2nd October 2018, Kyiv – On Tuesday, October 2, the Independent Defence Anti-Corruption Committee presented its new report, Poor governance and corruption in Ukraine’s defence housing system: Risks and Recommendations, and called for systemic changes in how servicemen and women are housed. There are 47 thousand families of servicemen currently waiting for homes. According to a preliminary calculation by NAKO, under the current model, it would take more than 600 years to house them all.

NAKO identified ineffective management and corruption risks, including that a few individuals have the power to make decisions with few controls and little oversight. Interviewees reported that servicemen are required to pay bribes to get a place in the queue for houses, even as some are provided with multiple homes.

And poor oversight means that companies that fail to deliver on the buildings they’ve committed to are not held to account; in one instance, the director of a company that failed to build the homes it was contracted to was even put in the position of overseeing the body ensuring that military properties are built.

The report also identified that poor planning by the MOD leads to unbuilt homes and drained budgets, even as thousands wait for homes. In one building alone, researchers found that the Ministry paid more than $300,000 US dollars over what the Ministry of Regional Development estimated the cost should be.

NAKO Co-Chair James Wasserstrom stated: “It is high time for the MOD to find a realistic way to make good on unrealistic Soviet promises. This is going to require a major change that won’t be easy. It will require political courage to make decisions in the long-terms interests of Ukraine’s military, rather than sticking to commitments that the Ministry is unable to deliver.”

NAKOs New Committee Member, Former NATO Vice Chief fo Staff, SHAPE, LTG Michel Yekovleff, stressed the need for Ukraine to keep its Euro/Atlantic promises: “Being with the EU and NATO means following their principles and procedures”.

In terms of defence housing, it means that Ukraine is expected to follow the best examples of the Euroatlantic contries providing the decent housing to the servicemen in a transparent and non-prone to corruption way”.

NAKO recommends that the Ministry of Defence:

1. Abolish the housing queue. Instead of promising homes that the Ministry cannot deliver, it should move to a model of transparent, fair monetary compensation for personnel, which is not only more realistic, but also puts decision-making in the hands of service families.

2. Conduct an audit of existing homes and the queue of those waiting for homes. This can be used to make the Maino-Zhytlo software, which tracks the queue and available homes, more effective.

3. Adopt capability-based planning, so that housing projects that the MOD embarks on are based on the real needs of its troops.

NAKO conducted the research on housing corruption at the request of Defence Minister Poltorak. The Committee has offered to advise and support the Ministry on the implementation of the recommendations for systemic reform.

***ENDS***

Download NAKOs Research ‘Poor Governance and Corruption in Ukraine’s Defence Housing System: Risks and Recommendations’ here

NOTES TO THE EDITOR

The Independent Defence Anti-Corruption Committee (NAKO) aims to reduce corruption and increase accountability in the Ukrainian defence sector. It is a joint initiative of Transparency International Defence and Security (TI-DSP) and  Transparency International Україна (ТІ Ukraine). NAKO’s vision is that Ukraine’s defence and security sector that is accountable, efficient, and has a low level of corruption. Its mission is to minimize opportunities for corruption through strong research, effective advocacy, and increased public awareness, in order to strengthen the Ukrainian defence and security sector.

The Committee consists of six members: Editor in Chief of ‘Ukrayinska Pravda’ Sevgil Musaieva, Former Minister of Foreign Affairs of Ukraine, Former First Deputy Secretary Defence and Security Council of Ukraine Volodymyr Ogryzko, Chairman of Centre UA, co-initiator of Chesno Campaign Oleh Rybachuk, Chair of the OECD Working Group on Bribery and Former Anti-Corruption Commissioner in Slovenia Drago Kos, and anti-corruption expert and Former Head of Oversight of Public Utilities at the UN Mission in Kosovo James Wasserstrom. The committee is supported by a Secretariat in Kyiv, which is led by Olena Tregub.

TI Defence & Security


Nigeria: More spent on security votes per year than Army budget
Civil society groups call for scrapping of secretive security vote spending

28th May 2018, London/ Abuja – Ahead of the 2019 Presidential elections in Nigeria, Transparency International and the Civil Society Legislative Advocacy Center (CISLAC) are calling on candidates to commit to scrapping the unaccountable and secretive “security vote” spending – one of the most durable forms of corruption in Nigeria—saying that they fail to provide real security for citizens.

“Camouflaged Cash”, a new report launched today by the groups, estimates that security votes in Nigeria total around $670 million annually – more than the annual budget of the Nigerian Army. This amount dwarfs the US security assistance to Nigeria since 2012 and UK counter terrorism support promised from 2016-2020.

Security votes, used by successive governments since 1999, are opaque funds that are disbursed at the discretion of public officials, very often transacted in cash, without being subject to oversight or independent audit. In theory they are designed to cover unforeseen security needs but in reality many have become slush funds for corrupt officials.

As well as undermining Nigeria’s fight against corruption, the misuse of these funds is fuelling instability. By prioritising security vote spending, less funding is available for Nigerian forces to pay salaries or procure needed supplies, leaving them underequipped to fight Boko Haram. They also offer major potential sources of funding to tilt political campaigns, stoking tensions at a critical time.

Katherine Dixon, Director of Transparency International Defence & Security said:

“The security vote is one of the most durable forms of corruption operating in Nigeria today. Yet instead of addressing its many urgent threats, the ever-increasing use of security votes is providing corrupt officials with an easy-to-use and entirely hidden slush fund.”

“Corruption in the crucial sector of defence and security plays right into the hands of those who seek to sow the seeds of instability and terror. It leaves armed forces under-resourced in the fight against Boko Haram and feeds groups who may destabilize the elections.”

Auwal Musa Rafsanjani, Executive Director Civil Society Legislative Advocacy Center, said:

“We are calling on all candidates for the coming election to agree to phase out this secretive and dated form of spending. Growing insecurity at a time when security vote spending has increased shows that it serves no positive purpose in keeping Nigerian citizens safe. Any candidates serious about fighting corruption in Nigeria will recognise the need to urgently address the problem of security votes.”

“Ahead of our National Democracy Day a strong commitment from public officials against security votes would help the growing understanding that combatting corruption is a vital element of any serious democratic society.”

Transparency International Defence & Security and CISLAC recommends the Nigerian government:

  • Pass federal legislation outlawing security votes at all levels, to be accompanied by legislation specifying budgeting procedures and criteria for security expenditure.
  • Establish effective oversight structures to ensure existing spending is appropriate.
  • Educate its officials, security leaders and the general public about the risks of using security votes.
  • Support state governments to set up Security Trust Funds as a constructive first step to phasing out security votes.

Key stats and findings from Camouflaged Cash include:

  • $670 million spent on security votes per year
    • More than the annual budget of the Nigerian Army
    • More than the annual budget of the Nigerian Air Force and Navy combined
    • More than 70% of the annual budget of the Nigerian Police Force
    • More than nine times the US security assistance since 2012
    • More than 12 times the UK counterterrorism support for 2016 – 2020
  • 29 Nigerian states receive an average total of $580 million through security votes each year
  • $5 million – increase in security vote spending between 2016 and 2018
  • $15 billion – estimated amount stolen from Nigeria’s defence sector of by former military chiefs

 

***ENDS***

View the full report here.

Contact:
Dominic Kavakeb
+44 20 3096 7695
+44 79 6456 0340
Dominic.kavakeb@transparency.org.uk
Transparency International Defence and Security (TI-DS) works to reduce corruption in defence and security worldwide.

Civil Society Legislative Advocacy Centre (CISLAC) is a non-governmental, non-profit, advocacy, information sharing, research, and capacity building organisation. Its purpose is to strengthen the link between civil society and the legislature through advocacy and capacity building for civil society groups and policy makers on legislative processes and governance issues.

TI Defence & Security


On Saturday, 12 May, the state-owned defence company Ukroboronprom posted an updated tender for a consultant on the e-procurement platform Prozorro. Ukroboronprom is now bound to an independent financial audit in line with international standards. The move follows the re-establishing of the functioning Supervisory Board of Ukroboronprom and extensive input from the Independent Defence Anti-Corruption Committee (NAKO) together with international partners.

The previous version of the Statement of Work excluded a fully independent financial audit. The new edition of the tender includes three components: (1) assessment of corporate governance and strategic consulting of Ukroboronprom and its members in accordance with OECD standards; (2) legal due diligence and legal consulting of Ukroboronprom and its members; and (3) an independent financial audit of Ukroboronprom and its members in accordance with international standards.

NAKO provided recommendations relating to this independent financial audit as well as assessment of corporate governance and they were duly implemented by the Tendering Committee in the final version of the call for tender. NAKO will provide external monitoring of this procurement process.

Volodymyr Ohryzko, NAKO Co-Chair said:

A full and independent financial audit, conducted in accordance with international standards by a recognized auditing firm, will gain trust not only from the Ukrainian people, but also among Western partners and investors’.

The success of the audit depends on multiple factors including: a strict adherence to International Auditing Standards by the auditor; the auditor’s ability to access all necessary information, taking relevant laws on state secrecy into account; the auditor’s independence, impartiality, and; the implementation of audit recommendations.

Olena Tregub, NAKO Secretary General said:

“Ukroboronprom’s willingness to amend the Statement of Work though including the services of independent audit is a positive step which will open the company up to greater scrutiny. It is the first step towards transforming the company. NAKO is expecting to see reputable international auditing firms among the bidders,”

***ENDS***

The deadline for companies to bid is 18 June 2018.

More details can be found at: https://prozorro.gov.ua/tender/UA-2017-12-20-003453-c

TI Defence & Security


Tue 26 Dec 17 // Conflict & Insecurity

The Independent Defence Anti-Corruption Committee (NAKO) announced that it would withdraw from engagement with UkrOboronProm, due to the failure of the Government and Presidential Administration to make progress in establishing an independent Supervisory board.

The committee had hoped to support efforts to reform the state-owned enterprise, both by providing advisory services and by advising the Government and Presidential Administration on the steps needed to establish an independent and effective Supervisory board for the Company. Recommendations were provided to Deputy Head of the Presidential Administration Valeriy Kondratiuk, who committed to supporting their implementation.

Oleh Rybachuk, co-chair of NAKO, said:

We hoped we could contribute to reducing the high corruption risk that exists in UkrOboronProm today, and ensure that UkrOboronProm is overseen by an independent, effective board, so that the firm could do what it should: provide our troops with the equipment they need and use taxpayer funds wiselyUnfortunately, we do not see that this presidential administration has the political will for real change.

At the invitation of UkrOboronProm, NAKO has monitored UkrOboronProm’s procurement of a consulting firm to advise and support the implementation of governance reform. Without an independent Supervisory board in place, however, the NAKO committee determined that the procurement of a consultant would be out of line with Ukrainian legislation (Article 6 of the Law of Ukraine “On features of management of objects of state-owned property in the defence industry complex” requires Supervisory board sign-off on strategy, audit, and reorganisation of the Company). More importantly, the procurement of a consultant would have little chance of affecting substantive change.

The OECD Principles on Corporate Governance of State-Owned Enterprises represent good practice internationally on governance of state-owned enterprises. According to these principles, the government is responsible for establishing well-structured, merit-based and transparent board nomination processes in State-owned enterprises. These boards are required to provide strategic guidance and monitor management, and are ultimately accountable for the Company’s integrity and performance.

Oleh Rybachuk, co-chair of NAKO, also said:

Given the allegations surrounding senior political leaders’ relationship with UkrOboronProm, it is absolutely vital that the Supervisory board is genuinely independent, said Drago Kos, co-chair of the NAKO. In a time of war, the largest state-owned defence enterprise must meet the needs of the troops – [not political leaders.] The only way for this to happen is through a supervisory board that is independent and trusted by the Ukrainian public.

NAKO announced that it would work with others to develop concrete recommendations on how to put in place an independent Supervisory board in 2018, and offered their continued support to the government on their implementation.

Contacts:

Taras Yemchura
(098)910-24-86
tyemchura@transparency.org

The Independent Defence Anti-Corruption Committee (Nezalezhny Antikorrupciynii Komitet z pytan oborony, or “NAKO”) is a joint initiative established by Ukrainian activists, journalists and international experts to fight corruption in the Ukrainian defence sector. The NAKO is a national-international project of Transparency International Defence & Security and Transparency International Ukraine, and is supported by the Ministry of Foreign Affairs of the Netherlands.

TI Defence & Security


The illegal trade between government-controlled Ukraine and the occupied territories in Donbas is conducted systematically, facilitated by Ukrainian defense and security institutions, according to new research. The illegal trade undermines defence capacity, and damages Ukraine’s economy and reputation. And it is so lucrative that those involved have an interest in sustaining the conflict, potentially prolonging the war.

The research, Crossing the line: how the illegal trade with occupied Donbas has undermined defence integritywas completed by the Independent Defence Anti-Corruption Committee (NAKO), and is based on 40 interviews with ATO participants, security force representatives, civil society, judges, and residents of Donbas.

The government has taken steps to address the problem of illegal trade; in March 2017, the government banned the transport of all goods through the contact line except personal belongings and humanitarian aid. The government has also created “joint mobile groups” made up of servicemen and volunteers, and “fiscal groups,” of State Border Guard Service and State Fiscal Service officers. But these actions have not been effective in reducing the trade.

Olena Tregub, Secretary General of NAKO, said Tuesday:

“The illegal trade incentivizes conflict, and means that some profit as others suffer. When some servicemen collude with militants to facilitate trade, it has a huge impact on coordination between units and security institutions, the accuracy of our intelligence, the reputation of our forces, and has even caused the death of troops.”

The report describes 5 ways that goods are moved illegally across the contact line: 1) by car, through checkpoints 2)  through humanitarian logistics centers, initially organised to enable retail trade 3) through railway corridors, by using the double bottom of the wagons or in undeclared additional wagons 4) by paying defence and security forces to enable movement outside of formal checkpoints, in the “gray zone,” in 2015 the payment for crossing all the checkpoints could vary from 25,000- 120,000 UAH (US $930-4,450); 5) through a process known as “terminated transit,” in which goods headed for the occupied territories are falsely registered as destined for Russia; once in Russia, they enter the occupied territories through the uncontrolled parts of the Ukraine-Russia border.

According to the analysis, this lucrative trade will not be completely halted as long as the occupation continues. It finds that current efforts, including the blockade, have been ineffective in stopping the movement of goods. The report makes a series of recommendations, including immediate steps to mitigate the problem short-term, and long-term solutions.

Download the Report

TI Defence & Security


5th September, 2017, London – Corruption is perpetuating violent conflicts around the world. New research from Transparency International – Defence and Security found that fighting corruption is rarely a foreign policy priority, despite mounting evidence it’s a major 21st-century contributor to global insecurity.

“The Fifth Column”, published today, found that states most affected by corruption are very often victims of deep conflict. Seven of the ten lowest-scoring countries in Transparency International’s Corruption Perceptions Index were also amongst the ten least peaceful countries in the most recent Global Peace Index.

Corruption was found to be contributing to violent conflict in a number of ways, including:

  • Undermining public trust, which can lead to violent movements for regime change;
  • Driving the recruitment of extremists, who use corrupt governments as a rallying cry;
  • Enabling terrorist groups, who can exploit corrupt structures for their operations;
  • Facilitating proliferation of WMDs;
  • Undermining state sovereignty, when foreign governments use opaque networks of shell companies to hold whole political classes hostage;
  • Eroding state’s capabilities to respond to instability and violence when it occurs.

By failing to address these risks, governments are ignoring a major cause of conflict. Transparency International recommends corruption is treated as a serious foreign policy concern and that states should:

  • Address kleptocracy, or state capture, as a development, diplomatic and security issue, exerting political pressure on corrupt elites, supporting oversight institutions and focusing on improving governance in partner states.
  • Focus on defence governance and avoid treating it as a “special case” that can circumvent normal oversight processes.
  • Stop viewing corrupt autocrats as an alternative to instability and instead limit their influence through options such as financial sanctions, visa bans, and the withholding of international recognition.

Katherine Dixon, Director Transparency International Defence and Security, said:

“Its high time that states made corruption a top-tier foreign policy priority, as important as non-proliferation and counter terrorism efforts. Until they do that, efforts to end conflict, promote global peace and stability, will be falling short of the mark.”

“Corrupt regimes are unstable and dangerous, and supporting them is rarely the right choice for building stability either nationally or regionally. From Syria to Ukraine, corruption has fuelled conflicts, undermining the long-term future of those states and contributing to the loss of many lives.”

 

TI Defence & Security


On Thursday, Transparency International Senior Advisor Sir Ian Andrews, and Defence and Security Director Katherine Dixon facilitated a day of high level discussions with the leadership of the Nigerian Air Force. The aim was to identify the corruption risks which face the Nigerian armed forces, discuss the initiatives already taken, and to begin to develop mechanisms to address them.

Sessions included a full discussion of the challenges facing the Air Force including issues surrounding defence budget processes, personnel integrity, and procurement systems. TI facilitators presented lessons from international best practice, including the vital role of political leadership, a commitment to transparency, and external independent oversight mechanisms which had been crucial factors underpinning successful defence transformations in other context, such as Colombia.

The entire leadership of the Air Force was present or represented, including the Chief of Air Staff, Air Officers Commanding and Branch Chiefs.

Katherine Dixon, Director Transparency International Defence and Security, said:

“We welcome the positive participation of the Air Force. The purpose of the event was to create a forum for the leadership to discuss openly the corruption risks as they see them. The Nigerian Air Force outlined the steps they had taken to address these challenges and we strongly encouraged them to end the presumption towards secrecy and open these measures up to public scrutiny.”

Transparency International has outlined a number of recommendations for systemic reform of the Nigerian Defence sector including the development of unified anti-corruption strategy, extending public access defence and security information, and strengthening external oversight particularly over confidential procurements.

Contact:

Gavin Raymond
graymond@transparency.org
0044 7738 621 115

TI Defence & Security


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May 24 2017 | Kyiv

International security assistance to Ukraine is not always used effectively, according to new research on corruption risks in security assistance by the Independent Defence Anti-Corruption Committee. The report identifies improvements in how assistance is monitored, but calls for improved regulation and oversight of security assistance, and greater transparency of key strategic planning documents like the State Defense Order and defence budget. The report also called on donor countries to use international aid as a leverage  to push for systemic anti-corruption reform in the Ukrainian defense sector.

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Corruption in Nigerian defence sector benefitting Boko Haram

18th May, London – Deep-rooted corruption in the defence sector is crippling the Nigerian military in the fight against Boko Haram, according to a new report by Transparency International. To effectively combat Boko Haram, Nigeria’s international partners must build anti-corruption measures into all defence deals.   

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Increase transparency in the security sector to defeat corruption.

18th May, Abuja – An opaque and secretive security sector will jeopardize President Buhari’s ambitious anti-corruption drive and is derailing the fight against Boko Haram, according to a new report by Transparency International.

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