ARMSCOR, SA's state arms procurement agency, is likely to be reduced in size and responsibility a move which could see its function of marketing military equipment internationally being spun off Minister of Defence Mosioua Lekota said recently.

The move is part of a strategy to shift the state-owned arms industry to the ministry of public enterprises, enabling the defence ministry to concentrate on defence rather than promoting the arms industry, Lekota said.

Increasingly, SA will look to international strategic equity partners in its defence industries for the marketing of its wares. Although Jeff Radebe, the minister of public enterprises, has said equity partners would be ring-fenced from the state's arms procurement programme, Armscor could become the first casualty of the government's commitment to an accelerated privatisation process.

Armscor has found itself under fire this year from two defence companies that threatened to sue it, accusing the state agency of corruption. Quantam International Services threatened to sue for $312m after a deal for the purchase of nine C160 Transall aircraft collapsed.

CCII Systems threatened legal action after it was overtaken as the preferred bidder to supply a management system for four new corvette ships by a rival company it believes has links with defence ministry officials.

Armscor has been an adjunct to the ministry of defence. The Armscor Act is under review and proposals will be presented to a parliamentary committee.

Armscor, once notorious for its covert dealings during the apartheid era, has been reinventing itself since democratic elections brought the African National Congress to power.

While meeting the acquisition needs of the SA defence force and promoting the local defence industry, it has been at pains to declare itself a respectable organisation.

Armscor employs 1000 people, of whom about a third are scientists, engineers and technical staff.

Its activities include acquisition, international marketing, technology development, evaluation and the negotiating of countertrade agreements.

With acknowledgement to Nicol Degli Innocenti, James Lamont and Business Day.