Category: Conflict & Insecurity

By Matthew Steadman, Project Officer – Conflict & Insecurity

 

2019 was a deeply concerning year for the Sahel. Attacks by extremist groups have increased five-fold in Mali, Niger and Burkina Faso since 2016, with the UN now describing the violence as “unprecedented”. The past year was the deadliest by far with more than 4,000 deaths reported. Niger lost 89 soldiers in a single attack by Islamic State in Changodar in January, whilst two ISGS attacks in Mali in November claimed the lives of 92 soldiers. In Burkina Faso alone, 1,800 people were killed in the past year due to extremist violence. The intensification of extremist activity in the Sahel threatens to engulf West African coastal states, as already weakened national defence and security forces come under increasing pressure. Much international coverage of the developing events has focussed on the operational aspect of the crisis, from the various armed groups operating in the region to the international response, spearheaded by France’s Operation BARKHANE but also including MINUSMA, the G5 Sahel, the United States and the EU. However, one aspect that has been regularly overlooked is the poor capacity of the region’s national defence forces to respond to security threats as a result of poor defence governance, corruption and weak institutions.

Corruption and conflict go hand in hand, with corruption often fuelling violence and subsequently flourishing in afflicted regions. Because of corruption and poor governance, defence and security actors are often seen not as legitimate providers of security, but as net contributors to the dynamics of conflict; with poor training, management and institutional support leading to a downward cycle in which it is the civilians that more than often feel the brunt – as has been seen in Burkina Faso, Nigeria and Mali. When security institutions are perceived as corrupt, public confidence in government erodes further. Fragile governments that are unable to respond to the needs of citizens can exacerbate existing grievances, heightening social tensions and hastening the onset of violence. Across the Sahel, armed groups have been able to entrench themselves first and foremost in those areas which have been neglected by weakened and corrupt central authorities, often by positioning themselves as providers of security, justice and basic services. In this way, it is crucial to view corruption not just as the consequence of conflict, but more often as its root cause and therefore a critical element for any attempt at resolution to address.

Against this backdrop, research by Transparency International – Defence & Security’s Government Defence Integrity Index (GDI), highlights the deficiencies in the safeguards which should provide protection against corruption in the defence sectors of Burkina Faso, Cote d’Ivoire, Ghana, Mali, Niger and Nigeria, increasing the likelihood of defence funds and capabilities being wasted due to mismanagement of human, material and financial resources. In doing so, the GDI outlines a number of key issues which need to be addressed in order to enhance security forces’ ability to respond to threats and protect local communities:

Reinforce parliamentary oversight

Despite most countries having formal independent oversight mechanisms for defence activities, policies and procurement, our research has found that these are often only partially implemented, easily circumvented and insufficiently resourced to carry out their mandates. The result, is defence sectors which are still largely the preserve of the ruling elite and shrouded in secrecy, raising concerns over the use of vital defence funds and the management of resources and assets.

Strengthen anti-corruption measures in personnel management and military operations

Personnel management systems are also vulnerable, with inadequate or non-existent whistleblowing protections and reporting mechanisms, unclear appointment, and promotion systems open to nepotism, and codes of conduct which fail to specifically mention corruption or enforce appropriate sanctions. Equally, despite many countries in the region being actively engaged in on-going counter insurgencies, there is no evidence of Mali, Niger, Burkina Faso or Nigeria having up to date doctrine which recognises corruption as a strategic threat to operations, meaning there is little if any appropriate training on the pitfalls associated with operating in corrupt environments and little appreciation of how soldiers’ conduct might exacerbate the violence they are trying to quell.

Increase transparency and external oversight of procurement processes

Perhaps most concerning of all is that corruption risks in defence procurement remain extremely high across the region. The procurement process is opaque and largely exempt from the checks and balances which regulate other areas of public procurement in countries like Mali and Niger for instance. Across the region, the effectiveness of audit and control mechanisms over the acquisition of military goods and services is heavily restricted by blanket secrecy clauses and over-classification of defence expenditure. This raises serious concerns over the utility, relevance and value for money of purchased equipment and increases the risk of that frontline troops will not have the resources required to deliver security.

Despite these structural vulnerabilities, international assistance in the region has been heavily focussed on security assistance rather than on improving the underlying structures that govern and manage defence and security in the states that make up the region. The 13^th January summit between French President Emmanuel Macron and the leaders of the G5 Sahel countries, was emblematic of this with the meeting focussed on reaffirming France’s military presence in the region and announcing the deployment of further troops, whilst side-lining the governance deficit which underlies so much of the crisis. Programmes have tended to focus on training and equipping military and police forces in Mali and Burkina Faso for instance, or improving strike capabilities by investing in US drone bases in Niger. The concern however, is that the impact of these efforts will be blunted without a more sustained engagement in addressing the more fundamental failings that lay at the hearty of the problem. Mali’s recent announcement of a recruitment drive for 10,000 new defence and security forces personnel for example, will only be effective if it is accompanied with improvements in the way these troops are trained, led, equipped and managed and if the political and financial processes which govern them are strengthened and corruption risks reduced.

A successful response, at the national, regional and international levels, to the violence cannot be just security focussed. Poor defence governance and corruption risks will continue to hamper national forces’ operations and will hinder the impact of international efforts which support them. A more comprehensive approach is needed which addresses the underlying corruption risks which permeate the region’s defence sectors.  Improving oversight, transparency and accountability is a critical step in securing a sustainable peace in the region and ensuring that defence and security apparatuses do what they should, which is to further the human security of populations that they should be serving.

January 14, 2020 – Sweeping reforms to controls on American arms sales abroad are increasing holes in checks to identify and curb corruption – measures that can also be used to assess whether sales may help or hurt efforts to address terrorist threats and attacks – according to new research by Transparency International Defense & Security.

Launched today, Holes in the Net assesses the current state of US arms export controls by examining corruption risk in three of the most prominent sales programs, which together authorized at least $125 billion in arms sales worldwide for fiscal year 2018.

Across all three different arms sales programs, which are managed by the Defense, State, and Commerce Departments, there is a clear gap in American efforts to assess critical, known corruption risk factors. This include the risks of corrupt practices – such as theft of defense resources, bribery, and promoting military leaders based on loyalty instead of merit – weakening partner military forces.

The United States is one of the biggest arms exporters to countries identified as facing ‘critical’ corruption risk in their defense sector, including Egypt, Jordan, Oman, Qatar, and Saudi Arabia, according to recent analysis by Transparency International – Defense & Security.

Steve Francis OBE, Director of Transparency International – Defense & Security, said:

“Given the corrosive effect corruption has on military effectiveness and legitimacy, it is deeply concerning to see that these reforms to American arms export controls have made it easier for practices like bribery and embezzlement to thrive.  In order to ensure American arms sales do not fuel corruption in countries like Egypt, Qatar, and Saudi Arabia, it is imperative to understand and mitigate the corruption risks associated with countries receiving US-made weapons before approving major arms deals.”

Of the three programs assessed in the report – Foreign Military Sale, Direct Commercial Sale, and the 600 Series – the 600 Series was identified as having the biggest gaps in its anti-corruption measures. Overseen by the Commerce Department, sales through this program do not require declarations on a series of major corruption risk areas, including on certain arms agents or brokers, political contributions, company subsidiaries and affiliates, and any defense offsets. These areas are common conduits used for bribery and political patronage.

More recently, the Trump administration has proposed moving many types of semi-automatic firearms and sniper rifles to Commerce Department oversight. The proposal calls for additional controls for firearms, but also reduces overall oversight of small and light weapons exports.

 Colby Goodman, Transparency International – Defense & Security consultant and author of the report, said:

“Over the past 30 years, America has established some of the strongest laws to prevent bribery and fraud by defense companies engaged in arms sales. However, defense companies selling arms through the 600 Series program no longer have to comply with key anti-corruption requirements. As a result, US officials will likely find it harder to identify and curb bribery and fraud in sales of arms overseen by the Commerce Department.”

The report analyzed five priority corruption risk factors for American arms sales programs: 1) Ill-defined and unlikely military justification; 2) Undisclosed or unfair promotions and salaries in recipient countries; 3) Under-scrutinized and illegitimate agents, brokers and consultants; 4) Ill-monitored and under-publicized defense offset contracts, and 5) Undisclosed, mismatched or secretive payments.

The report makes a series of policy recommendations that would help strengthen anti-corruption measures in these prominent arms sale programs, including:

• Creating a corruption risk framework for assessing arms sales through programs managed by the Defense, State, and Commerce Departments. These assessment frameworks must examine key risk factors identified in our report, including theft of defense resources and promoting military leaders based on loyalty instead of merits, among others.
• Strengthening defense company declarations and compliance systems for sales of arms overseen by the Commerce Department, including declarations of any defense company political contributions, marketing fees, commissions, defense offsets, and financiers and insurance brokers of arms – all clear conduits for corruption.
• Increasing transparency on arms sales and actions to combat arms trafficking overseen by the Defense, State, and Commerce Department. Critically, the Defense and State Departments need more details on defense offsets in order to properly review proposed arms sales. There is virtually no information on Commerce Department approved arms sales.
• Legislation requiring for firearms and associated munitions to remain categorized as munitions to ensure further relaxing of export controls do not adversely impact US national security or foreign policy objectives.

Notes to editors:

Interviews are available with the report author.

Holes in the Net is available to download here.

Saudi Arabia, a major importer of US-made arms, failed to defend against an attack on its oil facilities in September 2019. Reports have suggested that corrupt ‘coup-proofing’ measures designed to shield the ruling family likely contributed to the ineffective response.

Contact:

Harvey Gavin

harvey.gavin@transparency.org.uk

+44 (0)20 3096 7695

+44 (0)79 6456 0340

20th December, London – The complex web of murky pathways through which the American defense industry works to secure permission to export arms to repressive regimes in the Middle East has been laid bare in new research by Transparency International – Defence & Security.

A Mutual Extortion Racket: The Military Industrial Complex and US Foreign Policy reveals how defense industry players, elected officials, the defence bureaucracy, and governments in the Middle East – working through intermediaries such as lobbyists, think tanks, and public relations firms – are intertwined and serve one another’s interest, often at the expense of US foreign policy outcomes.

These mutually-beneficial relationships have contributed to a vicious cycle of conflict and human rights abuses across the Middle East and North Africa (MENA), including increased exports of arms and defence services to Saudi Arabia and the United Arab Emirates which began under the Obama administration and has ramped up under President Trump.

Steve Francis OBE, Director of Transparency International – Defense & Security said:

“In the midst of the unending war in Yemen and after the murder of journalist Jamal Khashoggi last year, questions have been asked over why American arms exports to places like Saudi Arabia and the UAE have not only continued, but accelerated. After examining the murky web of lobbying, campaign finance, revolving door employment, and sometimes even downright corruption, it is now clearer how these exports are allowed to continue, despite attempts by many in Congress to stem the flow.

“While much of the system that allows these exports to continue is riddled with a lack of transparency and oversight, there are some areas in which existing strengths can be amplified. We urge Congress and the Executive branch to adopt our recommendations and ensure that arms exports are better aligned with US foreign policy interests and the American defense industry no longer wields excessive influence over policymaking.”

 

The pathways which allow this ‘extortion racket’ to play out include:

• Controversial sweeteners bolted on to defence contracts known as ‘offsets’

Despite rarely making economic sense, these side deals account for US$3 to $7 billion in obligations every year – and the lack of transparency around offsets means they are a notorious conduit for corruption.  A series of leaked emails in 2017 revealed that American defence firms were indirectly funding advocacy campaigns around drones which were friendly to the Saudi and Emirati governments. Money from the US companies was paid directly into an Emirati development fund which was eventually routed to a US think tank who created the campaigns.

• Political campaign donations

‘Dark money’ groups such as the US Chamber of Commerce, the largest American business lobbying organization, are under no obligation to reveal their donors but can contribute to influence political campaigns, especially via so-called Super PACs. According to a defence lobbyist, the Chamber aims to move any discussion about US defense exports “straight down to dollars and jobs in a congressional district” to incentivise members of Congress not to take any steps that could impact arms sales.

• The so-called ‘revolving door’ between high-level jobs in government and the military and senior roles with defense companies or lobbying firms.

After leaving Congress, Republican Howard McKeon set up a lobbying firm which boasts its status as “the only firm led by a former Chairman of two full congressional Committees”. McKeon signed as a registered foreign agent for the Saudi government in 2016 soon after setting up his firm. During his tenure as Chairman of the House Armed Services Committee, $10 billion in military sales were approved to Saudi Arabia – a doubling of previous sales to the country.

Rarely is just one of the pathways identified in the report is used and they are often intertwined to magnify influence towards desired policy outcomes.

Simply limiting lobbying and campaign finance contributions is necessary but not enough to rebalance the egregious flaws of this influence system. Our policy recommendations include:

• Establish a ‘Defense Exports Czar’ on the National Security Council to oversee all aspects of security assistance, including defence exports, and assess whether exports align with larger US foreign policy goals.
• Legislate a ban on offset contracts between the American defence industry and foreign governments.
• Re-establish the State Department as the lead agency for all security assistance, including all defense exports, while Congress should demand more insight and transparency into these exports
• Require all contractors and sub-contractors to list their beneficial owners to ensure contract funds are not funnelled to those tied to corrupt politicians, insurgents, terrorists, warlords or criminal actors.
• Establish legislation to limit contributions to super PACs by the defense industry or its intermediaries and prevent anonymous donations; require defence firms to publicly disclose all donations or political activity over $10,000.

 

Notes to Editors:

The report is available to download here.

Transparency International’s newly-released Government Defence Integrity Index scores countries according to the risk of corruption in their defence institutions. Saudi Arabia was ranked F – indicating a critical risk – while the UAE was ranked E, indicating a very high risk.

The American arms industry is the largest in the world. In 2018, American companies were responsible for 57 percent of worldwide arms sales, totalling $226.6 billion.

The sector is also a major force in US manufacturing in employment. In 2017, 10 percent of the $2.22 trillion factory output went to produce weapons sold to the Defence department.

Between 2012 and 2015, the US exported 46 percent of all arms delivered to the Middle East. In 2016, 35 of the 57 arms sales proposed were to countries in the MENA region.

 

Contact:

Interviews are available with the report author.

Harvey Gavin

harvey.gavin@transparency.org.uk

+44 (0)20 3096 7695

++44 (0)79 6456 0340

By Steve Francis OBE, Director of Transparency International – Defence & Security

The Government Defence Integrity Index (GDI) is the first global analysis of corruption risks and the existence and enforcement of controls to manage that vulnerability in defence and security institutions, highlighting priority areas for improvement. Key to analysing results from the Index is understanding that the GDI measures corruption risk, not levels of corruption per se.

GDI data will be released in regional waves through 2020. Results from the most recent wave – the Middle East and North Africa – were published in November.

On the whole, the data paints a fairly bleak picture for the region. Tunisia leads the group with an overall grade of “D,” indicating a “high” degree of defence corruption risk, while the other 11 assessed countries received either an “E” or an “F” – signalling “very high” or “critical” levels of risk. Regional averages reflect a similar performance across the individual risk areas – political, financial, personnel, operations, and procurement.

With these findings in mind, what can the analysis of the GDI’s result teach us about protracted cases of armed conflict, political instability, and insecurity that seem to characterise the region?

1. In many cases, high defence corruption risk is symptomatic of wider governance issues.

The GDI’s political risk indicators and aggregated scores on anti-corruption themes examine broader issues of legislative oversight, public debate, access to budgetary information, and civil society activity – issues that don’t just impact the defence sector. Indeed, this area of the assessment highlights essential ingredients for any open and transparent government that engages constructively with its citizens. As most of the assessed MENA countries are governed by authoritarian regimes, we should not be too surprised then that these wider governance challenges also exist in the defence sector. Specifically, our data found a clear lack of external oversight, audit mechanisms, and scrutiny of defence institutions across the region.

Table: MENA region average scores for key political risk indicators and anti-corruption themes

Question	Indicator/Theme	Score	Grade
Q1	Legislative scrutiny of defence laws and policies	15	F
Q3	Defence policy debate	9	F
Q4	CSO engagement with defence and security institutions	15	F
Q6	Public debate of defence issues	23	E
Q13	Defence budget scrutiny	10	F
Q17	External Audit	8	F
Aggregate	Openness to civilian oversight	14	F
Aggregate	Oversight	14	F
Aggregate	Budgets	15	F
Aggregate	Transparency	15	F
Aggregate	Undue influence	19	E

 

2. Countries with the highest defence corruption risk are also significant arms importers.

Saudi Arabia, Egypt, and Algeria were three of the world’s top five arms importers from 2014-2018. All three received an “F” grade in the GDI, with Egypt and Algeria receiving the bottom two regional scores (6/100 and 8/100, respectively).

The region has gaps in export controls, with only Lebanon and Palestine having ratified the Arms Trade Treaty, in addition to related risks like a lack of regulation around lobbying in defence and virtually no transparency around defence spending.

Although major arms exporters to the region like the United States have rules against the transfer of arms to third parties, end-use monitoring is not always consistent or comprehensive. This is especially troubling given that top arms importers in the region are either directly involved in or are arming parties to the devastating conflicts in both Yemen and Libya.

3. Low-scoring countries also exhibit high corruption risk by blurring the line between business and defence.

While the region as a whole scored poorly on indicators relating to the beneficial ownership (47/100) and scrutiny of military-owned businesses (44/100), these risks are greatest in countries with extensive military-run industries and/or significant natural resources. In Egypt for example, the military owns lucrative businesses across industries ranging from food and agriculture to mining, but has few controls in place for regulating these ventures. In Algeria, a largely state-owned economy renowned for high levels of corruption and patronage, there are a range of potential implications now that the military has stepped in to fill the vacuum following the ousting of President Bouteflika in March 2019 following mass public unrest.

The Gulf monarchies offer an example of how defence and business can overlap at the level of the individual. In the assessment for Saudi Arabia, we found that members of the royal family who serve in senior military positions also have controlling or financial interests in businesses related to the country’s petroleum sector. In the UAE as well, our research found that Mohammed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, is also the Chairman of a company dealing in natural resources.

On the other end of the spectrum, the GDI found that in Morocco, Palestine, and Tunisia, defence and security institutions do not own businesses of any significant scale, thereby removing a significant source of corruption risk.

 

As the GDI data shows, the risk of defence corruption in the MENA region is a serious concern with the potential to exacerbate ongoing conflict and instability. However, robust tools like the GDI can help governments to identify gaps in safeguarding practices – the first step in a process towards reform – while supporting civil society and oversight actors in countries across the region in conducting evidence-based advocacy.

6 December, Niamey – Security and stability in Niger are threatened by high levels of corruption risk in its national defence sector, according to new research by Transparency International – Defence & Security.

Niger’s defence sector scores poorly in the 2020 Government Defence Integrity Index, which is today being launched in Niamey. Receiving a majority of E and F grades, indicating either a “very high” or “critical” risk of defence corruption, the analysis assesses corruption risk across five key areas: political, financial, operations, personnel and procurement.

But Niger’s overall score of 22/100 places it above the regional average of 18/100, with levels of corruption risk in the country’s political, financial and procurement categories lower than in the region, but higher in terms of personnel and operations.

Steve Francis, OBE, Director of Transparency International – Defence & Security, said:

“In recent years, Niger has become increasingly affected by the conflict and insecurity in neighbouring Mali, which has quickly spread across the Sahel. With Niger now a key member of the G5 Sahel Joint Force, contributing over a thousand troops to the UN peacekeeping mission in Mali and receiving increasing amounts of military and technical assistance from foreign donors, the country is on the frontline of the regional struggle against extremist groups.

“Given the empirical link between corruption and conflict and the corrosive effect of corruption on defence capabilities, it is essential for Niger to accelerate its efforts to improve the governance of the defence sector and strengthen civilian democratic oversight of the defence apparatus. We urge the Nigerien government to improve the access to defence information of legislative and oversight bodies and take steps towards improving transparency and external oversight in procurement processes. Building the integrity and effectiveness of Niger’s defence sector will enhance its ability to respond to multiplying regional security threats and bolster public trust in defence and security institutions.

“With high corruption risks across national defence sectors in West Africa, tools like our Government Defence Integrity Index are more important than ever. By highlighting areas where safeguards against corruption are weak or non-existent, campaigners on the ground and reform minded military leaders and politicians can use these results to push for real change. Taking action to improve transparency and closing the loopholes which allow corruption to thrive is a critical step in building effective and accountable defence and security forces.”

 

These findings come against a backdrop of rising insecurity in Niger and the Sahel more broadly. Attacks by extremist groups against civilians and Nigerien defence and security forces are rising, while the protracted conflicts in Mali and Libya are increasingly spilling across the border into Niger. Mounting instability in Burkina Faso, Northern Nigeria and the Lake Chad region are also threatening to seriously impact the security of populations along Niger’s southern border and are turning the landlocked nation into a critical base in the fight against violent extremism.

Despite recent promising government initiatives and reforms, attempts to improve defence governance in Niger are hindered by high levels of secrecy and defence exceptionalism, which severely limit oversight and control of defence institutions by parliament and audit mechanisms.

The capacity of the National Assembly to hold the government to account is hampered by a lack of technical expertise and limited access to information, whilst a general lack of engagement between the defence establishment and civil society further limits the scope of civilian democratic oversight.

Financial oversight is also curtailed by the lack of a detailed defence budget made available to the legislature. Even the parliamentary Defence and Security Commission is presented with only abbreviated information when it comes to spending on secret items and military intelligence, whilst audit mechanisms are limited in terms of capacity and access to information. This lack of oversight is mirrored in Niger’s defence procurement process, with many purchases excluded from normal public procurement procedures. Moreover, reports from the Inspector General, along with the military acquisition plan are strictly confidential, thereby hugely hindering external control.

Personnel management would be improved through a greater emphasis on addressing corruption, for instance through revamped Codes of Conduct and specific anti-corruption training which are currently lacking. Equally, the nomination and recruitment processes at higher levels are shrouded in secrecy, opening the door for nepotistic practices.

Finally, Niger’s defence sector scores very poorly in terms of operational risk, with its military doctrine lacking an appreciation of corruption as a strategic threat during deployments.

At a time of growing regional instability, Transparency International – Defence & Security urges the Nigerien government to consider heightening efforts to improve civilian democratic oversight of the defence sector and strengthening the integrity of the armed forces to better respond to the security threats with which it is faced.

 

Notes to editors:

The full, country-specific Government Defence Integrity Index (GDI) results for Niger and West Africa as a whole are available at https://ti-defence.org/gdi/

The GDI assesses the existence, effectiveness and enforcement of institutional and informal controls to manage the risk of corruption in defence and security institutions.

Our team of experts draws together evidence from a wide variety of sources and interviewees across 77 indicators to provide a detailed assessment of the integrity of national defence institutions, and awards a score for each country from A to F.

The GDI was previously known as the Government Defence Anti-Corruption Index (GI). The Index underwent a major update for the 2020 version, including changes to the methodology and scoring underpinning the project. This means overall country scores from this 2020 version cannot be accurately compared with country scores from previous iterations of the Index.

Subsequent GDI results will be released in 2020, covering Central and Eastern Europe and Latin America, G-20 countries, the Asia Pacific region, East and Southern Africa, and NATO+.

 

Contact:

Harvey Gavin

harvey.gavin@transparency.org.uk

+44 (0)20 3096 7695

++44 (0)79 6456 0340

November 19, London – Corruption is being harnessed by authoritarian regimes as a foreign policy tool, research by Transparency International – Defence & Security warns – and the West could be at risk unless action is taken to address vulnerabilities in key institutions.

Corrupt practices like bribery and embezzlement of public funds have traditionally been viewed as a means of personal enrichment for individuals and networks, but new research published today reveals how policymakers have overlooked a key issue: corruption can be weaponised to achieve foreign policy goals and could potentially become a tool of hybrid warfare.

Corruption as Statecraft details how ‘corruption with intent’ schemes have already been used as part of the foreign policy arsenal of authoritarian states like Russia. They are often based on a dependence in a strategic sector, such as energy exports or infrastructure investments.

Those dependencies, based on a real need and combined with opaque governance and economic arrangements, can enable cross-border schemes where money is funnelled to decision makers in one country with a view to ensuring foreign policy decisions favourable to another country.

Dr Karolina MacLachlan, Regional Programme Manager for Transparency International – Defence and Security, said:

“Typically practices like bribery, money laundering and embezzlement of state funds are used by a corrupt elite for economic gain, but ‘corruption with intent’ schemes are far more insidious. These strategies are not aimed at making money, but are instead focussed on corrupting decision makers and public institutions in other countries in the pursuit of foreign policy goals.

“The damage corruption causes to individuals, communities and entire countries is well documented – and the poorest in society are inevitably left to suffer the brunt of the impact. This indiscriminate ‘collateral damage’ is what needs to make policy makes pay attention.”

Corruption as a tool of foreign policy can be deployed anywhere there is opaque company and government contracting structures, bribery, lack of oversight, and loopholes in key regulations. This means Europe and the United States are both at risk.

The Parliamentary Assembly of the Council of Europe has already been targeted by a corruption with intent scheme – and its ethics watchdog initially failed to stop it. The European Parliament, unable to fully account for MEPs’ external employment and outside income, is also at risk.

Dr Karolina MacLachlan said:

“While it would be tempting to assume that this weaponising of corruption is only a threat to emerging democracies such as Ukraine or Armenia, our research also highlights a vulnerability at the heart of the Europe Union which malign actors have already exploited – and others that can be exploited in the future.

“Worryingly, there are vulnerabilities in European energy trade and infrastructure investment carried out as part of China’s trillion-dollar Belt and Road Initiative. Large-sale commitments made by a number of countries, alongside limited transparency in international contracts and with legal loopholes, limit countries’ room for manoeuvre and open them up to external pressures and corrupt schemes.

“Despite the warning signs, there is still time for policymakers to address these chinks in the armour. The link between corruption with intent and strategic dependence means that European countries and the US not only need to pay far more attention to their own vulnerabilities and treat corruption as the strategic threat it can be, but also reconsider how they can help other countries fight corruption. Anti-corruption programmes need to be joined with wider political and economic considerations to manage the dependence that corruption schemes can be based on.”

How ‘corruption with intent’ schemes can work:

1. There is a real or perceived need: infrastructure investment, energy, arms imports
2. The need is met by an entity from another country (government, state-owned enterprise, a private company linked to government)
3. The contracting and mode of implementation of the project(s) are opaque, involve intermediaries, are based on unfavourable terms, and create dependence. They are facilitated by local loopholes
4. Opacity is used to funnel money to elites in the recipient country to secure favourable foreign policy outcomes

 

Contact:

Harvey Gavin
harvey.gavin@transparency.org.uk
+44 (0)20 3096 7695
+44 (0)79 6456 0340

By Dr Karolina MacLachlan

States and corrupt elite are turning to corruption to achieve foreign policy goals and a way to carry out hybrid warfare.

This kind of corruption is not aimed at economic benefit: rather, it relies on a willingness to forgo economic gains in favour of increased influence, desired political outcomes, and an ability to spread political norms and practices.

If successful, the use of corruption within a foreign policy arsenal can enable elites in one country to hold whole political classes in other countries to ransom, to undermine government institutions and exert illegitimate influence in the target state, and sow insecurity and instability.

In their most dangerous and durable form, these ‘corruption as statecraft’ schemes are built on political and economic dependence, usually in key sectors such as energy, defence and military equipment or even infrastructure projects.

Russia’s attempts to shape the domestic and foreign policy decisions of Ukraine over the last two decades, for example, reportedly utilised corrupt schemes in the energy sector. These schemes capitalized on Ukraine’s dependence on Russia’s state-owned energy giant, Gazprom, for gas imports to strengthen and leverage corrupt networks in Ukraine to help achieve foreign policy goals. The fluctuations in gas prices, often orchestrated by Gazprom’s political masters; threats of supplies being held up; and the use of opaque, anonymously owned intermediaries between Gazprom and Ukrainian state-owned energy company Naftogaz to redirect profits to oligarchs and political parties enabled a combination of pressure and bribery that helped further Russia’s foreign policy interests.

Corruption can also be a tool of hybrid warfare, alongside disinformation and cyber-attacks. Electoral campaign contributions could be traded for political influence or promises of decisions favourable to individuals. For example, Former Lithuanian President Rolandas Paksas was accused of having received campaign financing from individuals suspected to be linked to Russian organised crime, in exchange for granting them Lithuanian citizenship and for divulging classified information on investigations into their business dealings. While Paksas was eventually cleared of the charges of divulging state secrets to his campaign contributors, similar schemes could be employed to undermine institutions managing crucial infrastructure or those responsible for deterring aggression and providing security.

‘Corruption as statecraft’ is hard to detect and difficult to prove because it is often intertwined with complex, opaque corruption and criminal networks, both in the state employing corruption and in the target state. Where governing elites have extensive links to organised crime and where the distinction between public and private is blurred, criminal networks can be harnessed by the state to exercise influence, thereby turning corruption into a weapon

The ‘Azerbaijani Laundromat’, a money-laundering scheme transferred a total of $2.9 billion USD from Azerbaijani companies and government departments through four UK-based shell companies. This money bankrolled both private enrichment and foreign policy schemes aimed at improving the country’s international reputation. Azerbaijani officials appear to have used funds passed through the ‘Laundromat’ to bribe members of the Parliamentary Assembly of the Council of Europe in order to water down official criticism of Azerbaijan’s human rights record; at the same time, top officials used it as a slush fund to pay for luxury goods and services.

Schemes like these also pose significant problems in mature democracies. Authoritarian, kleptocratic elites from across the globe use financial channels that enable opacity and anonymity, but also offer political stability and protection of the rule of law not only to hide and legitimise wealth, but to export their way of doing business.

Unless countered, practices ranging from the illegal (bribery and tax evasion) to the unethical (such as tax avoidance through offshore banking) will weaken institutions and laws across multiple states in which corrupt networks operate. Ultimately, the use of corruption to undermine national and international institutions threatens upon which many societies are based.

The links between corruption and insecurity have already been recognised in the US, with calls for Congress to take action to block financial flows which can not only undermine allies, but also influence the US political system. In the EU there has been even more progress in addressing the prevalence of anonymous companies and reporting financial flows, but verifying data, monitoring financial flows, and understanding their purpose pose ongoing challenges.

Only by understanding and addressing the strategic dependence that often underpins these schemes can we begin to attempt to dismantle them effectively. Even a robust anti-corruption effort will only have limited effects if it’s not combined with efforts to address the underlying issues. Whether it is a crucial resource such as energy, a key state asset such as defence and military power, or investment in important infrastructure projects, these dependencies have to be tackled if countries are to have a chance of dismantling the schemes that grow out of them, and to maintain independence and freedom of manoeuvre on the international scene.

This article is based on Corruption as Statecraft, a new report by Transparency International – Defence and Security, available here.

 

 

 

Bénédicte Aboul-Nasr is a Project Officer at Transparency International Defence and Security. She works on issues related to corruption, conflict, and insecurity in the Middle East and North Africa region, as well as on how corruption affects United Nations Peacekeeping.

This week, Member States are convening for the 74^th Session of General Assembly, during which they will discuss the general affairs of the United Nations. This will include a session focusing on a comprehensive review of peacekeeping operations.

Last September, the Security Council held its first meeting on corruption, underlying its relationship to global insecurity. Secretary-General António Guterres emphasised these links, noting that: ‘Regrettably, there is currently no coordinated strategy to gain the necessary leverage … to break the link between corruption and conflict’. The sentiments were echoed by the UK, calling corruption ‘an insidious plague’; and the Executive Director of our chapter in Venezuela made the same argument. And while not often discussed, links between corruption and the conflicts which the UN seeks to address with peacekeeping operations should be discussed.

There is no doubt that corruption breeds conflict and insecurity, as well as poverty and inequality. Six 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. Transparency International’s research has long highlighted that addressing corruption can help prevent and address the very conflicts the UN finds itself involved in.

The Secretary-General has praised peacekeeping for its instrumental role in supporting peace and security – all the while acknowledging shortcomings and promising to reform performance and accountability and the conduct of peacekeepers and peacekeeping operations throughout his ‘Action for Peacekeeping’ (‘A4P’) initiative. Whilst those fighting corruption around the world will welcome his strong words, newly implemented reforms and a persistent focus on the challenges operations face present an even better opportunity for the UN to do more to root out corruption within its ranks.

Corruption undermines the chances of mission success, particularly of complex UN peacekeeping missions in the most high-risk areas of the world. Where fuel supplies are sold off, for example, troop mobility is reduced; when soldiers have paid to become blue helmets instead of earning their post through merit, missions may lack the skills they need; and when a blind eye is turned to smuggling, it enriches combatants and fuels further conflict. Such misconduct also reduces public trust in the ability of intervention forces to secure the peace.

The increasing discussions around corruption and conflict are a welcome step to beginning to address the problem. But as is so often the case, taking serious action is harder. In order to make words a reality, the UN will need to address corruption within its own systems, and figure out how to deal with corrupt governments in the areas where peace operations are in place – in particular if leaders are more focused on self-enrichment than on the needs of the population or the fulfilment of a UN mandate.

A leaked staff survey of the Secretariat in December 2017 had depressing findings: 50% of staff doubt people at all levels are held accountable for ethical behaviour; 55% were not confident that ‘UN staff members will be protected from retaliation for reporting misconduct or cooperating with an authorised audit or investigation’. Far from New York, the problem can have immediate with dire consequences for the hope of lasting peace.

So how can the UN go from public statements to actually handling the issue?

The UN Secretariat should strengthen its commitment to tackling corruption and the associated risks, particularly in the context of peace operations. To do so, the Secretary-General could issue a direction providing greater clarity on the responsibilities of Troop and Police Contributing Countries; in particular, when it comes to investigating instances of corruption and holding individuals responsible for misconduct to account within their national judicial systems. Whistleblowers – one of the best ways of identifying corruption – should be encouraged to come forward. Ultimately, holding perpetrators to account is often the best way to shift an institutional culture away from turning a blind eye, or even condoning graft.

The UN also needs people in the organisation with the mandate, expertise and capacity to get to grips with this issue – from understanding the risks on the ground to navigating corruption risks in one of the world’s largest and most complex bureaucracies.

Guterres was right when he said that ‘In peace operations, our engagement should be designed and implemented with a clearer anti-corruption lens to reinforce a culture of accountability and respect for the rule of law.’ But in a Member State organisation, this will be tough. The sad truth is that many governments in states where there are UN operations are kleptocratic or based around highly corrupt regimes and networks – often in direct contravention to the UN’s aims and to mission mandates. Operating with an ‘anti-corruption lens’ will not mean just improving procedures, but making difficult political decisions; ultimately, the UN has to be willing to put its goals in peace operations over the interests of diplomacy, if it is to successfully implement its own peacekeeping mandates.

Transparency International wants to help the UN fulfil its aims and support its efforts to strengthen peace and security worldwide. In July, we published an assessment of corruption risks within UN bodies relating to peacekeeping, to illuminate the dynamics of corruption and better support efforts to address it. TI’s Defence and Security Programme is also working on a toolkit for those leading international interventions to help officials, commanders and their planners chart a course through the challenges of conducting operations in high-risk, corrupt environments and understand the ways of responding to corruption.

If admitting to a problem is the first step to solving it, then the UN is on a much better path than it has been, and Guterres should be commended for this. But now is the time to start the next round of the heavy lifting needed to weave a more consistent approach to tackling corruption into the fabric of the organisation and its missions. Doing so promises to make UN operations more effective, cheaper, and better able to serve the interests of the most vulnerable.

Not tackling the underlying dynamics at the root of a conflict, and inadvertently sustaining or even reinforcing it, merely serves to prolong a peace intervention and can end up sowing the seeds of the next crisis. If the UN is serious about reducing the root of conflicts — all of which will be discussed in much detail over the coming weeks — it should ensure that its own operations are capable of responding to the very corruption risks they are vulnerable to — regardless of political sensitivities.

The United Nations (UN) should further expand its work to safeguard against corruption around peacekeeping missions or risk jeopardising the success of its operations, according to new research published by the Transparency International Defence and Security Programme (TI-DS). 

UN peace operations can be an effective way to respond to conflicts, natural disasters and other crises. But the risk of not placing anti-corruption at the heart of the planning and conduct of missions threatens to undermine their success – and can perpetuate the very conflict the UN seeks to quell.

Following commitments by Secretary-General António Guterres to put transparency and accountability measures at the forefront of his proposed UN reforms, TI-DS has recommended five actions which would help enhance the effectiveness of future missions.

In a new report entitled Corruption Risks and UN Peace Operations: Strengthening Accountability to Improve Effectiveness, TI-DS has assessed these risks and identified areas the UN is struggling to fully address.

Steve Francis, Director of Transparency International’s Defence and Security Programme, said:

“UN Peacekeepers face a difficult task when being deployed to conflict zones where corruption may have sparked the very conflict they are there to quell. If the UN is serious about reducing the root causes of conflict, it should do everything possible to ensure its own operations are protected against the same corruption risks host nations are vulnerable to. Ultimately the objective of these operations is to protect civilians, provide security and establish conditions for a sustainable peace – failure to make anti-corruption a guiding principle in both a peace keeping mission’s design and delivery threatens to delegitimise what is supposed to represent a global response for good.

“Acknowledging there is a problem with corruption is undoubtedly the first step to solving it, and the commitment from Secretary-General António Guterres to improve accountability in peacekeeping operations is a welcome step in the right direction. Transparency International wants to help the UN in its efforts to reform, and our research offers clear, deliverable changes which would address the risks and strengthen those anti-corruption measures already in place. We hope the UN leadership will consider our recommendations, make good on its pledge to improve accountability and take the required steps to safeguard the legitimacy and success of future peacekeeping operations.”

The report summarises the key findings of an in-depth study which has also been published today. TI-DS drew on UN documents, secondary literature and some 50 interviews with a range of former UN officials, officials from Member States, as well as academics and community groups.

Recommendations include:

• Adding credibility to the commitment to fight corruption by improving funding to specialist oversight offices, and staffing these internal watchdogs with anti-corruption experts.
• Acknowledging that UN peacekeeping operations, which inherently involve a large influx of funds, resources and personnel, may create an unintended corruption risk for the host nation – and planning ways to mitigate this risk from the outset.
• Drafting clear and unambiguous mandates in conjunction with host nations and other UN Member States to enhance the legitimacy and effectiveness of peacekeeping missions.
• Ensuring any peacekeepers found to have engaged in corrupt or illegal behaviour are properly held to account by monitoring the steps taken against those who have been repatriated for trial or investigation.

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Contact:

Harvey Gavin
harvey.gavin@transparency.org.uk
+44 (0)20 3096 7695
+44 (0)79 6456 0340

Notes to Editors:

The UN Security Council held its first ever meeting to address the links between corruption and conflict in September 2018. Addressing the Council, Secretary-General António Guterres emphasised these links and warned that corruption is a problem in all nations, both rich and poor.

He said UN Member States must be on the front lines of combatting corruption, adding that UN peace operations should also employ a clear anti‑corruption lens.

TI-DS is one of Transparency International’s global initiatives and is based in our London office. Through its work, TI-DS is fighting to establish global standards and hold advanced and emerging powers to account, prevent conflict and support fragile countries and address systemic corruption risks in the arms trade.

Transparency International is the civil society organisation leading the fight against corruption

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.

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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.

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.

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