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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.

Required response

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.

By Dr Jelena Aparac, the UN’s Independent Expert on its Working Group on the Use of Mercenaries and Ara Marcen Naval, Head of Advocacy at Transparency International Defence and Security.

The Russian network Wagner, which has spawned shadowy mercenary groups operating in conflict zones around the word, has just opened its first headquarters in Saint Petersburg.

From the battlefields of Ukraine to the ongoing conflicts in South Sudan and the war in Yemen, private military security companies and their corporate partners are flourishing from conflict. Despite the deadly force they fuel, these firms remain subject to scant regulation and accountability.

Next week [December 1 – December 2], the United Nations will stage talks on the dangers posed by the Wagner network and other private military and security companies. Governments recognised and began talking about the need to better regulate the activities of non-state security outfits back in 2008. Well over a decade on, they’re still talking.

In that time, the industry has grown to be worth US$224 billion. That figure is expected to double by 2030. New groups are proliferating, seizing on opportunities to make money from conflict hotspots.

Russian contractors, subject this summer to gold smuggling investigations in Sudan. Wagner, perhaps the world’s most notorious network operating in this sector – often through elusive and locally-registered companies that use an alphabet soup of opaque brand names – has meanwhile been accused of murdering civilians in Central African Republic, in Libya, and more recently in Ukraine.

Latest research from Transparency International Defence and Security underscores the myriad threats that leaving this growing sector unregulated pose on a global level.

Contractors are expanding their sales of surveillance, armed security and military training to many countries around the world, often including nations that have critically weak protections against defence sector corruption.

This growing industry, while sometimes providing necessary or benign support to the keeping of security and safeguarding of rights, has the potential to infringe international law, and insufficient oversight and regulation risks personnel engaging in corrupt conduct or human rights abuses.

Recent reports point to firms perpetrating suspected war crimes in Mozambique. In Libya and Yemen, claims have been made that groups are engaging in cyber-attacks against political opponents, human rights activists, and journalists, and almost always linked to the exploitation of natural resources.

As firms seek to expand opportunities, they are increasingly taking on activities in new areas, such as security around border controls and for mining industries. These often require technical and logistical support, opening the door to bribes to politically connected sub-contractors.

This outsourcing of one of the primary responsibilities of the state, the provision of security, is worrying. And efforts to respond to the risks are falling flat.

Initiatives such as the publication of the Montreux Document, which outlines the theoretical and non-legally binding responsibilities of states, have proven out of step with the risks posed, largely due to the non-binding nature. Similarly, the industry’s Code of Conduct only encourages voluntary standards to be upheld by the companies it audits and certifies.

With the ever-accelerating rise of Wagner, the time to move from words to the establishment of robust international rules and regulation that provide transparency and accountability for victims around the globe has surely arrived.

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.

Pressing priority

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.

Required response

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.

The assassination of Haiti’s president by a mercenary hit squad demonstrates the destabilizing effects of privatized force. The United States does not have the laws needed to prevent and punish such acts.

By Michael Picard

 

On 7 July, a team of foreign mercenaries linked to a US security firm assassinated a head of state. Jovenel Moise, Haiti’s president, was murdered in his own home by a well-trained commando unit composed of Colombian and US nationals. His wife, Martine, was critically wounded.

This raises questions. Under what pretext did the US citizens participate in this heinous act? More importantly, what control does the US government have over such actions, and is this enough to prevent similar actions in the future?

Contemporary conversations about mercenaries focus on private military security companies and contractors (collectively PMSCs). The United States is home to a uniquely large PMSC industry, bloated by two decades of government contracting in support of the War on Terror, as well as a glut of recent combat veterans with special forces experience.

US PMSCs provide their services both domestically and abroad, from guarding oil pipelines and embassies to training foreign security forces. As the sector expanded and internationalized, so have concerns about the ethics, legality, and impacts of normalizing private force in fragile environments.

US mercenaries have a long history of operating in and destabilizing Latin American countries, which continues to this day. In May 2020, Venezuelan authorities captured and exposed a team of armed dissidents led by two US contractors – former green berets. The contractors worked for a US PMSC seeking to overthrow dictator Nicolas Maduro on behalf of the Venezuelan opposition.

US PMSC activity extends to Haiti. In February 2019, a group of US contractors were arrested in Port-au-Prince with a large cache of weapons and military equipment found in their vehicles. After the US Government intervened, the contractors were repatriated and set free without charge. The contractors claimed they were hired as a private security detail for Haiti’s wealthy elite in light of heightened civil unrest, while also claiming they were hired by the Haitian government to provide essential security services, demonstrating the blurry line between private and public interest in a country like Haiti. According to Transparency International’s Corruption Perceptions Index, which ranks countries according to local perceptions of state corruption, Haiti ranks in the world’s bottom 10, below Afghanistan.

These two examples demonstrate how a US PMSC could be hired by sectional interests to conduct criminal operations in a highly insecure environment with impunity. On one hand, such a group could be hired to provide – on paper – official services to a foreign government, such as military training, technical assistance, or executive protection. On the other hand, they could be hired under the guise of providing security for private interests, such as an influential oligarch or a foreign company with local interests.

In either case, however, the US Government has little to no oversight. If a foreign government hires a US PMSC to provide essential defense services – such as military training, intelligence gathering, equipment maintenance, etc – the PMSC would require an arms export license from the US State Department. As stipulated in the International Traffic in Arms Regulations (ITAR), the PMSC would present a contract-like document to the US State Department’s arms control body, which would then review it in coordination with the US Defense Department, before approving it.

As a rule, the State Department forbids the authorization of combat services under ITAR. While ITAR gives the government some oversight of PMSC activities, it is highly limited owing to the intangible nature of many defense services. Once in country, there is little to prevent the PMSC from carrying out unauthorized actions, especially when supported by the hosting state.

This was precisely the case with a US PMSC hired by the UAE to carry out assassinations in Yemen in 2015 and 2016. The team carrying out the killings reportedly received an ITAR license to provide the UAE with defense services, likely military training. Yet the US Government has few means to verify that the authorized services are carried out without diversion or misappropriation. Traditional post-delivery verification checks used for tangible defense items are arguably inapplicable to the knowledge- and skill-based services provided by professional soldiers.

Beyond ITAR, there is essentially no other avenue in which the US Government can monitor and control the overseas activities of a US PMSC (unless hired by the US Government). The ITAR definition for defense services intentionally excludes security services – whether for a government, a private company, or a wealthy individual – as its inclusion would overwhelm the thinly-resourced office responsible for licensing arms exports.

Furthermore, punishing the illicit actions of US PMSCs is also difficult. While mercenarism is illegal under international humanitarian law, its definition of mercenary is weak to the point of being redundant. US PMSCs operating overseas are typically held accountable to local law unless they are supporting a US military operation or diplomatic mission governed by a status of forces agreement. This poses a challenge in countries where there is little to no rule of law. Haiti’s justice system is debilitatingly corrupt, and likely lacks the capacity to impartially investigate and prosecute cases relating to political violence involving national elites.

Haiti has long suffered from the exploitative influence of foreign private interests as well as a government that is highly susceptible to corruption. This assassination shows that, in such an environment, it only takes a handful of mercenaries to potentially bring down the state. Without a substantive set of regulations governing the overseas activities of US PMSCs, there is little to prevent their diversion and misuse for subversive, destabilizing actions.

This puts countries like Haiti at risk – and in turn, the United States. It is apparent that any discrete actor can hire US PMSCs to assassinate influential individuals – perhaps even a head of state – and sow chaos in fragile, conflict-ridden countries. When that country borders the United States, it is apparent that US national security is at stake.

 

Michael Picard is a research fellow for Transparency International Defence & Security (TI-DS). Much of the research presented in this blog is the topic of a forthcoming report by TI-DS on PMSCs and corruption in fragile states.

 

 

Download as PDF: Statement on the killing of George Floyd, protests in the United States, and the need for transparency in related military deployments

 

June 10, 2020 – Transparency International – Defense & Security stands in solidarity with those demanding justice, equality, accountability and an end to racism worldwide following the killing of George Floyd while in the custody of police officers in Minneapolis on May 25.

In response to the resulting protests seen across the United States, the National Guard has been activated in 23 states throughout the country to assist local law enforcement agencies in the policing of protests, while some active duty military units were temporarily deployed to the National Capitol Region to potentially assist federal authorities.  On June 2, the president announced he was “dispatching thousands and thousands of heavily armed soldiers, military personnel, and law enforcement officers to stop the rioting, looting, vandalism, assaults, and the wanton destruction of property”. According to news reports, 17,000 National Guard members had been deployed, approximately the same number as active-duty US troops currently serving in Syria, Iraq and Afghanistan.  This is in addition to 45,000 members of the National Guard who have already been deployed across all 50 states in response to the COVID-19 crisis.

The challenges and responsibilities faced by the armed forces in complex times are significant as they seek to protect their fellow citizens as well as prevent the violence and property damage that have occurred in some metropolitan areas.  The statements by a number of current and former military leaders reminding servicemembers of the importance of American values and their oath to support and defend the Constitution and the citizens whom they serve send an important message.

It is during times such as these that transparency and oversight matter most to ensure that actions undertaken are accountable to the public. Some of these deployments present challenges in terms of protecting the right to peaceful protests alongside the duty to protect lives and livelihoods.

After days of scrutiny over the militarization of the police response, including the use of National Guard personnel to forcibly clear Lafayette Square of peaceful protestors on June 1,  Secretary of Defense Mark Esper and Chairman of the Joint Chiefs of Staff General Mark Milley appear to have refused a request to testify to the House Armed Services Committee. This response shows a disregard to the key guiding principles of transparency, oversight and accountability, as enshrined in the constitutional system of checks and balances.

Transparency International – Defense & Security calls on all governments around the world to instil greater transparency in all aspects of civil-military relations and to ensure responsible use of military by political leaders. To the government of the United States, we make the following recommendations based on established best practice in the defense and security sectors:

 

  • Ensure that all law enforcement agencies responding to protests, including components of the military when performing law enforcement duties, receive additional training and facilitate the right of peaceful public assembly.

 

  • Commit to the principles of transparency and accountability and ensure that Secretary of Defense Mark Esper and Chairman of the Joint Chiefs of Staff General Mark Milley fulfil all oversight requirements.

 

  • Resist any inclination by those who lead the security sector to limit engagement with citizens in response to this crisis. Trust can only be enhanced through more interaction, not less.

 

Transparency International – Defense & Security strongly encourages greater transparency and accountability in all aspects of relations between the military and civil society. The use of security forces must not infringe on the public’s First Amendment rights of peaceful assembly and freedom of speech.  Respect for and protection of basic human rights is the only path to restoring much-needed trust in civil-military relations.

 

Contact:

Harvey Gavin

harvey.gavin@transparency.org.uk

+44 (0)20 3096 7695

+44 (0)79 6456 0340

By Colby Goodman

This post first appeared in the March 2020 edition of The Export Practitioner

 

Sometimes good intentions are just good intentions. In the push for major changes to the U.S. arms export control system from 2010-13, the Obama administration often said the U.S. government was not effectively preventing harmful arms exports. One major culprit was “an overly broad definition of what should be subject to export classification and control,” according to then-Defense Secretary Robert Gates.

Placing “higher walls around fewer, more critical items” would solve the problem. Seven years later, however, there are serious questions about whether there are higher walls around military technologies important in modern warfare.

Push for Higher Walls

Gates’s concern about the overly broad definition of arms was based on his time as deputy director for intelligence at the Central Intelligence Agency. In his April 20, 2010, speech, Gates said, “it soon became apparent that the length of the list of controlled technologies outstripped our finite intelligence monitoring capabilities and resources. It had the effect of undercutting our efforts to control the critical items.”

A few State officials also told me at the time that they had been requested to do investigations (post-export end-use checks) on U.S.-approved exports of items such as washers for certain weapons systems, which they thought was a waste of time.

The Obama administration in fact frequently stated that the U.S. arms export control system was harmful because “we devote[d] the same resources to protecting M1A1 tank brake pads as we do to protecting the M1A1 tank itself.”

According to Gates, “many parts and components of a major piece of defense equipment – such as a combat vehicle or aircraft – require their own export licenses. It makes little sense to use the same lengthy process to control the export of every latch, wire, and lug nut for a piece of equipment like the F-16, when we have already approved the export of the whole aircraft.” Instead, the U.S. government should focus on the five percent of cases that are riskier.

While the administration often exaggerated these points – M1A1 tanks had always received much more vetting than their brake pads – many parts and components did require a separate license. In 2011, the Government Accountability Office (GAO) also published a report that highlighted clear gaps in State post-export end-use checks for sensitive night vision goggles to countries in the Middle East.

In response, the Obama administration led an effort to move an estimated 30,000 munitions-related items from State’s more strictly controlled U.S. Munitions List (USML) to Commerce’s more loosely controlled Commerce Control List (CCL). This effort included up to 90 percent of the items controlled under the USML’s military vehicle category.

For the military aircraft category, “missile launchers, radar warning receivers, and laser/missile warning systems” would continue to be controlled under the USML. However, items such as F-16 wings, rudders, fuel tanks, and landing gear would move to the CCL. The administration would also move some items formerly classified as significant military equipment.

But, did the Obama administration simultaneously elevate reviews or checks on key U.S. military technologies that stayed on the USML? It certainly was not enough for the Obama administration to just move tens of thousands of munitions off the USML. There was also a risk that the move would likely result in a dip in State revenue and personnel for examining arms exports.

Gaps in Implementation

In a recently published report entitled Holes in the Net: U.S. Arms Export Control Gaps in Combatting Corruption, I argue that there are a number of gaps in State’s efforts to place higher walls around arms on the USML. These gaps are in State’s Directorate for Defense Trade Control’s (DDTC) basic review of arms export licenses and in their more detailed pre- and post-export end-use checks. The problems appear to have been widened under the Trump administration.

In July 2018, for instance, State’s Inspector General (IG) found several weaknesses in the way DDTC reviews arms export applications in an audit. Specifically, the IG found that DDTC had “approved 20 of the 21 applications (95 percent) [IG] reviewed despite lacking required information…” (see The Export Practitioner, March 2019, page 15).

In eight cases, the IG found inconsistencies within the application on the quantities, types of arms, or values, which are indicators of a possible diversion of U.S. weapons or bribery. The IG audit also found 17 cases in which DDTC should have notified Congress for additional scrutiny, but DDTC did not.

State is no longer increasing the number of its end-use checks in a year. In the department’s annual report on end-use checks for fiscal year (FY) 2016, DDTC said there was an increase in the percentage of end-use checks they initiated compared to the total export applications for the year from 1.3 percent in FY 2015 to 1.75 percent in FY 2016.

DDTC seemed to indicate that this increase showed it was beginning to elevate its reviews of more sensitive military items. However, the most recent end-use report for FY 2018 under the Trump administration shows a drop in the percentage of end-use checks to 1.3 percent, which is similar to percentage levels before the reform started.

There are also some key gaps in the way DDTC conducts its end-use checks. In 2016, State developed a new framework for reviewing arms sales, which recommend asking several key questions about corruption. These questions include whether or not the intended recipient of U.S. arms is “permitting illicit trafficking across borders, buying and selling positions or professional opportunities, stealing government assets and resources, engaging in bribery, or maintaining rolls of ghost personnel.” However, DDTC does not regularly look at the above defense sector corruption indicators when conducting its pre-export end-use checks.

It also appears there have been some challenges with DDTC’s post-export end-use checks. In the department IG’s audit of DDTC in 2018, they noted serious delays, from 77 to 300 days, in conducting post-export end-use checks. In FY 2018, DDTC had also only conducted around nine pre- or post-export end-use checks for all arms exports to the Middle East and North Africa despite the ongoing risks of diversion in the region.

What could be done to elevate State checks on key military technologies and weapons systems? DDTC has said one of the key reasons for some of the above gaps has been staff turnover and an overall staff reduction. DDTC told the department’s IG that its licensing office had a 28 percent reduction in staffing as of July 2018, and some licensing officers were finding it difficult to keep up with their workload. Staff turnover also made it difficult for DDTC to conduct end-use checks in the Middle East in FY 2018.

Fixing the Gaps

While DDTC has hired some staff to help address the gaps in end-use checks for the Middle East, they still have not been able to add enough staff to address all of the above concerns. The Trump administration’s hiring freeze and reductions in State funding have also impacted DDTC’s efforts to hire new staff. Congress, however, could address this gap by elevating funding for DDTC personnel, which would also help speed up DDTC’s review of arms export applications generally.

It also appears that the Trump administration’s focus on increasing the number of U.S. arms sales to key U.S. partners and allies around the world has impacted some State focus on enhancing risk assessments. There, however, are continuing efforts to enhance these risk assessments at State, including related to defense sector corruption indicators.

In some ways, Gates was right when he said there was a need to place higher walls around key U.S. military technologies and weapons systems to prevent them from reaching the wrong hands. If the United States does want to make good on one of its initial reasons for the reform, there are still opportunities to do so. Without these improvements, however, the United States will be back where it started at the beginning of the reform, not effectively preventing harmful arms exports.

 

(c) 2020 Gilston-Kalin Communications LLC. Reprinted with permission.

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

Corruption is widely recognized as one the major stumbling blocks in US government efforts to improve the capacity of foreign defense forces to address shared international security threats over the past 15 years.

This report assesses the current state of US arms export controls to identify and curb corruption in US arms sales. It first highlights critical corruption risk factors the United States should consider in order to help prevent corruption and fraud in its arms sales. The report then assesses US laws, policies, and regulations aimed at identifying and mitigating corruption and fraud risks in US arms sales.

Defence industry players, elected officials, the defence bureaucracy, and governments in the Middle East 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, including increased exports of arms and defence services to Saudi Arabia and the United Arab Emirates which began under the Obama administration and have ramped up under President Trump.