Q33.

Is there evidence of unauthorised private enterprise by military or other defence ministry employees? If so, what is the government’s reaction to such enterprise?

33a. Prohibition

Score

SCORE: 50/100

Assessor Explanation

Assessor Sources

33b. Prevalence

Score

SCORE: 25/100

Assessor Explanation

Assessor Sources

Compare scores by country

Please view this page on a larger screen for the full stats.

Relevant comparisons

The Algerian government explicitly outlaws private enterprises by military personnel who are actively serving in the armed forces. It is unclear what kind of sanctions are in place. According to Art. 34 of the Statute of Military Personnel of 2006 a member on duty shall devote all his professional activity to the performance of the tasks assigned to him and shall be prohibited from engaging in any private gainful activity (1). No possible sanctions with regards to this issue could be found in the Statute of Military Personnel or the Code of Military Justice (2).

Information has been found that suggests defence employees are engaged in private enterprises. One report alleges that top army officers are running up to 30 private companies each, which might be owned by themselves or members of their families (1). A recent report from the ICG noted that Algerian’s rentier economy has produced a “private sector in which state contracts are awarded based on personal connections, rather than merit or efficiency” (2). Another article has claimed that sons of the elite run lucrative businesses; i.e., the son of the head of the DSS (3). Researcher Mohammed Hachemaoui noted that there have been connections between companies and the DRS (4). No information was found on whether these companies have been authorized.

The 2010 Law on Public Probity, as well as previous legislation, explicitly prohibits public servants from receiving money or gifts from private business deals; however, the law has been poorly enforced (1).

The Angolan journalist Rafael Marques has documented numerous examples of impunity of violations of the public probity law by public officials on the anti-corruption blog Maka Angola. These include many cases of senior military officials, and particularly from the president’s Security Bureau, illicitly engaging in private businesses that pose a clear conflict of interest (2), (3), (4).

Senior military officials, including top officials of the president’s Security Bureau under Dos Santos, reportedly have declared or beneficial ownership in major private security companies, diamond and oil companies and other private businesses, despite flagrant conflicts of interest outlawed by the public probity law. The private security business has been dominated by senior military officials. The 2014 law on private security companies establishes mandatory licensing, background checks and professional training for staff, yet does not elaborate on illicit ownership by public servants (1), (2), (3).

Law N° 037-2008 (2008) and Decree N° 94-159 (1994) prohibits commercial activities conducted by members of the armed forces (1), (2). However, the government encounters many difficulties in fully implementing this legislation. Hence, some defence ministry employees are directly or indirectly running private enterprises. According to Gondé, Burkina Faso’s defence institutions are involved in the political, economic and social arena since the country achieved independence. These activities are not part of the classic missions of the defence sector. Although they are illegal the government has done nothing to shut them down (3).

Analyzing what should be the new role of the military in Burkina Faso, Gondé claims that the Burkina Army has infiltrated non military roles including taking membership in political parties, associations, trade-unions; construction of roads, dams, buildings; making profits through agriculture, health, education and water, even though the legislation prohibits these activities (1), (2), (3). To monitor funds derived from these activities, the Constitutional Council created commissions to check out asset deposits by government officials, including in the military (4).

There is no legislation which authorises private enterprise by military personnel or personnel of the Ministry of Defence. According to the General Rules and Regulations governing Service and Establishments in Cameroon, civil servants are not allowed to operate private businesses [1]. However, there are several military personnel who are not only involved in their own personal enterprises but use the resources of the Ministry for their own personal purposes [2].

Some military personnel are involved in small-scale business like the production and sales of books and the purchase and sales of land [1].

It is reported by ICI CEMAC that some top-ranking military officers are involved in some form of commercial activities that are linked with the Ministry of Defence. There are several military personnel who are not only involved in their own personal enterprises, but use the resources of the Ministry for their own personal business [2].

According to ICI CEMAC, the electronic journal The Young Observer reveals the market value of the arsenal amassed by Edgar Alain Mebe Ngo’o: 20 dump trucks (20 million / unit – 400 million FCFA), 3 Bulldozers D7 (130 million / unit – 390 million FCFA), 4 graders (100 million / unit – 400 million FCFA), 4 compactors (60 million / unit – 240 million FCFA) and 3 loader excavators (80 million / unit – 240 million FCFA). As a prudent man, he also invests, especially in real estate. The fortnightly Le Jeune Observateur also revisits Mindef’s relationship with Mag-Force. The overcharging of this company is unveiled, and it is flagrant. For example, regarding combat suits, the former suppliers sold each at 18,285 FCFA while Mag-Force was offered 22,350 FCFA. The berets were provided by the former suppliers at 5,452 FCFA each, while Mag-Force supplied them at 8,855 FCFA each… Alain Mebe Ngo’o directed the money allocated to the fiftieth anniversary ceremonies of the armies to his personal enterprises; even the restaurant was run by his sister-in-law, Mrs Baoro, who had done such a great job in the minesec hijacking business. He named a certain “Akono”, the brother of his wife, head of the Markets Department. The contract for the “repair of Bamenda airport was passed to his friends in Deco-Center who had already worked with him on the refurbishment of his office that had swallowed nearly 350 million FCFA…” [2]

No explicit legal provision ban MoD officials from operating an unauthorized commercial business. There is ample and longstanding evidence of illicit trafficking in commodities and natural resources by military commanders, particularly at artisanal gold-mining sites. Though the Mining Code was revised in 2014 to combat illicit sites, the administration of President Alassane Ouattara has been ineffective in fighting unauthorized private ventures by military personnel because of the threat to domestic political stability. The Ministry of Industry and Mines regulates artisanal mining (orpaillage) and demands the disclosure of beneficiary ownership when an application is submitted for an artisanal mining permit, as per the 2014 Mining Code and Decree No. 2014-397.

According to the 2014 Mining Code (Portant Code Minier) (1) and Decree No. 2014-397 (Déterminant les modalites d’application de la Loi No. 2014-138) of June 25, 2014 (2), Côte d’Ivoire now regulates artisanal mining operations. The objective is to end illegal operations by extending official permits (autorisations d’exploitation) and forcing applicants to comply with basic safety, environmental and disclosure regulations. Though the government has closed down 400 illicit mining sites since the 2014 Mining Code was introduced, the measures have proven largely ineffective and international mining companies suspect government laxity vis-a-vis the military commanders who run the illicit operations (3). In July 2017, Jersey-registered Randgold Resources announced a five year USD 300 million investment in gold mining in West Africa, including Côte d’Ivoire. CEO Dennis Marc Bristow complained to the authorities in Abidjan about the thousands of artisanal miners that operated within its permit at the site of Boundiali stating that the miners appeared to enjoy the “protection” of local military commanders (4), (5). Bristow said, “there is an obvious complicity with people that involves a certain degree of responsibility. It is urgent that a radical government decision be taken,” said the boss of the Tongon mine. The man also called for a distinction between traditional and organized gold panning (orpaillage traditionnel) that has long been codified by the mining code and the current clandestine mining that takes place chaotically” (4).

There is no evidence of unauthorized private enterprises openly operated by the MoD officials. However, there is ample and longstanding evidence of illicit trafficking in commodities and natural resources by military commanders, particularly at artisanal gold-mining sites. The evidence of illicit artisanal gold mining operations points to former rebel leaders of the Forces Nouvelles (FN), who sided with President Alassane Ouattara during the 2010-2011 post-electoral crisis. Known as COMZONES, they usually have hundreds of soldiers under their command supplementing their MoD wages by trafficking. The government is reticent to address this issue due to the history of soldier mutinies and the threat to political stability.

According to a report by France Inter in western Côte d’Ivoire (region of Daloa), soldiers were running an illicit artisanal gold mine (Mine 22) in December 2015. This type of operation is prevalent throughout the country with the tacit (sometimes direct) involvement of the local military establishment. About 500 artisanal miners were working at Mine 22 producing 40 kg of gold per month. Soldiers, the local prefect and MoD officials were referred to by the miners as VIPs or “parrains” (godfathers) (1):

“Mine 22 alone produces about 40kg per month when it runs at its maximum output level, or 1.2 million euros. And there are at least three other deposits operated illegally in the area of Daloa. So, the returns are very significant…We are dealing with a mafia system on a large scale. It is clandestine trafficking, but a totally codified system involving scales and quotas. Everyone shares the cake. The soldiers are milling about inside the mine because the armed forces there receive a percentage of the sales of gold, just like the members of the local administration: the prefect, local officials, etc” (1).

In a more recent report by the Canadian-based Partenariat Afrique Canada (January 2017), Alan Martin and Hélène Helbig de Balzac found that gold production at illicit artisanal mines operated by former rebels had registered a strong growth because of the quality of Ivorian gold and the low extraction costs. The report estimated that gold was being mined illegally 24 out of 31 regions of Côte d’Ivoire, but especially outside of the towns of Bouaké and Katiola. The Ministry of Mines puts the number of artisanal miners at 500,000 in 2017 (2):

“The networks established by former combatants and gold traders during the war in Côte d’Ivoire still have tentacles and the former zone commanders continue to profit from smuggling and the parallel tax system linked to the artisanal mining sector. However, they are now working with intermediaries, according to a military source in Bouaké, Côte d’Ivoire” (2).

No law prohibits defence and security institutions from establishing private commercial enterprises. It is reported that the Ministry of Military Production oversees about 20 businesses, while the Ministry of Defence controls dozens (1), (2), (3), (4). These businesses are usually established by ministerial decrees from the respective ministries, leaving the expansion of the military’s economy to the military itself to decide. The armed forces usually operate in strategic industries and enjoy major tax and other incentives, which makes them very profitable. The 20 companies that are under the control of MMP are expected to generate revenues of about EGP 15 billion in 2018/2019 five times higher than that of 2013/2014, which shows the expanding role of the military in the economy since 2013 (4). It is unclear what happens with those revenues.

Private enterprises by the military are very common and range from construction to fish farms, to a holiday resort. Due to the non-disclosure policies in place, there is no accurate agreed-upon estimate of the size of the military’s private enterprises. However, the lowest cited estimate was 2% of GDP, which was cited by President Sisi himself in an attempt to undermine other estimates of 20-40% cited by others. However, even the very low 2% estimate is still a sign of the prevalence within the economy. According to our sources, there are many unauthorized enterprises owned and operated by the military. These enterprises are sometimes are declared and operate openly, but are not authorized or registered within the government (1), (2), (3), (4).

There is no evidence of any law preventing miltiary personnel from engaging in the private sector (1).

There is a significant number of illegal private security companies and personnel (“galamsey”), particularly concerning the mining sector. A UN working group reports that these mining groups either arm themselves or employ mercenaries illegally (1). There is no evidence that defence employees engage in unauthorised private enterprises.

It is permissible for defence and security institutions to operate private enterprises, they must be officially registered and operate following principles of transparency (1). Neither the ministry of defence or interior are identified as having any, and the law states that armed forces are not subordinate to civilian institutions, armed actors are the true power brokers (2), (3). Evidence of the subordination of civilian institutions to paramilitary and armed groups has become difficult to ignore in the wake of the liberation of Mosul (4).

According to interviewees, there is an unauthorized private enterprise owned by members of militias, who are also members of the armed forces. The government does not outlaw these practices, but turn a blind eye to senior officers who own private enterprises and exploit their positions to gain financial assets(1,2).

There is myriad of evidence and examples of defence personnel being involved in defence-related private enterprises, as well as corruption related to them [1, 2, 3]. The state of Jordan does not outlaw private enterprise under the umbrella of the state’s defence and security operations. For example, Abdel-Hadi al-Majali, who held defence posts, founded one of Jordan’s first private security enterprises in the country. His son is currently the head of MID Contracting and his cousin Shadi Ramzi heads the KADBB, Jordan’s largest military services private business [4]. These examples provide evidence that private defence-related enterprises are legal in Jordan, however, corruption cases related to these enterprises are usually concerning granting these companies preferential treatment in relation to contracting [2,3,4,5]. According to the military service law, article no. 41: personnel are forbidden to own or have private enterprises that affect their time of duty and service. Thie article does not prevent personnel from owning private enterprises or businesses as long as it does not affect their working time [6].

Defence employees are engaged in unauthorised private enterprises to the extent that some industries are majority captured. The majority of defence-related businesses in Jordan are either run by defence employees or by officials within the Government [1, 2, 3]. It is important to note here that when these businesses are accused of corruption by the media, the journalists get persecuted for defamation [4]. In addition to these being private defence-related enterprises, it seems that they enjoy the same immunity the defence sector enjoys [5,6]. As previously explained, in an environment where publishing news about the armed forces is prohibited, freedom of information and scrutiny around defence is almost non-existent.

Even though the institutions do not own commercial business, there are some military and police employees, who do not control or represent these organisations, and who are not linked and occupy different positions and ranks, have over the years privately, independently and individually broken the law and been involved in small-scale enterprises.

Article 14 of the military’s internal law (2) forbids officers from receiving payment in exchange for any kind of work, “work in commerce,” or from utilizing military funds in any way, and article 131 applies the same rules on ministers. ِArticle 15 of the police’s law (1) contains the same provisions but it has a clause that allows officers to manage businesses on behalf of first, second, third and fourth degree relatives.

These laws, however, do not apply to civilians in the Defence or Interior Ministry. According to Kuwait’s military law, the enterprising officers could be investigated by one’s superior or military prosecutors and then referred to a military trial since this is a crime committed by a military employee, but there is no law that explicitly says what sanctions or procedures would follow a conviction.

The police and the KNG, whose views on the matter are not known, fall under the jurisdiction of the military judiciary (3).

Officials, activists and an analyst say that these ministries usually just quietly dismiss the person in question and they do not usually attempt to retrieve or confiscate the illegally acquired money (4, 5, 6, 7, 8 and 9).

The aforementioned unauthorised business activities are common in the Defence and Interior ministries, former and current officials said (1, 2, 3 and 4). These are usually small-scale nepotistic dealings, taking the form of a defence or a police mid-ranking official granting deals with the Ministry to the company of a relative. The deals could be to provide anything from bottled water to chocolates to be put in jars for important official meetings. Most journalists, officials and activists are unable to name enterprises owned by or somehow related to employees from the security agencies. But these officers do not control entire industries or anything of that nature.

There is also public concern over nepotism amongst security leaders, which often have familial and some secretive business ties with the royal family, or with big pro-government families like al-Khorafy, Rashyda, Ghanem or al-Rawad, activists and journalists said. This area appears to be completely untouched by both the media and auditing bodies, and so there is virtually no information available about it.

The government does not outlaw private enterprise under the umbrella of the defense sector and applicable reprecussions (1).

There are no occurrences of unauthorized private enterprises linked to Lebanon’s defence sector. A source also dismissed the existence of unauthorized private enterprises (1).

Mali has legislation that explicitly outlaws state employees, including security officials, from engaging, directly or indirectly, in private enterprises that could compromise their independence.
Article 11 of the General Statute for Civil Servants, which entered into force in 2002 and was amended in 2014, states that:
“It is forbidden for a civil servant to possess, by themselves or via an intermediary of any kind, interests, of a nature that could compromise their independence, in a business that is either subject to the control of their organisation or in any form of relationship with that organisation. A Decree issued by the Council of Ministers states that private commercial activities, which could violate the dignity and the interests of the functioning of the public administration, are prohibited for civil servants”.¹
The General Statute for members of the armed forces, adopted in 2016, is even more stringent. Article 45 of the statute states that:
“Serving members of the armed forces are forbidden from engaging in any profit-making business activity in a professional capacity, regardless of what it is. The conditions under which serving members may exceptionally be made exempt from this restriction are fixed by the decree of the Council of Ministers. Military officials may not, directly or via an intermediary, while they are in service and for a period of five years after terminating their service, have interests, of a nature that could compromise their independence, in a private company subject to their oversight or control”.²
The General Statute for the national police, adopted in 2018, contains a similar clause, but does not go as far as to impose restrictions after officials have left the police. Article 14 states that:
“Police employees may not, regardless of their position, undertake a commercial activity whose nature could discredit the functioning of the police or create an ambiguity that would be prejudicial to the functioning of the police. The employee must also take appropriate measures to safeguard the interests of the service when the activity of his or her spouse is of a nature that could discredit the functioning of the police or create an ambiguity that would be prejudicial to the functioning of the police”.³
None of the three General Statutes cited outline specific sanctions for breaking these clauses, but they do contain sections relating to disciplinary proceedings in cases where officials breach any part of their statute. The statutes contain provisions for the suspension of employees while investigations are undertaken and, in the most serious cases, for the dismissal of officials.¹ ² ³

The assessor has found evidence indicating that unauthorised private enterprise is common, but is largely in the form of illicit and highly informal activities. By contrast, there is no evidence that military figures exercise any control of the formal activities of private businesses.
A defence attaché working at a foreign embassy in Bamako told the assessor that it is common for soldiers to take up informal secondary jobs to supplement their income.¹² The source noted that young recruits are not allowed to be married: only when they have completed basic training and officially become soldiers, entitling them to a basic starting salary, can they marry [10]. As soldiers marry and start to have children their domestic liabilities increase. The stakeholder said that military bases are often half empty because soldiers are out performing manual labour, such as chopping wood, to earn more.¹⁰
The northern parts of Mali have been an important area of transit for smugglers for at least the past ten years following decades of underinvestment and poor governance in the regions.¹ ² ⁵ ⁸ Smuggling of subsidised food, cigarettes, fuel, arms and human-beings have become embedded in the local economies, which for centuries have served as important trading routes across the Sahara Desert.¹ ² ⁵ ⁸ ⁹
Smuggling and the complicity of state officials reached its peak under the government of Amadou Toumani Touré, who was president between 2002 and 2012. As ICG notes “Under the ATT government, relations between the centre of power in Bamako and the periphery rested on a loose network of personal, clientelistic, even mafia-style alliances with regional elites with reversible loyalties rather than on robust democratic institutions.”² During this period, Mali even became a trafficking route for cocaine from Latin America. In 2009, a Boeing 727 carrying up to ten tonnes of cocaine crash-landed after taking off from an airstrip in Gao.³ In 2010, another plane carrying several tonnes of cocaine landed at an air-strip in Kayes, in the west of the country, where it was reportedly received by several local officials, including military officials.³
According to many observers, the military and many politicians were effectively embroiled in organised crime and “have bolstered their political and military positions of power using illegal income”.¹ A report by the Global Initiative against Transnational Organized Crime claimed that illicit trafficking “defined the nature of the political crisis in Mali,” has “entrenched itself into the Malian ethnography,” and has become “thoroughly integrated within political and military structures in northern Mali”.⁹
However, since the collapse of the Malian state in 2012 and the election of IBK in 2013, reports of drug trafficking and any kind of military involvement have dried up amid “some tangible efforts to reform the legal system and tentatively enforce some of the legal mechanisms that exist to tackle such problems”.⁶

Even so, there is still widespread evidence that security officials remain complicit in human trafficking. The Netherlands Institute for International Relations highlights that corruption is particularly visible in the police and security forces, where jobs are distributed as political favours and sold at a price.⁷

“At the dozens of roadblocks along the way to Bamako and Gao, migrants pay a toll of between 1,000 and 5,000 CFA (1.50–7.50 EUR) to the security forces that control them. According to key respondents from the region, the Gao gendarmeries also take migrants off the bus at the city entrance. Migrants reportedly have to pay a tax between 2,000 and 5,000 CFA (3–7.50 EUR) and are then handed over to the smugglers who take them under their wing. In other cases, migrants are arrested after entering Gao, and smugglers pick them up from the police station in exchange for a bribe.”⁷ Security officials are also reportedly implicated in the issuing of false passports.⁷

Nevertheless, the assessor found no concrete evidence to suggest that the country’s main legitimate industries, chief among them gold mining, are captured by military leaders. Gold is by far Mali’s most important export, comprising nearly 70% of total exports in 2016.¹⁰ The mining areas are mainly concentrated in the south and west of the country, specifically in the regions of Sikasso, Kayes and Koulikoro. The sector is dominated by foreign-owned companies, such as Jersey-based Randgold, Toronto-based IAMGOLD, Johannesburg-based AngloGold Ashanti, Vancouver-based B2Gold and Toronto-based Endeavour. These companies are highly professional enterprises that are not subject to the influence or control of Mali’s security organisations.

However, Mali’s weak implementation of taxes on gold exports and lax regulation of artisanal mining has resulted in the country becoming the region’s major hub for illicit gold exports.¹¹ For instance, in 2014, the Malian government recorded that a total of 40 tonnes of gold had been exported from the country.¹¹ Yet, the UAE reported that it had received 59.9 tonnes of gold exports from Mali, indicating a large discrepancy attributable to illicit exports of artisanally-mined gold and gold smuggled into Mali from Côte d’Ivoire.¹¹ Smuggling on this scale strongly suggests a significant degree of complicity on the part of Malian customs officials. In Côte d’Ivoire, it is primarily former soldiers from the Forces Nouvelles rebels, many of whom have yet to be formally integrated into the Ivoirian army, that control the smuggling routes. But there is no evidence that members of the Malian armed forces or defence ministry officials are implicated in the smuggling of gold along the main transit route through Sikasso to Bamako.¹¹

No legislation was found to suggest that the government prohibits military personnel from owning private enterprises. (1)(2)

Examples exist of unauthorised private enterprise run by high-ranking military or other defence ministry employees, as shown in the 1998 allegation of Captain Adib against his superior (heading the Royal Air Force base of the Errachidia region) (1)(2)(3).

Interviewees raised a more recent case of unauthorised private enterprise run by high-ranking military or other defence ministry employees, highlighting the drug trafficking case in Western Sahara in 2007 (4)(5). They also underlined the fact that due to heavy military presence in the Western Sahara region where other public bodies and CSOs are limited, the armed forces have more power there. No more recent evidence of such unauthorised enterprise was found in either the media or CSOs reports.

The assessor did not find evidence of any military involvement in private enterprise, the interviewees agreed that this was unlikely (1,2). Furthermore, as noted in sub-question 32a, art. 129 of the public penal code provides for strict regulations around which public officials can be involved in private business. Sanctions range from 100 000 FCFA to 1 million FCFA and, at least, two years of imprisonment (3). The assessor did not find evidence of any military involvement in private enterprises.

No evidence was found of the existence of unauthorised private enterprises by the military (1,2) .

Internal rules of the military and other civil service rules prohibit private enterprise. The general civil service rule is commonly understood to prevent the involvement of civil servants in any other business or similar activity except for farming. The response of the government to the involvement of defence officials in private enterprise has been slow. Despite some public comments against the practice, very few measures have been implemented to curb unauthorized private enterprise (1).

Unauthorised private enterprise is widely pursued by individuals rather than institutions. The normal civil service rule prohibiting such activity is in existence; however, the enforcement of the rule is not always consistent across the civil service (1).

The response of the government to the involvement of defence officials in private enterprise has been slow. Despite some public comments against the practice, very few measures have been implemented to curb such activities. Nigerian civil service rules prohibit private practice while employed (Private Practice rule 030426 Public service Rules) (1).

There is no specific legislation outlawing private enterprise under the umbrella of state and security operations (1). Royal Decrees 36/2008 and 120/2011, relate to relations between ministries and private companies and are concerned with tenders prohibiting personal business interests. Additionally, the Anti-Corruption Law 112/2011 and penal code, prohibit employees in the public sector from accepting bribes, the embezzlement of public funds, or granting unjustified preferential treatment (2), (3). According to this legislation, ministers are not allowed to hold office in state-owned businesses, or serve as chairperson to private businesses; however, this is rarely enforced and many influential figures in government hold private business interests (4). No cases of unauthorised private enterprise by defence or military employees were found.

Businesses and enterprises can not operate in Oman without authorization from the relevant institutions and ministries (1). The government operates businesses according to the law and with authority from relevant institutions (2), (3).

There is no evidence or information on private businesses or companies operating under the umbrella of the national forces or security apparatuses from 2004 (1). As such a law that prohibits these practices does not exist. Before 2005, there was one business affiliated with the financial department of the national forces. However, it was stopped via presidential decree. The Military Employment Law prohibits these practices (2), (3).

There are no private companies managed by the national forces. No high-ranking officers or institutions own businesses (1). Low-ranking officers may operate private enterprises (ordinary businesses) but they have to be approved, and registered under the names of their relatives. Additionally, many security personnel might not own a business, but they might have a second job like working on a taxi, or even in private security company to secure restaurants and bars. The involvement of senior security officials in businesses remains unclear.

There is no evidence of an unauthorized private enterprise run by the military or the Ministry of Defence. The private enterprises run by the army are legal and operate according to the law [1,2,3].

There are no cases where unauthorized private companies can operate in Qatar or be run by the military/ MoD. The companies must be legal and registered, yet they enjoy more secrecy regarding their financial and administrative operations [1,2,3].

Article 14 of the Saudi Civil Code prohibits government employees from working in the private sector, and from engaging in specific commercial activities, such as contracting or establishing and managing a company. Ministers and other senior government officials appointed by a royal decree are prohibited from involvement in commercial activities with their ministry or organization during their public tenure (1). According to our sources, although there are these laws, many officials from the royal family do not abide by them (2).

According to our sources, no unauthorized enterprises are operating in KSA. All enterprises are authorized by the law or by royal decree (1). In practice, it has historically been common for government employees, specifically senior government military and defence officials, to be involved in business activities, including in the defence sector. Analysts at US-based think tanks have suggested these princes include Khaled bin Sultan, Saudi deputy minister of defence between 2011 and 2013, who allegedly “reaped unseemly personal financial gain” from the logistical aspects of the Gulf War (2). Other examples include Miteb bin Abdullah, the erstwhile chief of the Saudi Arabian National Guard. He allegedly controlled several private companies that supplied equipment to the Saudi military, such as a USD 10 billion deal for walkie talkies and bulletproof military gear that was awarded to one of his firms (3).
It is clear that these practices have been prevalent, and the Saudi government has turned a blind eye to them. Historically, there has been no evidence of penalties incurred by military or defence employees engaged in private enterprise. The exception to this is Miteb bin Abdullah’s arrest in November 2017 as part of Crown Prince Mohammed bin Salman’s broad anti-corruption sweep. However, charges against Miteb centred on fraud and corruption, for example through allegedly awarding contracts to his firms and inflating these contracts, rather than the fact that he owned and operated private enterprises that supplied the Saudi military.
There is no further evidence of military or defence ministry employees being penalized over unauthorized private enterprise, and it does not seem that the Saudi government enforces the abovementioned prohibition. The line between public and private money in the country has always been notoriously difficult to discern, and the government has not in the past actively moved to obstruct senior defence officials and princes from pursuing private business interests. It remains to be seen whether this reality will change under Mohammed bin Salman’s rule, given that he has attempted to impose stricter controls on the finances and business interests of government officials and princes while boosting the central government’s reserves (4).

Article 30 of the law n° 67-20, dated 31 May 1967, on the General Status of the Military, states that it is forbidden for the military to practice a commercial profession, to do a private remunerated activity, or to take positions in commercial companies as directors, administrators or managers (1). According to our resources, there are no private companies owned by the military as they are forbidden by law(2).

According to our sources, there is no evidence of unauthorised privet enterprises (1).

Within the general labour law of the UAE, there are prohibitions within the Labour Law, Federal Law No, 8 of 1980, restricting public sector employees from running unauthorised private enterprises (1). There are also special laws for the armed forces that prohibit armed forces officers from engaging in unauthorised private enterprises, working with third parties and having a direct or indirect interest in any work, agreements or contracts with the armed forces (2). These laws include Federal Law No. 6 of 2004, Federal Law No. 7 of 2004 and Decision No. 12 of 1986. Despite the exemption from Labour Laws, the laws of the armed forces strictly outlaw any unauthorised private enterprise, and they include appropriate sanctions in place to deal with offenders (3), (4).

There is no evidence of the existence of any unauthorised private enterprises in the UAE. Research has revealed that Federal Law No. 6 of 2004, Federal Law No. 7 of 2004, and Decision No. 12 of 1986 strictly prohibit the armed forces from engaging in private enterprises (1). There is no evidence in the media of any unauthorised private enterprises. This could be due to the treatment of defence issues as confidential; however, there is no indication that unauthorised private enterprises occur, and there is relative transparency about the conduct of the private sector in the country. Senior officials within the defence sector are involved in businesses and enterprises; however, these are state-owned rather than privately owned, and the involvement is in terms of running the companies rather than owning them. For example, the Emirates Defence Industries Company (EDIC), which is a national leader in military industries, is owned by the Mubadala Development Company, whose chairman is H.H. Sheikh Mohammed bin Zayed bin Sultan Al-Nahyan, the Crown Prince of Abu Dhabi, and Deputy Supreme Commander of the UAE’s Armed Forces (3), (4), (5), (6).

Country Sort by Country 33a. Prohibition Sort By Subindicator 33b. Prevalence Sort By Subindicator
Algeria 50 / 100 25 / 100
Angola 50 / 100 0 / 100
Burkina Faso 50 / 100 0 / 100
Cameroon 50 / 100 25 / 100
Cote d'Ivoire 0 / 100 25 / 100
Egypt 0 / 100 0 / 100
Ghana 0 / 100 100 / 100
Iraq 0 / 100 0 / 100
Jordan 0 / 100 0 / 100
Kuwait 50 / 100 50 / 100
Lebanon 0 / 100 100 / 100
Mali 100 / 100 50 / 100
Morocco 0 / 100 75 / 100
Niger 100 / 100 100 / 100
Nigeria 50 / 100 50 / 100
Oman 0 / 100 100 / 100
Palestine 0 / 100 100 / 100
Qatar 0 / 100 100 / 100
Saudi Arabia 50 / 100 100 / 100
Tunisia 100 / 100 100 / 100
United Arab Emirates 100 / 100 100 / 100

With thanks for support from the UK Department for International Development and the Dutch Ministry of Foreign Affairs who have contributed to the Government Defence Integrity Index.

Transparency International Defence & Security is a global programme of Transparency International based within Transparency International UK.

Privacy Policy

UK Charity Number 1112842

All rights reserved Transparency International Defence & Security 2020