Category: Industry Integrity

Last week, Transparency International Defence & Security (TI-DS) attended the Fifth Annual Conference of States Parties (CSP5) to The Arms Trade Treaty (ATT), where delegations of the 104 signatories gathered to review the status of the Treaty and set the agenda for the year ahead. 

Five years since the introduction of the Arms Trade Treaty, there are plenty of reasons for gloom. This year’s Conference focused on two topics in particular: diversion and gender-based violence. Despite being covered under the ATT – articles 7 and 11 respectively – states have been struggling to address these illicit arms flows and reduce gender-based violence. Any advances made by new states ratifying the treaty – most recently Canada and Botswana – have been countered by the lack of representation from some of the world’s largest arms exporters such as Russia, China and now the US, which withdrew its signature from the treaty.

Meanwhile transfers of weapons continue to increase, and implementation challenges are becoming obvious. However, at this point the question is not one of giving up, but rather one of what can we do to make the Treaty more effective?

The CSP is open to civil society, encouraging participation in side events and lively debates. Only one panel discussion was restricted to state signatories – out of 20 in total. While this shows the role and importance of civil society participation in the ATT process, more can be done to foster this cooperation during the rest of the year.

TI-DS has an important contribution to make to this movement. By working together with Transparency International’s national chapters and other local partners we can do more to support national adoption and implementation strategies.

What does that mean in practice? Here are five learnings from the CSP5 that point the way:

1. Provide the evidence-base for arms control decisions

When deciding whether to approve an arms export application, state licensing bodies must consider a wide range of factors about the importing country – from the internal security situation to regional stability and risk of diversion from the stated end-user. Most states will assess these factors through an in-depth risk assessment of the viability of the export, using both classified and open source information.

Research reports and studies conducted by civil society can provide valuable sources of information for states. TI’s Government Defence Anti-Corruption Index (GI) provides an analysis of the corruption risks within the defence establishments of 90 countries worldwide. Government export control agencies can use this data to consider the risk of corruption in importing countries to inform the likelihood of diversion or misuse of weapons.

2. Raise awareness of the ATT and its relevance to national governments

As organisations with a particular national, regional or thematic focus, civil society organisations (CSO) are well-placed to provide expert insight into the arms control issues facing a country. In states that have not yet adopted the ATT – or are working towards ratifying it – CSOs can work with government agencies, industry and think tanks to facilitate a national debate on the importance and benefits of compliance with the treaty. They can build coalitions of interested parties to work towards a common goal, as shown by the continued contribution made by the Control Arms Coalition.

Moreover, civil society – unlike governments, industry or think tanks – often have the grassroots networks and community buy-in needed to build pressure and hold states to account for their promises when it comes to international obligations such as the ATT.

3. Assist parliaments and governments in implementing the treaty

CSOs working on arms control issues are in general able to develop a broader knowledge base than parliamentarians and other actors whose day jobs only touch upon this complex topic. The potential for cooperation between the two was illustrated by an example presented at this year’s conference which highlighted the role of the Small Arms Survey NGO, who assisted Japan by conducting a gap analysis of its ATT implementation progress.

From giving evidence to a parliamentary committee to providing MPs with research to inform parliamentary questions, CSOs can work directly with concerned parliamentarians to maintain the political will and internal pressure needed to support proper implementation of the treaty.

4. Monitor ATT progress and violations

As third-party stakeholders, CSOs are often able to raise and address controversial topics.

CSOs working in-country may encounter evidence of a violation of treaty obligations and report it to the government. Many CSOs also have the ability and expertise to synthesise these cases into national and regional trends, thereby providing governments with a tool to develop mitigation strategies and improve their progress in implementing the ATT. 

By providing a solid evidence base with clear policy recommendations, CSOs can help states reflect on the progress they have made and highlight areas that need strengthening.

5. Achieve universalisation through improved reporting and transparency

The substantial differences in the way that states submit their ATT reporting obligations constitute a barrier to universalisation. Although 83 per cent of states used the reporting template, some are still submitted incomplete or in non-readable format or indeed in a completely different format that is difficult to consolidate. On top of this, 25 per cent of states failed to submit an annual report at all.

CSOs can work with national governments and industry to promote transparency and common reporting standards, which in turn allows for comparability and more effective implementation of treaty obligations.

The future of the ATT may be uncertain, but states can’t do it alone and nor should they. Civil society can help national governments bridge the gap between policy and practice by providing hands-on insight and analysis into arms control issues worldwide.

Relevant Links

Transparency International Defence & Security would like to announce the initial phase of the 2019 edition of the Defence Companies Anti-Corruption Index (DCI).

Update: Following a thorough review of the company feedback, we will now begin the assessments in May 2019 to account for company reporting periods.

What is the Defence Companies Anti-Corruption Index (DCI)?

The DCI sets standards for transparency, accountability and anti-corruption programmes in the defence sector. By analysing what companies are publicly committing to in terms of their openness, policies and procedures, we seek to drive reform in the sector, reducing corruption and its impact. The DCI will assess 145 of the world’s leading defence companies across 39 countries. The Index was first published in 2012 with a second edition in 2015, and the latest edition is set to be published in 2019.

The upcoming index will apply a revised methodology and will include some key differences from previous editions. The draft Questionnaire and Model Answer document can be found here.

The 2015 DCI can be found here.

How will the 2019 Index be different?

After a comprehensive review, the new DCI assessment has evolved and should be read alongside our recent report ‘Out of the Shadows: Promoting Openness and Accountability in the Global Defence Industry’ – which provides greater insight into the theory behind our methodology. Based on consultations with anti-corruption and defence experts, TI DS have identified ten key areas where higher anti-corruption standards and improved disclosure can reduce the opportunity for corruption.

In one the most significant changes to the methodology, TI DS will this year base the research only on what companies choose to make publicly available. The decision to exclude internal information from the evaluation reflects our increased focus on transparency, public disclosure of information, incident response and the practical implementation of anti-bribery and corruption programmes.

How have companies been selected?

Companies for the 2019 DCI have been selected on the basis that:

  • The company features in the 2016 edition of SIPRI’s Top 100 Arms-Producing and Military Services companies.
  • The company features in the 2016 edition of Defence Industry Weekly’s Top 100 defence companies.
  • The company is the largest national defence company headquartered in a country exporting at least £10 million, as identified by SIPRI.

To see the list of companies selected for assessment in 2019, click here.

How will data on companies be collected?

Our assessment of a company’s individual anti-bribery and corruption record is based entirely on publicly available information. In particular, we will review the company’s website, including any available reports, for evidence of robust anti-corruption systems, as well as any functioning hyperlinks to other relevant online materials. In reviewing your company’s materials, we will assess the completeness and accessibility of the information, in particular:

  • The amount of information a company publishes about its internal anti-corruption programmes, incident response systems and interactions with third parties;
  • Evidence that these systems are used by employees and made available to all employees;
  • Evidence that the company monitors and reviews its anti-bribery and corruption processes.

Researchers from TI DS will conduct assessments of each company’s public information starting in May 2019, giving companies an opportunity to make any alterations to their publicly available information before the research process begins. The initial results will be shared with your company, after which you will have the opportunity to review the initial findings and suggest any corrections. The final assessments will be published on our website.

Where can I find the assessment criteria?

A draft version of the 2019 Questionnaire and Model Answer document is available here. Companies, governments, and civil society alike were invited to provide feedback on the methodology. To view an anonymised version of this feedback, click here. 

We are currently reviewing this feedback and aim to publish a final version of the Question and Model Answer document by early February 2019.

Our recent report ‘Out of the Shadows: Promoting Openness and Accountability in the Global Defence Industry’ provides greater insight into the theory behind the changes to the 2019 methodology.

What is the timeline for the Index?

The draft questions and model answers for the 2019 assessments are now available at staging.clearhonestdesign.com/tids/dci.

We are currently reviewing the feedback received from companies, industry bodies and subject-matter experts and we will aim to publish a final version of the Question and Model Answer document early February 2019. Research will begin in May 2019 once companies have had some time to make improvements, should they wish to.

What do companies have to do next?

We are currently reviewing the feedback received from companies, industry bodies and subject-matter experts and we will aim to publish a final version of the Question and Model Answer document early February 2019. Research will begin in May 2019 once companies have had some time to make improvements, should they wish to.

Will we have an opportunity to give feedback on the methodology before the assessments start?

Yes – companies, industry groups and experts were able to provide feedback during a dedicated consultation period in November 2018. A document containing the entirety of this feedback in the form that it was submitted, with company names anonymised, is now available here.

Feedback is welcome from all users of the index including governments, civil society, journalists and companies.

Resources

View letter

Dear Director

Ensuring any enforcement action against Airbus meets fair justice standards

We are writing as concerned anti-corruption organisations that have seen the effect of corporate bribery on democracy, good governance, economic progress and security across the world.

We are aware of extensive media coverage about allegations of bribery involving Airbus. The allegations are egregious. They span over a decade and include at least 14 countries including Sri Lanka, Kazakhstan, Austria, Tunisia, India, Poland, China, Greece, Saudi Arabia, Turkey, Indonesia, Kuwait, Mauritius and Mali as well as implicating all business segments within Airbus, including aerospace and defence, commercial aerospace and helicopters. The media coverage has indicated that the SFO, PNF and DOJ are all investigating alleged wrongdoing. Other authorities around the world are also investigating these allegations, including in Austria, Kuwait, Poland and Sri Lanka.

We welcome the fact that the SFO and the PNF have set up a joint investigation team in this case with close coordination with the DOJ. The co-ordination of law enforcement activities in such cross-border and global alleged wrongdoing is essential. It helps to maximise use of law enforcement resources and ensure that investigators and prosecutors are aware of the full facts of potential wrongdoing when making enforcement decisions.

We are writing to ask you to ensure that any enforcement action against Airbus, whether a settlement or other form of action, meets standards that would ensure justice is achieved and that the harm caused by any wrongdoing is properly assessed and compensated for. We would encourage you to give careful consideration to the full range of enforcement options available, including prosecution. In particular, we ask you to ensure that: (more…)

6th June 2018, London – New allegations made by Corruption Watch U.K.  that British intermediaries took corrupt payments from an Italian defence company, to secure defence contracts in South Korea, must be fully examined by the UK’s  Serious Fraud Office and where wrong-doing is established prosecutions should follow.

Robert Barrington, Executive Director Transparency International UK, said:

“’These are strong and long standing allegations about significant crimes having been committed, and need to be properly examined by the authorities in the jurisdictions concerned, which means the Serious Fraud Office in the UK.  We also encourage UK MoD to fully consider the use of their procurement exclusion powers and whether the company should be temporarily suspended from MoD bidding while these matters are investigated. If wrongdoing is found to have occurred, the full weight of the law should be used against the individuals involved, any senior officers of the company who were complicit, and the company itself.”

“The use of third parties in defence deals has long presented a significant corruption risk and this case demonstrates the need for more consistent transparency requirements in export policies around the use of payment of agents.” 

Transparency International’s. “Licence to Bribe? Reducing corruption risks around the use of agents in defence procurement” highlighted the profound risks of using middlemen in defence deals and showed that 90% of companies assessed by TI, fail to provide evidence of regular due diligence over the use of agents.

***ENDS***

Contact:
Dominic Kavakeb
+44 20 3096 7695
+44 79 6456 0340
Dominic.kavakeb@transparency.org.uk

Relevant Links

 20th March 2018, London – The re-opening of corruption charges against former South African President  Jacob Zuma, relating to a 1999 arms deal, are a welcome step and should mark the beginning of justice finally being served, according to Transparency International Defence & Security.

Research from Corruption Watch UK into the scandal known as the ‘Arms Deal’ suggests billions of taxpayers money was squandered – at a time when the South African government claimed that there were insufficient funds to treat thousands of citizens for AIDS.

Andrew Watson, Head of Industry Integrity at Transparency International Defence & Security, said:

“We warmly welcome the news that Jacob Zuma may now finally face justice for his crimes. It’s a shame that these charges took him to leave office for a prosecution to take place – but it is encouraging that his crimes may now finally be catching up with him.”

“Jacob Zuma and the companies alleged to have paid bribes to him have escaped justice for many years. These charges must now finally shed some light on one of the largest defence corruption scandals ever seen and result in robust prison sentences for those found to have been involved.”

***ENDS***

Contact:

Dominic Kavakeb
020 3096 7695
079 6456 0340
dominic.kavakeb@transparency.org.uk

Relevant Links

19th January 2018, London – Commenting on an announcement by the Serious Fraud Office that it is investigating Chemring Group PLC, a British Defence Company, for corruption, money laundering and bribery, Andrew Watson, Head of Industry Integrity at Transparency International Defence and Security, said:

“It is disappointing to see another British defence company facing fresh allegations of systemic and widespread corruption, highlighting the very real challenges facing this unique sector.”

“Once again, intermediaries – long established as one of the highest corruption risks in defence commerce – are at the heart of these allegations.”

“Whilst it is encouraging that the company reportedly discovered the allegations themselves during an internal audit and that it was then self-reported to the SFO, we call for the company to fully cooperate with investigators and conduct an internal review of its anti-bribery procedures to discover what went wrong and why it wasn’t discovered before now. It’s vital that this investigation is thorough and perpetrators are brought to justice, no matter how high-up in the company they may be.”

Chemring scored a C in the Transparency Internationals most recent Defence Companies Anti-Corruption Index, meaning there is “moderate evidence” that they have anti-corruption measures.

Transparency International’s 2016 report “License to Bribe” identified the significant risks in the use of third parties and agents in arms deals, one area reported to be the subject of this investigation.

***ENDS***

Contact:

Dominic Kavakeb
020 3096 7695
079 6456 0340
dominic.kavakeb@transparency.org.uk

 23rd September 2017, London – Transparency International Defence and Security welcomes the pledge by Heckler & Koch to no longer sell arms to corrupt states, and calls on the wider defence industry to make similar commitments.

The German firm has announced that it will use Transparency International corruption assessments as one of three indicators to decide which states to sell weapons to, in what is believed to be an industry first. Heckler & Koch should now publicly announce the exact criteria of this move, as well as which countries this will apply to, ensuring full transparency and accountability.

Transparency International’s research has found that selling arms to corrupt states can perpetuate conflict and lead to deadly weapons falling into the wrong hands. This can fuel violent conflict and terrorism, with repercussions both domestically and internationally.

Transparency International’s most recent “Government Defence Anti-Corruption Index” found 70% of states assessed for risk of defence corruption are either at high, very high or critical risk. Defence spending is growing fastest in states at the highest risks of defence corruption with real implications for human suffering.

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

“If implemented fully, this is a welcome pledge from Heckler & Koch. This sort of due diligence should be the norm for defence companies. But it’s important that this commitment is more than just a PR exercise. The best way to ensure this is to provide full transparency over the criteria and which companies they will no longer sell to.” 

“It should be difficult for any responsible defence company or State to justify exporting to countries which don’t implement the minimum transparency and accountability mechanisms to achieve at least a D on TI’s defence anti-corruption index.  Introducing lethal weapons into unaccountable and corrupt environments is a recipe for disaster. Defence companies and the governments that license their exports have the power and responsibility to make a difference in these states and reduce human suffering; we encourage them to use it’.” 

***ENDS***

Contact:
Dominic Kavakeb
Dominic.kavakeb@transparency.org.uk
0044 20 3096 7695
0044 796 456 0340

 23rd September 2017, London – Transparency International Defence and Security welcomes the pledge by Heckler & Koch to no longer sell arms to corrupt states, and calls on the wider defence industry to make similar commitments.

The German firm has announced that it will use Transparency International corruption assessments as one of three indicators to decide which states to sell weapons to, in what is believed to be an industry first. Heckler & Koch should now publicly announce the exact criteria of this move, as well as which countries this will apply to, ensuring full transparency and accountability.

Transparency International’s research has found that selling arms to corrupt states can perpetuate conflict and lead to deadly weapons falling into the wrong hands. This can fuel violent conflict and terrorism, with repercussions both domestically and internationally.

Transparency International’s most recent “Government Defence Anti-Corruption Index” found 70% of states assessed for risk of defence corruption are either at high, very high or critical risk. Defence spending is growing fastest in states at the highest risks of defence corruption with real implications for human suffering.

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

“If implemented fully, this is a welcome pledge from Heckler & Koch. This sort of due diligence should be the norm for defence companies. But it’s important that this commitment is more than just a PR exercise. The best way to ensure this is to provide full transparency over the criteria and which companies they will no longer sell to.” 

“It should be difficult for any responsible defence company or State to justify exporting to countries which don’t implement the minimum transparency and accountability mechanisms to achieve at least a D on TI’s defence anti-corruption index.  Introducing lethal weapons into unaccountable and corrupt environments is a recipe for disaster. Defence companies and the governments that license their exports have the power and responsibility to make a difference in these states and reduce human suffering; we encourage them to use it’.” 

***ENDS***

Contact:
Dominic Kavakeb
Dominic.kavakeb@transparency.org.uk
0044 20 3096 7695
0044 796 456 0340

The world’s major arms exporters have a conflicted approach when it comes to dealing with what are effectively kleptocratic governments. (more…)

This blog was orginally published by New America and can be accessed here

These are banner times for corruption watchdogs pushing for transparency. From Congress’s recent repeal of the bi-partisan Lugar-Cardin provision—which would’ve required oil, gas, and mining companies registered with the SEC to disclose payments to foreign governments—to the ongoing controversy involving veteran intelligence officer Michael Flynn and Russia’s ambassador to the United States, transparency and security have never seemed more impossibly intertwined—or at stake. (more…)

Eva Anderson, our Senior Legal Officer and Barrister discusses issues around debarment (more…)

Following the Rolls-Royce DPA, Andy Watson, Head of Industry Integrity, asks who are the real victims in a big corruption case like this? (more…)