How to achieve due diligence in offset programmes

An opaque part of the defence industrial landscape, defence offset programmes pose a significant risk for corruption that is largely over-looked and poorly understood. Often unconnected to the main defence contract, offset contracts outline a set of additional investments in the country that the defence company agrees to make with the purchasing company’s government. For example, the Indian government’s recent $11 billion decision to purchase the Rafale fighter jet from Dassault Aviation brings with it an accompanying $6 billion offset contract. Our team has released a new report which examines current due diligence practices in offset programmes by defence companies and brokers. On the plus side, it finds that some defence companies have thorough and well-founded offset due diligence programmes. On the other hand, the majority of defence companies and their brokers and sub-contractors have a long way to go to move beyond a ‘box-ticking’ mindset.