Corruption has a dramatic impact on the operational effectiveness of the military forces. It means troops are often equipped with equipment ill-suited to their needs, as purchases are made according to how large the accompanying bribe is, and not according to real requirements. Corruption can fatally undermine security strategies. When procurement funds are artificially increased because of corruption and fraud, corruption can lead to high levels of unnecessary expenditure.  

There are myriad ways in which corruption harms the operational effectiveness of the armed forces. Corruption and poor procurement may lead to:

• Inadequate analysis to determine the needs of the armed forces.
• Inadequate integration of equipment into current and planned equipment and systems.
• Inadequate evaluation of candidate equipment before awarding the contract.
• Inadequate assessment of equipment’s through life-costs and value for money.
• Inadequate post-contract support.
• Inadequate interoperability.
• Inadequate consideration of long-term requirements.

Security and anti-terrorism

Corruption is a hindrance to effective security and anti-terrorism policies and procedures.

• Corruption problems in many border guard services ease the transport of illegal weapons, drugs, and people. Bribery and favours facilitate transport of goods and people that may pose a major security threat. 
• Intelligence may be misused for purposes like terrorism or organized crime; corruption in the intelligence sector poses a clear and strong danger to anti-terrorism activities and is a threat to information security. 
• Mechanisms of international export controls, such as through The Wassenaar Arrangement or The Australia Group, are endangered if the process is corrupt.

Corruption and the regional balance

An IMF report by Gupta et al (2000), "Military Spending and Corruption," suggested that there is a statistically significant positive association between military spending and corruption. Escalating military expenditure, artificially inflated by the incentive of commissions, is likely to provoke a response in neighbouring countries where there is existing tension. Corruption in the defence sector can therefore affect delicate regional and international balances and contribute to instability.

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