A working group of the United Nations assembled in Geneva, Switzerland on April 17, 2023 to evaluate and negotiate regulation of private military and security security companies (PMSCs).
Transparency International Defence and Security Head of Advocacy Ara Marcen Naval joined and delivered the following statement:
Mr. Chairperson rapporteur, distinguished delegates,
I stand before you today at this crucial discussion to bring to your attention, and consideration, the corruption risks linked to the activities of Private Military and Security Companies (PMSCs) with a sense of urgency and resolve. PMSCs can play an important role in government efforts to enhance security, but they often operate in secret and outside standard transparency and accountability structures. This dynamic provides a permissive environment for corruption and conflict to thrive and deprives governments and its citizens of financial resources and security.
The Defence and Security Programme of Transparency International welcomes the progress made in the revised draft and the changes made to include references to the Convention Against Corruption and Convention against transnational crime. These references are important steps towards policy and legal coherence and to ensure that the efforts to regulate the activities of PMSCs align with the international legal obligations in relation to corruption and transnational organised crime.
Corruption and the unchecked actions of PMSCs have far-reaching consequences, eroding the rule of law, undermining human rights and security, and threatening the legitimacy of governments. It corrodes public trust, undermines democratic institutions, and creates a culture of impunity that breeds more corruption. It can also weaken the fabric of societies, divert resources meant for development, and perpetuate inequality and injustice.
Transparency International has identified dozens of cases in which PMSCs are suspected of involvement in corruption and fraud. Some of the most concerning cases involve PMSCs colluding with government officials to inflate threat perceptions to win or sustain contracts. In one case, this action led to excessive use of force against protesters resulting in unnecessary injuries to civilians and security forces.
Transparency International has also raised concerns about some of the practices of PMSCs failing to disclose conflict of interests that could undermine government decisions, or even threaten national security.
In some cases multinational PMSCs have fuelled corruption by requiring local partners to pay kickbacks for participating in government funded contracts.
In these cases, the opaque arrangements prevalent in the sector make it extremely difficult to ascertain chains of command, responsibilities and levels of coordination among the different security actors, and undermine monitoring efforts and accountability. Furthermore, it is usually difficult to find public confirmation of the nature of the contract and the identity of subcontractors in the event that they are hired.
We hope that during the discussions on the potential instrument, the distinguished delegates will confront the implications corruption has and the abuses of PMSCs head-on and work together to prevent, detect, and punish corruption in all its forms. Transparency and reporting are the greatest steps that states can take to allow for effective monitoring and oversight of private military and security companies and other actors providing security services in order to effectively prevent, address and remedy any abuses committed.
Distinguished delegates, the stakes are high. The impact of corruption and the actions of PMSCs are felt by communities around the world, often with dire consequences for the most vulnerable among us. The fight against corruption and the responsible use of PMSCs requires our unwavering commitment and concerted and holistic action. Thank you.
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Regulatory oversight of the private military and security sector is failing to keep pace with the rapidly growing and diversifying industry, leading to heightened global risks of fraud, corruption and violence. Better regulation of the industry is urgently needed.
This three-page fact sheet defines Private Military and Security Companies and outlines the required response.
Private Military and Security Companies (PMSCs) are a growing presence globally. They act as ‘shadow armies’, operating without transparency and free from legal accountability for their actions in conflict zones around the world.
Since the US-led wars in Afghanistan and Iraq, the industry has expanded from an estimated value of US$100 billion in 2003 to US$224 billion in 2020.
Such is the power PMSCs wield, there is an urgent need for United Nations members states to collectively commit to regulate, investigate and prosecute misconduct by these firms.
It is against this backdrop that Transparency International Defence and Security is bringing policymakers together at a hybrid event, open for registration now, to highlight this issue and catalyse change.
Many of the largest PMSCs were founded in the United States and Europe. But sophisticated PMSCs are increasingly being established in a variety of countries ranging from Australia to China, India to Israel, and Turkey to the United Arab Emirates (UAE). The Russian Wagner Group is operating in many African countries and the network’s grip on matters of national security is tightening.
PMSCs are not merely providing ‘bodies’ and direct combat services. They sell services such as intelligence, surveillance and cyber security. This expansion in services has elevated corruption and conflict risks in many countries with critically weak protection to guard against defence and security sector corruption.
In response to these trends, a United Nations Intergovernmental Working Group on PMSCs is debating an international framework to regulate their activities.
Currently the internationally supported but non-binding Montreux Document encourages countries to refrain from hiring PMSCs that have a record of engaging in bribery and corruption, among other crimes. While it is a step in the right direction, it lacks teeth.
Some countries, such as the United States, Australia and New Zealand are also exploring new regulations and laws at national level.
These are positive moves. However, until international and national legislation is formally agreed upon, the kind of law-breaking carried out by PMSCs such as land grabs facilitated through corruption and violence against civilians, documented in our latest research paper, will continue.
In Washington this month Transparency International Defence and Security will be convening a workshop to galvanise international support for anti-corruption standards for PMSCs. Chaired by Transparency International co-founder Peter Conze, the event is being held as part of the influential International Anti-Corruption Conference.
We will be making the case for the UN to establish:
- Clear complaint mechanisms and standards to protect whistle blowers
- A requirement of reporting on beneficial ownership of PMSCs and subcontracting by PMSCs
- Increased transparency of contracts and enhanced reporting on exports of PMSC services to enable external oversight and accountability, including procurement and transfers of weapons and equipment in line with arms control requirements
- Heightened oversight at the higher level of states institutions. For example, the State and Defense Department should establish accessible whistleblowing channels and regularly monitor their use, at a minimum
As the event is being held in Washington, we will also share a roadmap for progressing US legislation, highlighting the need for:
- The definition of defence services to be expanded to include combat activities and potentially intelligence services, so that US companies and individuals must obtain US government authorisation (or a licence) to export such services
- More detailed reporting to Congress on defence service exports, including listing the specific types of authorised defence service and associated dollar value for each country
- Enhanced policy guidance for the State Department to assess the risks of corruption before approving a contract or license for PMSC services abroad
It’s time for PMSCs to be brought out of the shadows. Join us.
Our latest research catalogues conflict and corruption around the word – harm caused by leaving the privatisation of national security to grow and operate without proper regulation.
Post-Afghanistan, exploitation of global conflicts is big business. Most private military and security firms are registered in the US, so we are calling on Congress to take a leading role in pushing through meaningful reforms under its jurisdiction. The time has also come for accreditation standards to be enforced rather than only encouraged, at both a national and international level.
Michael Ofori-Mensah, Head of Research at Transparency International Defence and Security, describes some of the dangers documented in our latest research paper.
Unaccountable private military and security companies continue to pursue partnerships that in recent years have led indirectly to the assassination of presidents and journalists, land grabs in conflict zones, and even suspected war crimes.
From Haiti to Saudi Arabia to Nigeria, US-based organisations – the firms that dominate the market – have found themselves associated with a string of tragedies, all while their sector has grown ever-more lucrative.
Transparency International Defence and Security’s latest research – ‘Hidden Costs: US private military and security companies and the risks of corruption and conflict – catalogues the harm playing out internationally as countries increasingly seek to outsource national security concerns to soldiers of fortune.
Hidden costs from the trade in national security
While the US and other governments have left the national security industry to grow and operate without proper regulation, the risks of conflict being exploited for monetary gain are growing all the time.
Hidden Costs documents how the former CEO of one major US private military and security company was convicted – following a guilty plea – of bribing Nigerian officials for a US$6bn land grab in the long-plundered Niger Delta.
Our research also highlights that the Saudi operatives responsible for Jamal Khashoggi’s savage murder received combat training from the US security company Tier One Group.
Arguably most damning are the accounts from Haiti, where the country’s president was killed last year by a squad of mercenaries thought to have been trained in the US and Colombia.
Many governments around the world argue that critical security capability gaps are being filled quickly and with relatively minimal costs through the growing practise of outsourcing.
Spurred on by the US government’s normalisation of the trade, US firms are growing both their services and the number of fragile countries in which they operate.
The private military and security sector has swelled to be worth US$224 billion. That figure is expected to double by 2030.
The value of US services exported is predicted to grow to more than $80 billion in the near future, but the industry and the challenge faced is global.
The risks of corruption and conflict in the pursuit of profits are plain.
These risks are as old as time. But their modern manifestations in warzones must not be left to spill over. The 20-year war in Afghanistan cultivated dynamics that threaten further damage, more than a decade after governments first expressed their concerns.
International rules and robust regulation are urgently needed. We need measures that ensure mandatory reporting of private military and security company activities. The Montreux Document lacks teeth, operating as it does as guidance that is not legally binding. Code of conduct standards must also become mandatory for accreditation, rather than purely voluntary.
Most private military and security firms are registered in the US. So Transparency International Defence and Security is also calling on Congress to take a leading role in pushing through meaningful reforms under its jurisdiction. There is an opportunity arriving in September, when draft legislation faces review.
Policymakers have long been aware of the corruption risks and the related threats to peace and prosperity posed by this sector. The time for action is well overdue. No more Hidden Costs.
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.
Interviews are available with the report author.
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25 November, London – Security and stability across the Middle East and North Africa continues to be undermined by the risk of corruption in defence institutions, according to new research by Transparency International – Defence & Security.
11 of the 12 Middle East and North Africa states assessed in the 2020 Government Defence Integrity Index released today received E or F grades, indicating either a “very high” or “critical” risk of defence corruption. Only Tunisia performed better, scoring a D.
These findings come against a backdrop of insecurity and fragility in the region. Mass protests – driven by grievances including corruption and financial mismanagement by government – continue in Egypt, Iraq and Lebanon. Meanwhile protracted armed conflicts in Syria, Yemen and Libya show no sign of ending.
Steve Francis OBE, Director of Transparency International – Defence & Security, said:
The Middle East and North Africa remains one of the most conflict-riven regions in the world and this instability has a major impact on international security. While some states have made some improvements in their anti-corruption safeguards, the overall picture is one of stagnation and in some cases regression. Given the empirical link between corruption and insecurity, these results make worrying reading.
Military institutions across the region continue to conduct much of their business under a shroud of secrecy and away from even the most basic public scrutiny or legislative oversight. This lack of accountability fuels mistrust in security services and governments, which in turn feeds instability.
With the regional picture looking bleak, 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 close loopholes which allow corruption to thrive would improve public trust and bolster national security.
Defence sectors across the region continue to suffer from excessive secrecy, and a lack of oversight and transparency, the research found. Meanwhile, defence spending in the region continues to surge to record levels.
The countries with defence sectors at a ‘critical’ risk of corruption are Algeria, Egypt, Jordan, Morocco, Oman, Qatar and Saudi Arabia, as there is virtually no accountability or transparency of defence and security institutions. Many of these countries are either major arms importers or benefit from significant international military aid.
In Lebanon, a lack of clear independent auditing mechanisms and gaps between anti-corruption laws adopted in the last two years and their implementation contributed to the country’s “very high” risk status, despite the Lebanese Armed Forces demonstrating high levels of integrity and a willingness to remain neutral and avoid using excessive against protesters.
Tunisia was the only country in the region to rank higher, with new whistleblower protections, improved oversight and public commitments to promoting integrity in the armed forces contributing to its score. But the continued use of counter-terrorism justifications combined with an ingrained culture of secrecy within the defence sector prevented Tunisia from scoring higher.
|Very high risk
Notes to editors:
The full, country-specific Government Defence Integrity Index (GDI) results for the Middle East and North Africa will be available here
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+.
+44 (0)20 3096 7695
++44 (0)79 6456 0340
+44 (0)20 3096 7695
++44 (0)79 6456 0340