Thu 4 Oct 18 // Industry Integrity

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

UPDATE: The final version of the Question and Model Answer document is available here. The accompanying methodology document is available here.

We appreciate the interest and involvement of all stakeholders who provided feedback on the draft Question and Model Answer document as part of the consultation period, including civil society, industry, experts, the investor community, government, and legal professionals.

The updated methodology includes a number of changes, many of which incorporate feedback received as part of the consultation. At the core of our approach remains the belief that there is an inherent value in information being available in the public domain as it contributes to setting common standards, encourages the sharing of best practice, and deters corrupt activity. Following the consultation, we have edited and refined questions to ensure that the level of transparency and disclosure needed for the highest score reflects the importance of the issue and the level of corruption risk it is aiming to address. These changes can be seen throughout the revised methodology; as an example, we rarely ask for the disclosure of full policy documents, but instead look for evidence that such a policy exists, through a company statement or otherwise, and we have revised our language accordingly. Where certain practical and / or legal considerations could not be mitigated at this point in time, we have removed several questions, in the hope that we can work towards greater standards of transparency over time.

Greater openness and transparency will not only help reduce corruption in the sector, it will build public trust, reassure investors, build constructive relationships with customers and improve the reputation of companies and the industry as a whole. Ultimately, the most responsible companies in the sector will benefit from adopting this approach and the clean business practices it promotes.

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 140 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 early 2020.

Following consultation with the industry, governments and civil society, the upcoming index will apply a revised methodology and will include some key differences from previous editions. The final Questionnaire and Model Answer document for the 2019 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?

The final 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 as part of the process to develop the new Model Answer document. To view an anonymised version of this feedback, click here.

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?

With the final version of the Questionnaire and Model Answer Document now published, research will begin in May 2019.

During the research phase we will share initial reports with the companies in question, giving you the chance to review these initial findings and suggest corrections. This will be an ongoing process, starting from May.

We aim to have the assessment phase of the index completed by November, and following an analysis of the overall results, aim to publish the full index in early 2020.

What do companies have to do next?

Companies still have the opportunity to make any improvements to their publicly available documents based on the final version of the Question and Model Answer document.

Research will begin in May 2019 and during this process companies will be given the chance to respond to initial findings and suggest any corrections or additional published evidence. We aim to complete this research phase by the end of 2019, with the publication of the results expected in early 2020.

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

If you work for a defence company selected for assessment on the DCI and you have not received information about the upcoming edition, please enter your contact details below:

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TI Defence & Security


Mon 11 Jun 18 // Industry Integrity

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:

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TI Defence & Security


 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

TI Defence & Security


Fri 19 Jan 18 // Industry Integrity

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

TI Defence & Security


Fri 22 Sep 17 // Industry Integrity

 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

TI Defence & Security


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

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TI Defence & Security


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Mon 20 Feb 17 // Industry Integrity

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.

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TI Defence & Security


Eva Anderson, our Senior Legal Officer and Barrister discusses issues around debarment

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TI Defence & Security


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

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TI Defence & Security


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Katherine Dixon, Director Defence and Security Programme, considers whether some defence companies are too important to be prosecuted

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