped accounting for the money it spends, and stopped delivering the capabilities it exists to deliver. Slide 5 of the Auditor-General's presentation, and the concluding remarks of the official who led that delegation, both said the same thing: the Secretary for Defence must reconfigure the accountability framework, because transparency and accountability have collapsed. An audit looks backwards. This Committee must also look forwards. A culture of non-accountability does not stay in last year's books. It infects the next contract.

The proof is already on the table. There is a request for an expression of interest for the replacement of automatic rifles. Under the findings the Auditor-General put before us yesterday, that process is already compromised. Information coming out of that RFI is that three hundred Kalashnikov AK-201 rifles have been purchased, paid for, and not yet delivered, in the most untransparent manner possible.

The company involved is Transworld. Its South African chief executive is Mrs Camellia Theron, a Bulgarian businesswoman married to a South African Afrikaner businessman whose own conduct warrants scrutiny. This is not a rumour I am prepared to leave in the corridor. I placed it on the record of the Portfolio Committee. If this culture is not broken now, this Committee, or a future one, will sit here in years to come and ask what went wrong with the rifle replacement, exactly as we now sit and ask what went wrong with the Strategic Defence Procurement Package, the arms deal, and with the tender for the hydrographic survey vessel SAS Nelson Mandela under Project Hotel. That contract became effective in December 2017.

Delivery was first promised for May 2021. By 2026 there is still no handover date, more than R2 billion has been spent, and the hull continues to sit unfinished in Durban. At the centre of it are the revolving-door shenanigans of the former Chief of Defence Materiel, Dr Mthobisi Clyde Zondi, who moved into executive leadership at the successful bidder, Southern African Shipyards, later Sandock Austral Shipyards, shortly after the award, and who now heads the South African Defence Group, and of so many others who have walked the same door. These issues will haunt us because we refuse to confront them in the present. The Auditor-General's call must be echoed, and acted on: the culture of accountability has to be addressed right now.

Five entities manage R63.28 billion. Ninety-five percent of that money sits under a qualified opinion or a disclaimer. The Department of Defence is qualified again, on the same old wounds, and has added new ones. Denel is in its ninth consecutive year of disclaimer. Armscor has sat on an unqualified opinion with findings for six years, the Castle Control Board for four, Military Veterans for two. The Auditor-General's own language for this pattern is "complacency in the yellow zone." Submission of financial statements by the legislated date remained at 100 percent. That is the one process metric that has not slipped. Everything that matters has.

Credit must be given where it is due, and only where it is due, not as an exercise in uncritical praise. Military Veterans moved from a qualification to an unqualified opinion with findings. Those findings remain serious. The Secretary for Defence post was filled after year-end, after the Auditor-General pressed the Minister and this Committee. We still need to hear from the Secretary exactly how he will break the culture I have described, including on the rifle RFI. A new Denel board has been appointed. Appointment is not delivery. Defence resolved the old qualification on compensation of employees.

Armscor and the Castle produced performance reports without significant material findings. Six unused dialysis machines at 2 Military Hospital are finally in use. That is the positive list. It is short. Four of last year's six recommendations remain unimplemented. Consequence management, the accountability framework, the technology-and-equipment strategy, and Denel's strategy revision did not move. A "Journey to Greatness" and a Defence Industry Lekgotla are not flying hours, sea hours or serviceable Gripens.

The qualifications that remain are not technical footnotes. Movable tangible capital assets are not at the locations the register records, are omitted from the register, or are recorded at the wrong values. Irregular expenditure is incomplete, because the controls cannot prevent, detect or disclose every case, and the understatement cannot even be quantified. Intelligence spending is still unauditable. New qualifications have been added on lease commitments and on food payments to commercialised messes. Of specialised military assets, 185,897 are unserviceable, the vast majority of them weapons. A further 207,801 are repairable, including Gripen and Hawk aircraft. Eighty-two percent of 395,410 specialised military assets are more than thirty years old. Flying hours, sea hours, the Border Safeguarding Optimisation Plan and the SADC Standby Force pledge were all missed. The Department failed half of its planned unclassified indicators. I have said this before, and I say it again now. An army that cannot fly, that cannot sail, and that cannot count its weapons is not a budget story. It is a sovereignty story.

Compensation of employees overspent by R3.78 billion, fifty percent worse than last year's R2.5 billion unauthorised overspend. That is not a technicality. It is a direct contravention of the law. This overspending is, in fact, criminal. Two truths have to be held together. A defence budget pinned near 0.7 percent of GDP, against the 2015 Defence Review requirement of 2 percent and the President's own aspiration of 1.5 percent, will produce this squeeze. And the Department has still not produced a binding, numbered force-rejuvenation plan that would stop the wage bill from cannibalising maintenance, flying hours, dockyard work and the Special Defence Account. Until both the fiscal ceiling and the force design are confronted, National Treasury will continue to use the overspend as the reason to refuse the recapitalisation the SANDF needs. Underfunding and impunity are not rival explanations. They are allies. They have worked together to bring this force to the brink of destruction.

The historic pile is the scandal. New irregular expenditure in the portfolio rose 47 percent to R425 million. Defence carries R16.43 billion in irregular expenditure that has not been investigated, and R492.6 million in fruitless and wasteful expenditure that has not been investigated. The reason is the same as last year: the continuation of a rotten, unaccountable and untransparent culture. The accountability framework does not allow the accounting officer to act against uniformed members. Boards of inquiry are instituted late, and when they sit they do not finish. Last year's recommendation that the Secretary for Defence reconfigure that framework is recorded as not implemented. A meeting in June produced a promise to look at a "hybrid" model. A promise is not a framework.

The roll of dishonour is specific. Compensation of employees above the Treasury ceiling: R10.13 billion since 2017/18. Project Thusano: R1.67 billion procured outside South African procurement law. The 2019 asset-management contract, not awarded to the highest-scoring bidder: R617 million, and also Material Irregularity 1, open since July 2019, with R250.56 million of loss prevented and consequence management against civilian and military command still not implemented. It sits with the Special Investigating Unit under a proclamation gazetted on 24 January 2025. Contract extensions beyond the statutory cap: R605 million. Project KGALA, in 2025/26 itself: R279 million, again without following South African procurement legislation. To that roll must be added Project Hotel and the SAS Nelson Mandela, and the revolving door walked by Dr Mthobisi Clyde Zondi. The same method is visible in the rifle RFI, in Transworld, in Mrs Camellia Theron, and in three hundred AK-201 rifles paid for and not yet delivered. Allegations of theft and fraud above R100,000 were not reported to the South African Police Service. That is not an audit technicality. It is a criminal omission.

Fifteen material irregularities are live. The estimated loss on eight quantified cases is R443.6 million. R250.6 million has been prevented, recovered or is in process. The outstanding balance is R198.1 million. Material Irregularity 2, lease payments for empty offices, a loss of R108.3 million, has sat with the Public Protector since October 2023 after a board of inquiry admitted the loss and held no official accountable. Material Irregularity 3 has sat with the Hawks since November 2021. On Material Irregularity 5 — unused equipment at 1 Military Hospital, a likely loss of R20.8 million — the Auditor-General has already issued remedial action and a directive, on 21 August 2025, to refer the matter to the State Attorney for an assessment of personal liability. The Department is still producing legal opinions that do not address the substance. Referrals to the SIU, the Hawks, the Public Protector and the environment department have become a parking lot for matters the accounting officer would not finish. That is the working definition of an accountability ecosystem that has failed.

Denel is the industrial base that is supposed to keep prime-mission equipment in the air, at sea and in the field. Thirty-four areas of its statements could not be audited. The Auditor-General's wording is unusually blunt: the disclaimer is symptomatic of long-standing and systemic deficiencies rooted in weak governance, not merely in weak bookkeeping. The 2023–25 turnaround has expired. It failed. The R3.4 billion bailout is nearly gone, used to pay legacy debt rather than to turn the entity around. Customer advances were used for purposes other than those intended. Liquidity, going concern and possible reckless trading are now openly flagged. A large share of major programmes routed through Armscor sit with Denel, many of them late, with money already spent and completion dates uncertain. Appointment of a board is not delivery.

Military Veterans achieved 45 percent of its targets. Houses, pensions, mortgage subsidies, skills programmes, bursaries and placements were missed. The subsidised public-transport benefit required by the Military Veterans Act was not even put in the annual performance plan, so it cannot be monitored. That is how a statutory right is quietly abolished: by omission. Machinery and tablets bought for skills programmes sit unused, and are themselves material irregularities. The internal audit that is supposed to catch this is hollowed out. At Defence it is 69 percent vacant, including the Head of Internal Audit, and it has no access to sensitive operations.

Then came the Regular Force Medical Continuation Fund. A soldier who enlisted was told that he or she would contribute every month, would not receive the medical subsidy paid to civil servants, and that in return the Republic would treat that soldier, the dependants, and if death came on duty the widow and the children, for life. That promise sits in the Defence Act, in Chapter XV of the General Regulations, and in the employment contract. It has been the law of this Force since 1964. It is not a charity. It cannot be classified away.

What did the Minister's one slide give this Committee? No rand figure. No funding percentage. No monthly shortfall. No number of lives. No list of unpaid claims. No date. Only the admission that the South African Military Health Service cannot deliver, that outsourcing has made the Fund unsustainable, that Treasury is being engaged, and that "a variety of options will be communicated once concluded." And then the lullaby: although there are financial difficulties, everyone entitled continues to receive all health-care benefits and services. That sentence is an outrage. It is not what retired soldiers, widows and dependents are reporting. The Minister has already told the other House that the March 2025 valuation funded this Fund at 3.5 percent, with a shortfall of R40 million every month. The hole has been put at some R2.4 billion.

The Fund has been selling its own assets since November 2023. Serving members' contributions are no longer invested for their retirement. They are being consumed. A members' work committee has said the Fund is no longer a going concern, and that from 1 November thousands of retirees, widows and orphans stand to lose essential care. The Fund's own Principal Officer told members in July that the position remains uncertain, and that Treasury funding would prevent disruption if secured. If secured. That is the real last sentence. Not "services continue."

Classifying this briefing was an abuse. The shortfall is already in a ministerial reply. The only institution from which the figures were withheld was the committee charged with oversight. I have asked for the actuarial valuation within seven days; for the number of unpaid, delayed and rejected claims since April 2023; for the dates and amounts of every engagement with Treasury; for the share of expenditure now going to private providers; and for a written guarantee, before 15 October, that no qualifying claim will go unpaid from 1 November. A Republic that will not honour the body of the soldier it used has no right to ask the next soldier to sign.

If there is not a hard intervention on accountability, this force will continue down the spiral of destruction. The Budgetary Review and Recommendation Report that follows yesterday's briefing cannot repeat last year's exhortations without dates, owners and consequences. The Minister must table a reconfigured accountability framework that allows the accounting officer to act against uniformed members. The R16.43 billion must be given a clearance plan with names and dates, and that plan must go to SCOPA. Every live material irregularity needs a 30-day tracker. The SIU, the Hawks and the Public Protector must be put on a single parliamentary clock.

The rifle RFI, Transworld, Mrs Camellia Theron and the three hundred AK-201 rifles paid for and not yet delivered must be investigated in the open, not managed in the dark, as must Project Hotel, the unfinished SAS Nelson Mandela, and the revolving door walked by Dr Mthobisi Clyde Zondi. Austerity does not award a contract to the wrong bidder. Austerity does not leave dialysis machines in boxes, pay rent on empty buildings, pay for the AK-201s and not yet deliver them, leave a hydrographic vessel to rust in Durban, or write a board of inquiry that fills a hundred volumes and finds no one responsible. Underfunding and impunity have worked together to bring the South African National Defence Force to the brink. That is no longer an audit finding. It is a danger to the sovereignty of the Republic.

** Ambassador Carl Niehaus is an EFF Member of Parliament, and the EFF's permanent representative on the Portfolio Committee on Defence and Military Veterans and the Joint Standing Committee on Defence.