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Transparency International UK finds 33% of defence companies improved the transparency and quality of their anti-corruption programmes, but two-thirds don’t make the grade
Anti-corruption group calls on governments to require that contractors have ethics and anti-corruption programmes in place before bidding for defence work, to bring greater accountability
London, 27 April 2015 | New research by Transparency International UK today showed that 33% of companies studied in their Defence Companies Anti-Corruption Index 2015 have improved their ethics and anti-corruption programmes since 2012, but the industry as a whole still has a long way to go.
The Defence Companies Anti-Corruption Index 2015 measures the transparency and quality of ethics and anti-corruption programmes of 163 defence companies from 47 countries. Each company is ranked from band A (highest) to F (lowest) using publicly available information. Forty-two companies improved by one or more bands since 2012. A further third also showed some improvement.
“Corruption in defence affects us all. It is not just about commissions on sales—corruption can also directly threaten the lives of citizens and soldiers,” said Mark Pyman, Director of the Transparency International UK Defence and Security Programme. “Companies that have improved are taking the lead in bringing transparency to this often-secretive sector.”
Companies from Brazil, Finland, France, Germany, Israel, Italy, Japan, the Netherlands, Norway, South Korea, South Africa, Spain, Turkey, the UK and the US improved by one band or more.
Nearly a quarter of companies show no evidence of anti-corruption programmes at all
Katie Fish, author of the report, said that “there’s still a long way to go. Two-thirds of the defence contractors in this study, which includes 36 more companies than the 2012 analysis, show little evidence of having ethics and anti-corruption programmes in place. This includes companies from most of the major arms producing countries”.
Based on public information,
- Only eight companies have evidence of whistleblowing mechanisms that encourage reporting
- Just 13 companies conduct regular due diligence on agents
- Only three companies have evidence that they have detailed procedures to avoid corruption in offset contracts (also known as counter-trade), a high-risk area.
Governments should require anti-corruption programmes from bidding companies
Transparency International UK called for procurement chiefs in importing governments worldwide to demand robust anti-corruption standards of defence companies. “If government contracts are contingent on companies having an appropriate ethics and anti-corruption programme in place, it will create a step change towards greater accountability in the defence industry, and further the positive work being done by many defence companies today,” said Pyman.
Transparency International UK also called on governments to require that bidding companies publish their detailed offset obligations and performance assessments.
Investors too are part of the solution
“Corruption can mean major reputational and financial damage,” said Fish. “Investors should use this report to ask: do the companies we invest in have high-quality anti-corruption programmes in place?”
Notes for editors
163 defence companies from 47 countries were assessed using publicly available information relating to their ethics and anti-corruption programmes. TI-UK used a questionnaire of 41 indicators. Based on their assessment companies were placed in one of six bands, A to F. TI-UK also reviews internal company information. 63 companies provided internal information in 2015. TI-UK reviewed and discussed the internal documents provided with companies.
About the TI Defence & Security Programme (TI-DSP): TI-DSP works to build integrity and reduce corruption in defence and security establishments worldwide by supporting anti-corruption reforms in defence establishments and companies, and raising integrity in arms transfers. The programme is led by Transparency International UK (TI-UK) on behalf of the TI movement. For more information visit www.ti- defence.org.
Media advisory: comparing the ethics and anti-corruption programmes of the world’s largest defence companies
Transparency International UK’s Defence and Security Programme will release its new Defence Companies Anti-Corruption Index online on 27 April, 2015, at 00:01 BST.
Left to Right: Carlos Hernández (Director ASJ-TI Chapter and member of APJ), Omar Rivera (APJ- Coordinator), Manuel de Jesus Luna (Secretary General Ministry of Security), Julián Pacheco (Minister of Security), Félix Villanueva (National Police Director), Julieta Castellanos (Rector National Autonomous University of Honduras-Member of APJ), Luciana Torchiaro (TI-Secretariat Berlin).
23 March 2015 | Evan Trowbridge, La Asociación para una Sociedad más Justa (ASJ)
Read the report: Advocating for Peace, Justice and Security in Honduras
Since the establishment of the Alliance for Peace and Justice (APJ) in 2012, we have been encouraged by what the members of this diverse coalition have been able to achieve together. Through the combined participation of the more than 24 member organizations of the APJ, the Alliance has become an important voice for security and justice reform in Honduras.
In 2014, four new regional chapters of the APJ were opened, increasing the organisation’s ability to monitor and advocate on a regional basis across the country. A training programme developed by the APJ on the security and justice challenges facing Honduras was provided to more than 830 influential actors in the country. On top of this, the APJ has been savvy in increasing its reach through social media platforms and campaigns. As a result of the APJ’s work, a poll in Honduras found that 65 percent of the population was familiar with the APJ.
As the APJ’s recognition and local engagement has grown, so has its influence at the top levels of government. One example of this growth is that in 2013, the APJ pressured the Honduran national congress to hold leaders in the security and justice systems accountable for their performance. The leaders of a number of departments were subsequently investigated by Congress — including the heads of the Ministry of Security, the National Police, the Ministry of Defense, the Armed Forces, and the Attorney General’s Office — and it was found that “many operators of justice have conspired with criminals.” Following the investigations — and with the APJ’s prodding — Congress created an “Inspector’s Commission for the Attorney General’s Office,” which resulted in the firing of the State General Prosecutor, the Assistant Prosecutor, and the Minister of Security. The APJ’s strategy and participation in the investigations of prominent state officials can be considered an exemplary exercise of civil society participating in the democratic process in the context of corruption.
The APJ continues to play a prominent role in the media and in meetings with officials. Building on the work of the APJ and conversations with government officials, in October of 2014, one of the APJ’s founding members, the Association for a More Just Society (Transparency International’s chapter in Honduras) signed a major anti-corruption monitoring agreement with the Government of Honduras and Transparency International. And the Alliance continues to meet with and demand change from officials who are key to the APJ’s mission of reforming the country’s security and justice systems. As an example, just the week before the writing of this update, APJ met with the Honduran Minister of Security and the director of the National Police to express their united voice in the need to properly test and remove corrupt police officers, increase transparency and accountability of state security, and address’ the weaknesses in the criminal investigation system. The Honduran officials then invited the APJ to participate in the process of revising the foundational law for the National Police, so that it would respond to current context and challenges.
The APJ’s investigations also continue to undergird the alliance’s advocacy and citizen action work. For example, one study released in 2014 that found that only 4 percent of homicides in Honduras end in conviction. The study went on to examine the completion rates for separate stages of the investigative and judicial process. Studies like this are very helpful in pursuing reform in Honduras. This study also got international media attention.
In the context of the APJ’s work, good things are happening in Honduras, including improvements in the security and justice systems. Notably, the homicide rate has dropped from 87 per 100,000 in 2012 to 68 per 100,000 in 2014. Additionally, important corruption cases are being brought against government officials — most notably, Mario Zelaya Rojas, the ex-director of the social security institute, who was arrested in September 2014 and is accused of working with a network of co-conspirators to steal millions of dollars through his position. As improvements continue to take place in Honduras, the APJ will persist in its role of being a united voice for peace and justice.
Transparency International’s 2015 MSC panel: from left to right Vitali Klitschko, Carl Bildt, Sir Stewart Eldon, President Toomas Hendrik Ilves and Jean-Marie Guéhenno.
Tobias Hecht, 10 February 2015
Last year, Transparency International for the first time attended the Munich Security Conference (MSC) with the goal of getting corruption and it’s links to insecurity on the radar among policy makers. This year, we joined for the second time, and received support for our message from a well-known person: the Vice-President of the United States.
The main conference hall was again packed with decision-makers from all over the world when the sudden snapping of cameras announced Joseph Biden’s entrance. He focused his speech on three threats: “First, the attempt to undermine Ukrainian sovereignty; second, the use of corruption as an instrument to try to undermine governments; and, third, the use of energy as a tool of coercion.”
It’s worth citing at length the part of Biden’s speech that covered corruption:
“[A]s the story of Ukraine shows, there are multiple dimensions to European security. Hard military power of NATO, for sure, but also confronting corruption that's being used as a tool to undermine national sovereignty in other parts of Europe.
Corruption is a cancer. Those of you who watch Superman movies and [read] comic books, it is like kryptonite to the functioning of democracy. It siphons away resources. It destroys trust in government. It hollows out military readiness. And it affronts the dignity of your people.
But as President Putin and others engage in the use of corruption as a tool of coercion abroad, then fighting corruption is not just about good governance, it’s self-defense. It’s about sovereignty. Fighting corruption may not be easy, but it’s not a mystery how you go about doing it. It’s hard, but not a mystery -- transparency, disclosure, independent agencies, vetting police departments and judges, inspector generals in government agencies with the mandate and the freedom to investigate abuses.
Ukraine has taken bold steps toward a new Anti-Corruption Bureau, and it’s passed legislation to reform the Prosecutor General’s office. It has to be implemented now.”
Biden’s right on message: corruption is a dangerous threat to security and peace.
But what can be done about it?
Transparency International held a panel discussion at the MSC on “Tackling state fragility and failure: the corruption dimension.” The panel was made up of the President of Estonia, Toomas Hendrik Ilves, former Swedish Prime and Foreign Minister, Carl Bildt, the Mayor of Kiev, Vitali Klitschko, and the President of the International Crisis Group, Jean-Marie Guéhenno.
This event was moderated by Sir Stewart Eldon, former UK ambassador to NATO and an advisor to the Defence and Security Programme of Transparency UK. He summarized the outcomes of the discussion:
- The problem of corruption is serious and urgent. It is now part of the security constellation – that message came out across the conference. We should not forget the role of the police in the security sector, who are often more closely in touch with the population than the defence forces.
- Corruption is not a “poor country problem.” The EU needs to look again at its regulations and their implementation.
- Learning from one another is a good way for improving security in a corruption context. Ukraine, for example, can learn lessons from Georgia’s experience of addressing corruption.
- Finally, there is a lot of material on e-governance available. Moving away from old fashioned systems into more modern techniques can increase transparency and accountability.
Corruption is a threat to stability and peace, and we need “a more comprehensive strategic approach”, as Edda Müller, Chair of Transparency Germany, wrote in The Security Times. Let’s hope that our new policy paper, Corruption threats to Stabilisation Missions and Defence Capacity Building: Establishing a better policy framework, helps understand the issue further and – above all – improve the accountability of international assistance for and in unstable environments.
Photo: US Army Africa / Flickr.
In the Corruption Perceptions Index 2014, a ranking of perceived corruption in the public institutions of 176 countries published today by Transparency International, a familiar list of names scored lowest: Iraq, South Sudan, Afghanistan, Sudan, North Korea and Somalia. Five of those six are failed or conflict states that receive military aid packages and security assistance. But unaccountable, opaque security assistance can do more harm than good. Donor states and recipient countries need to do more to make such assistance more accountable, and therefore more effective.
Corruption and instability go hand in hand. Instability breaks down the rule of law, creating opportunities for corruption. Corruption also fuels instability, sparking public unrest and competition over the spoils. Together, they destroy the legitimacy of the state and the fabric of society.
Because failed and failing states pose threats beyond their borders, other states often provide ‘security assistance’: money to build up the local security sector in these countries. The theory is that through investments in the military and police, security will improve.
But in practice, the pattern is often different. Money has unintended consequences, and this is even more true in places rife with corruption. If accountability for the assistance is poor, then the money can fuel corruption directly. Military aid programme are also at risk of embedding instability or encouraging conflict.
Why is this the case?
- Security assistance often ends up in ‘black budgets.’ According to Africa expert and Director of the World Peace Foundation Alex de Waal, security assistance can fall into secret government accounts shielded from the public and oversight bodies, creating a major risk of corruption and outright theft. In Uganda, security assistance paid for the salaries of thousands of “ghost soldiers” that did not really exist, their salaries instead going to a political slush fund.
- Failed or failing states may use the military aid to reinforce their hold on power. Instead of using the strengthened security forces to target the real threats to peace, those in power will often use security assistance to undermine political opponents and crack down on dissent, exacerbating local conflicts. In Iraq, former Shi’ite prime minister Nouri al-Maliki was said to employ security forces greatly strengthened by security assistance to crack down on dissenting movements within the Sunni minority during his tenure.
- Security assistance creates a perverse incentive. Military aid will decrease once the security situation improves, so it is not in the interest of those in power to provide stability. During his reign, Yemen’s former president Ali Abdullah Saleh was accused of having encouraged al-Qaeda and other militants in order to ensure the continuity of military aid that went to his allies in the defence and security establishment came without any of the accountability requirements of official development aid.
But progress in countries rife with corruption and instability is possible. In fact, despite being near the bottom, Afghanistan is one of the biggest improvers of the year, rising four points.
The question, then, is how accountability mechanisms can be put in place to make security assistance a means to improve stability and also encourage accountability—not to exacerbate corruption. It is clear that not only the states scoring low on the CPI need to start taking corruption seriously if security aid is going to have any benefit, but also those that provide security assistance to these countries. Donor states need to integrate measures to address corruption threats when they plan and provide security assistance. Donor states also need to be more open about how much money they’re spending, and on what.
We're delighted that Katherine Dixon will be joining us as our new Programme Director in the spring. We sat down with her to discuss her new role and her vision for the Defence and Security Programme in the years ahead.
What drew you to the position?
"Moving to Transparency International feels like a natural step.
The tendency in foreign policy circles is to view corruption as an unfortunate by-product of a failing or undemocratic state - more a symptom than a root cause of instability. TI’s work forced me to look at the big foreign policy challenges I’d worked on in government through an entirely different lens.
Corruption distorts the motivations of those who hold power. And when governments cease to act in the interests of those they pretend to serve, it’s easy to understand how people become drawn to those outside the system who do listen and do seem to care - however radical the ideology. This of course has been the story of the Taliban in Afghanistan and of ISIS in Iraq. But it’s also the underlying cause of the revolutions in Ukraine, the Arab Spring, and why the Chinese leadership is looking so understandably nervous."
Do you have any priorities for when you take the reins at the DSP?
"There’s a huge amount to build on. I’d definitely like to see the Defence and Security Programme become the leading centre of excellence for building anti-corruption systems into the defence and security establishments of post conflict states.
But corruption in the defence and security institutions affects more than just internal stability. Governments which are accountable to their citizens and motivated in the national interest are far more likely to generate predictable and cooperative relations with their neighbours, and are far likely more to contribute to the development of a just and stable international system. So I think the next natural step is to use the TI-DSP Government Defence Anti-Corruption Index to apply a little more pressure on some developed and emerging economies to raise standards."
You’ve moved from a position in government to a civil society organisation- a big change. What do you think will be the biggest challenge…and/or what are you looking forward to?
"Clearly I’ll need to get used to influencing from outside the room.
But it’s also liberating to escape the endless crises that hit the Foreign Secretary’s desk. I’m looking forward to having a little more autonomy, the freedom to focus on longer term challenges, and to rediscovering my own voice."
You have a background in counter-proliferation. Do you see a link between counter-proliferation and anti-corruption work?
"Definitely. International arms sales, funded by the proceeds of corruption, have helped many a shady regime maintain a grip of power. And TI’s Defence and Security Programme can take no small credit for ensuring this issue has been recognised in the International Arms Trade Treaty.
Conversely, most cases of nuclear proliferation over the last 40 or 50 years have involved some sort of corruption. It’s probably fair say that corruption is, by definition, a necessary component in the illicit transfer of sensitive technology.
TI as a movement has been exploring a more assertive approach, including a campaign to Unmask the Corrupt, while balancing this with our traditional approach of engaging with governments and companies. Do you think there might be merit in adopting this approach into our defence & security programme?
Yes – though it depends what we’re trying to achieve. Where developed states are failing to take serious action to root out corruption from within their defence and security establishments, civil society has a vital role in ensuring governments are held to account. But this kind of approach is less relevant when we’re working alongside aid programmes to build capacity in third countries."
You’re a woman in a leadership position in a field (defence & security) often dominated by men. Do you have any thoughts on how women can succeed in leadership positions, and be supported by their organisations?
"For me, leadership involves some combination of good ideas or vision and the ability to inspire confidence. Some people in this world do seem to have a distinct head start when it comes to the second part of the equation. They just walk into the room without appearing to question for one moment their right to be there, whether people will listen to them or take what they have to say seriously.
I’ve certainly never felt that way. But the one thing that’s always stopped this from really mattering is that I’ve always ended up caring so much about whatever I'm dedicating my time to that others’ biases towards me, conscious or otherwise, hardly seem relevant. I just end up completely focussed on what I’m trying to achieve or persuade someone of. So I think the answer for me has always been to be very serious about what I'm doing."
Do you think it's possible to discuss corruption with regimes in countries where there is a high prevalence of corruption?
"Yes. I’m fundamentally an optimist about human nature. I’m sure for some people it can be just as frustrating and soul destroying working within a corrupt system, as it is for those observing from the outside. Many would-be reformers can see the injustices but feel powerless to effect change. They might face a choice: compromise their integrity in the hope of rising to a position of influence, or keep their integrity but remain powerless. So the challenge has to be finding the right people at the right time, to understand the unique system of constraints in which they are operating and to support these individuals to take the often brave and long path towards reform."
What kind of impact do you think that a relatively small NGO can have on such a difficult problem?
"Transparency International’s record speaks for itself – a small group of highly capable and motivated individuals have placed corruption squarely on the global political agenda. TI has created internationally recognised indices, set international standards, and pushed many national governments into enacting some pretty bold legislation. As policy makers become increasingly trapped in the 24hr news cycle, a relatively small NGO with talented people, and which remains focussed in what it does, seems like the very best place to have impact."
This article was originally published in the opinion pages of the New York Times on 7 October 2014. It has been republished below with permission. The original article can be found here.
Aleksandr Lapko is a senior specialist-assistant in the NATO Liaison Office in Ukraine. He wrote the following article on wartime corruption in Ukraine while seconded with TI-UK's Defence and Security Programme.
This summer I received an official letter informing me that I had been called up for service in the Ukrainian Army, and that in a few weeks I would be deployed to the east, where our soldiers are fighting Russian-backed separatists.
I care deeply about my country and I want to defend it. But I was facing a dilemma: Should I go to war knowing that I will have to pay more than $2,000 out of my own pocket to get the military equipment that could save my life because official corruption has left the Ministry of Defense without enough adequate supplies to issue to new recruits? Or should I pay a $2,000 bribe to obtain papers falsely testifying that I am medically unfit and should thus be taken off the conscript list?
I’ve always been deeply opposed to corruption, a major problem in my country, not least for our soldiers fighting the insurgency. My brother, who is serving in the east, wasn’t issued anything but an old-fashioned AK-47 when he joined the army. My family, like too many others, had to spend their own money to buy what he needed: We found a secondhand NATO uniform, body armor, a helmet, a gun sight for his weapon, and kneepads and boots, all for roughly $2,400, including winter gear.
We were fortunate to have the money. The median monthly salary in Ukraine is about $260, which means that it’s impossible for the average family to equip their sons and brothers for war. The salary of a conscripted soldier varies from $185 to $417, depending on rank and specialty.
In times of peace, corruption hurts people indirectly. In times of war, corruption can be as deadly as a bullet.
Ukraine’s war with Russian-backed separatists came suddenly and caught the government unprepared. In Soviet times the military was relatively well equipped, but in the decades since that era ended our forces have deteriorated as defense spending has shrunk. In recent times, the Defense Ministry’s processes of procurement have usually been kept secret — specifications for body armor, for example, aren’t published. This means that the government can get away with purchasing low-quality gear. And it usually does.
The Office of the General Prosecutor recently announced that it is bringing charges against several former Defense Ministry officials who purchased substandard body armor for the army. They are accused of spending $5.6 million to buy 17,080 pieces of low-quality body armor, which, according to reports in the Ukrainian media, have led to dozens of casualties and deaths during military operations in the east. The armor was apparently incapable of withstanding a direct hit from a bullet.
In August, President Petro O. Poroshenko fired two Defense Ministry procurement directors for corruption. According to media reports, they will be charged with misuse of public funds, but not with manslaughter.
New procurement procedures were supposed to prevent corrupt practices that put our soldiers at even greater risk. In 2013, the Defense Ministry said that its Department of Internal Audit and Financial Control was starting a special investigation on behalf of the army under the direction of the then-minister of defense, Pavlo Lebedyev. Previously, it was relatively easy for bureaucrats in the ministry to jeopardize the integrity of an investigation. But last June, representatives from the internal audit department were excluded from procurement committees and lost their mandate to check army contracts. The military’s official explanation was that in times of war the army leadership needs the authority and flexibility to conduct its own purchases in order to supply troops as quickly as possible.
My brother says he was recently told he should buy his own winter equipment because the army couldn’t guarantee supplies. If they’ve changed the procurement system to make it faster, why are they still telling soldiers that they must fend for themselves?
Tetyana Chornovil, a former journalist who was put in charge of the new government’s anticorruption policy, recently resigned her post. “There is no political will in Ukraine for an uncompromising, wide-scale war on corruption,” she said in a newspaper interview.
Ordinary people in Ukraine want to help their soldiers. They buy special bracelets to support the troops and donate their time to volunteer organizations. But there have been reports that some initiatives are simply get-rich-quick schemes. I’ve heard of one organization whose members collected donations from the public to buy military equipment for the troops, then actually tried to sell it to soldiers.
Corruption scandals occur in many countries. But in Ukraine, it is the system itself that is corrupt. It greases the wheels between all institutions, be they in the public or the private sector, volunteer movements, or even NGOs. Without this grease, nothing moves.
There is a will to reform among the Ukrainian people and among our more forward-looking political leaders, but the momentum has slowed since the protests that helped rid the nation of President Viktor F. Yanukovych last winter. Now, amid the tensions with Russia and the unrest in the east, many of us are worried that the fight against corruption will be lost. If reforms don’t come now, they probably will never come.
As part of my job as a liaison officer with NATO, I was recently sent to Britain to research anticorruption programs with Transparency International. Their work is very important, tackling transparency issues in military enterprises and governments around the globe. But for Ukraine, these efforts aren’t enough; to “cure” the country all layers of society need to be involved. The political will to fight must also be in place.
As of now, the fighting in the east has quieted down and I may not have to be deployed after all. In any case, if it flares up again and it turns out that I am called to service, I have decided not to bribe my way out of the army. After all, I am 33 years old, and fit and able to serve. But if I am called to fight for my country, I want to be properly equipped to be able to defend myself. If I put my life on the line, I want to know that my government is committed to giving me the best protection it can afford. At this moment, I cannot be so sure. And I fear for my brother, who is still at the front.
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