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Q73.

How strongly does the government control the company’s use of agents and intermediaries in the procurement cycle?

73a. Policies

Score

SCORE: 0/100

Assessor Explanation

Assessor Sources

73b. Enforcement

Score

SCORE: NA/100

Assessor Explanation

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Relevant comparisons

Albanian legislation has no provisions on agents and intermediaries in the procurement cycle [1]. The State Supreme Audit Institution (SSAI) has no auditing records on agents and intermediaries in defence procurements [2]. The only reference to the regulation of agents and intermediaries is provided in the Law on Government Debt [3].

This indicator has been marked Not Applicable. In the absence of provisions on agents and intermediaries no track records on enforcement can be traced [1].

The 2016 Public Procurement Law does not provide for any regulations or restrictions of intermediaries or agents in the procurement cycle (1). The country’s last assessment (2) mentioned Law No. 88-29 of July 19, 1988, on state monopolies on foreign trade, which prohibits the use of intermediaries in contracts related to imports. Art. 13 of the law mentions that it is punishable under Art. 128, 242, 243, 423 of the Penal Code; referring to the Penal Code that was valid in 1988 (3). In the Penal Code of 2015, the articles are partly abrogated or do not address the issue. No explicit punishments for intermediates in public procurement could be found in the law (4). There are reports of intermediates involved in corruption cases linked to the state energy company Sonatrach (5) and the cross-country highway (6). There is no evidence that the government is committed to imposing restrictions.

This sub-indicator has been marked Not Applicable because there is no evidence that the government controls the company’s use of agents and intermediaries in the procurement cycle, for example, in the Public Procurement Law of 2016 (1), or the Penal Code (2).

The Public Procurement Law stipulates that foreign companies seeking government contracts must have a legal presence in Angola or a legally recognized representative. The public procurement law extends authority to such agents and intermediaries. The 2014 Anti Money Laundering Law also establishes strict rules for anybody who acts as an agent or intermediary in a corrupt transaction (1), (2).

The use of third parties and intermediaries to secure procurement contracts by-passing the law have been common and are rarely sanctioned.

For example, in 2017, Halliburton paid US$29.2 million in 2017 to settle charges by the US Securities and Exchange Commission of violating the Foreign Corrupt Practices Act in Angola. The company had engaged a third party with ties to an Angolan official to secure a contract with the state-owned company Sonangol. In June 2018, a Spanish court charged three companies and 27 company officials with corrupt practices in connection with procurement contracts with the Angolan police in 2008. In either case, there is no evidence of any sanctions taken against Angolan officials and intermediaries in Angola so far (1), (2).

There are no laws or policies regulating or controlling the use of intermediaries in the procurement cycle. The government does not have this element under their radar.

This indicator has been scored Not Applicable. The country has no restrictions on the use of intermediaries in the procurement and procurement processes. However, in reference to the criminal responsibility that regulates intermediaries, the Law is still relatively recent (from 2018). According to Papa, “it is seen as decisive to extend a supervisory and control task to be adopted by the legal persons regulated by law 27,401, in relation to third parties, taking into account that, in the vast majority of cases, the payment of bribes is channeled through their actions.” [1] [2]

The legislation on procurement, including the Law on Procurement and other government decrees, do not specify anything in relation to the use of agents and intermediaries in the procurement cycle [1, 2].

The legislation on procurement, including the Law on Procurement and other government decrees, do not specify anything in relation to the use of agents and intermediaries in the procurement cycle [1, 2]. As such, this indicator is scored Not Applicable.

Though patchwork Defence policy guidance on the use of agents does exist, and non-public Defence policy guides may contain a more comprehensive policy, public documents indicate that the use of agents is allowed and that agents do not seem to be strongly regulated by Defence. Though as recently as 2015, the Defence Procurement Policy Manual (DPPM) contained policy on the use of agents by contractors [1], the most recent version of the DPPM contains no clear agent and intermediary policy [2]. The A New Tax System (Goods and Services Tax) Act 1999 does allow the use of resident agents acting for non-residents in the course of business in Australia [3]. Defence procurement officials are required by Defence Instructions to include clauses in contracts with service providers that the service providers and their agents must comply with the management and reporting of “unacceptable behaviour,” including health and safety violations and contraventions of Defence Values and APS Code of Conduct [4].

Restrictions on the use of agents and intermediaries in the Defence procurement cycle appear to be limited, and as a consequence, there have been no public cases where companies have been investigated or faced sanctions for violations of these restrictions [1]. Generally speaking, Australia is considered to have a robust criminal justice system, ranking 12 of 126 countries for the quality of its criminal justice system by the World Justice Project in its 2019 Rule of Law Index [2]. However, in areas where sanctions must be applied by procurement officials in the face of unclear policy, such as with the corrupt activities of suppliers, there is some evidence political considerations and supplier relations may, intentionally or not, play a role in enforcement [3].

The lack of information on this issue means that it is not possible to score this indicator and, as such, it is marked ‘Not Enough Information’ instead.

Legislation in Azerbaijan does not prohibit the participation of agents and mediators in the procurement process. According to Article 22.2 of the Procurement Law, if the procuring entity has no experience in public procurement, local and foreign specialists or consulting firms may be involved in the organization of the tender (1).
In recent years, the press has written about a scandal surrounding the lobbying activities of the Azerbaijani authorities. It is alleged that the Azerbaijani authorities have given various gifts to various organizations, including representatives of the Parliamentary Assembly of the Council of Europe (2, 3, 4). German media published that the mediator’s assistance was used for cooperation with the German military company Rheinmetall (5).

This indicator has been marked Not Applicable. Azerbaijan does not prohibit the participation of agents and mediators in the procurement process.

There is no legal framework that prohibits or controls the use of agents and intermediate agents in the procurement cycle. Indeed, many acquisitions are done through intermediate foreign agents [1, 2].

As outlined in 73A, there is no legal framework that prohibits or controls the use of agents and intermediaries in the procurement cycle [1, 2]. This indicator has therefore been marked ‘Not Applicable’.

Agents are allowed in cases involving foreign suppliers under DP 35 and are subject to some level of control and monitoring. In the absence of any official evidence, it was not possible to ascertain whether agents are also required to incorporate anti-corruption clauses in contracts, declare remuneration, provide receipts or allow audits by official agencies [1,2].

There is not enough information to score this indicator, as there are no cases reported – either on open or official sources – of sanctions being applied [1].

Economic operators may use agents, but at their own risks and at their own expenses. The same constraints apply to such agents as to the economic operators in terms of grounds for exclusion, etc [1, 2]. Regarding important defence procurement procedures, parliament regularly asks for an overview of all the contacts that defence employees have had with representatives of the participating companies. Such a list is therefore systematically maintained for these procedures.

There is Not Enough Information to score this indicator. No cases of corrupt activities of suppliers were found.There is no evidence in the media of violation of policies by agents [1]. Similarly no evidence exists that the government has interrupted, discontinued, or punished anyone using an agent or intermediary. Sanctions can include financial fines, prison sentences or exclusion from future bidding [2, 3].

The use of agents by companies is not regulated by the Public Procurement Law [1, 2].

Relevant regulations do not stipulate agents in the procurement procedure [1, 2]. Given that there are no restrictions on agents or intermediaries, this indicator is marked Not Applicable.

The PPADB Act and the PPADB Manual do not expressly prohibit the use of agents and intermediaries in the procurement cycle [1]. The assumption of the PPADB Act, the PPADB Manual, and the CECA equally apply to agents and intermediaries in the procurement cycle [2]. The use of Agents is acceptable to the extent that they operate within the confines of the relevant legal framework. Agents and intermediaries are in terms of the law prohibited from enganging in corruption, collussion, conflict of interest and are subject to full disclosure of anything that may impact on the objectivity of the procurement processes as far as a transparency and accountability are concerned.

Sanctions that are provided for by the PPADB Act and CECA are applied [1]. However, some alleged cases of corruption that have been reported in the media have not been investigated to test the enforcement of the sanctions on the malpractices of the agents and intermediaries [2].

The use of agents and intermediaries in the procurement cycle is prohibited by the Public Procurement Law 8.666/93 [1, 2, 3].

The Court of Auditors (TCU) exerts control over suspicious interferences of third parties in public procurement; however, due to the way data is presented on their website, it is not possible to determine its role in enforcement [1]. As such, it is not possible to score this indicator and it is marked ‘Not Enough Information’.

ControlRisk (2016) writes, “the compliance risks associated with third parties have always been important because so many international corruption cases involve bribes paid by intermediaries, such as commercial agents” (1). The outcome of the 2015-2016 survey highlights that 65% of the respondents say ‘high’ or ‘very high’ to corruption risks associated with intermediaries, with some of them thinking that this percentage could be higher (1). Law N° 039 (2016), and Decree N° 0049 (2017) do not allude to the way companies use their agents or intermediaries in the procurement processes. They do not address how bidding or contracting companies use their agents and intermediaries in the procurement processes (2), (3). However, they both provide sanctions in case these agents and intermediaries are involved in offences to the procurement process, without any regard to their status within the bidding or contracting companies. Yet, there is no evidence of the existence of policies addressing such a case either. Given the fact that there is evidence that the use of agents and intermediaries increases the risk of corruption (4), this use may be regulated in the near future.

Because there are no controls over the use of agents and intermediaries, this indicator has been marked Not Applicable.

The activities of agents and intermediaries are not regulated in Cameroon. Based on the Procurement Code and as stated by Decree No. 2018/366 of 20 June 2018, the purchase of defence and security items is enacted outside the regular procurement processes (Articles 4 and 71) [1]. This makes procurement of defence and security items highly secretive and confidential [1] [2].

Because there are no restrictions on the use of agents and intermediaries, this indicator has been marked Not Applicable.

The confidential nature through which defence and security items are procured makes it difficult to decipher whether the government has a strong influence and control over a company’s use of go-betweens when it comes to the procurement of defence and security-related items [1] [2] [3].

There is no prerequisite for companies seeking to bid on government contacts to disclose their beneficial ownership, therefore more clarity on government oversight concerning a company’s use of agents and intermediaries would benefit the public interest. However, the Integrity Regime provides a framework for companies, and determines whether a supplier is ineligible to do business with the government. [1] The Ineligibility and Suspension Policy sets out appropriate legislative and legal measures that include accounting for potential violations by suppliers: Competition Act, Controlled Drugs and Substance Act, Corruption of Foreign Officials Act, Excise Tax Act, Financial Administration Act, Income Tax Act, and the Lobbying Act. [2] Companies bidding over CAD10,000 are required to provide information to verify the status of their prospective first-tier subcontractor prior to bid submission and before entering into a direct contractual relationship. Additionally, the Canada Business Corporations Act (CBCA) ensures accountability of officers, agents and mandataries, and other intermediaries. [3] The government’s Budget 2021 has proposed to fund a publicly accessible corporate benefical ownership registry by 2025. [4]

There is not enough evidence to score this indicator. There is no prerequisite for companies seeking to bid on government contacts to disclose their beneficial ownership, therefore more clarity on government oversight concerning a company’s use of agents and intermediaries would benefit the public interest. The RCMP has a Federal Contracting Fraud Tip Line, which is a joint initiative with the Competition Bureau, Public Services and Procurement Canada. [1] As the media reported issues related to a government contract award for security equipment in Canada’s embassies, it would benefit public interest to learn of the progress of enforcement. [2]

There have been serious concerns for the discretionary and opaque use of intermediaries in cases of alleged corruption in acquisition in the armed forces [1]. The use of intermediaries has been denounced by press reports in a case of duplicate invoices, in which Fábricas y Maestranzas del Ejército (FAMAE) was used as an intermediary in arms acquisitions by the army [2]. Officials of FAMAE have declared that intermediation processes have been reported to the General Comptroller (CGR) when the information has been requested; however, there is no evidence available regarding how the intermediation process is regulated [3]. In 2018, the Council for Transparency states that information related to acquisitions made by the Comando de Apoyo a la Fuerza (CAF), in which FAMAE was the intermediary, was first declared nonexistent, and then denied giving information stating it was considered restricted material [4]. While the army justified the restricted character of the information through Article 436 of the Code of Military Justice, the action should not include information regarding the procedural use of intermediaries, besides the specific and restricted character of the acquisitions. Pondering the evidence, the Special Parliamentary Commission for Irregular Acquisitions in the Armed Forces recommended: “regulate[ing] intermediaries of the procurement and acquisition processes”. Following this, the MDN established an agenda of probity and transparency in national defence and the armed forces [5, 6]. The agenda has compromised the establishment of processes that strengthen the good use of public resources and avoid acts that violate the principle of probity, including as a critical area the regulation of suppliers and procurement. However, it must be noted that the plan does not specifically address the problem of the intermediaries.

Given that the government imposes no restrictions on the use of agents and intermediaries, this indicator is marked ‘Not Applicable’.

Αccording to an ADB//OCD report, China has a comprehensive legal framework for the control of intermediaries in government procurement. [1] However, this legal framework does not apply to military procurement (Article 86, PRC Government Procurement Law). Despite the procurement system being centralised with the dismantlement of the formerly powerful General Logistics Department and the General Armaments Department, regulations on intermediaries (中介)or representatives (代表) on the CMC website and the procurement platforms are not available. Other available regulations include: the People’s Liberation Army Equipment Procurement Regulations (中国人民解放军装备采购条例) (referred to as CMC Equipment Procurement Regulations), Regulations on the Management of the People’s Liberation Army Equipment Procurement Methods and Procedures (中国人民解放军装备采购方式与程序管理规定), Regulations on the Management of Competitive Equipment Purchase of the Chinese People’s Liberation Army (中国人民解放军竞争性装备采购管理规定), Measures for the Administration of Confidentiality Qualification Examination and Certification of Weaponry Scientific Research and Production Units (武器装备科研生产单位保密资格审查认证管理办法). As military procurement is dominated by SOEs, the use of intermediaries is limited. One known case is the acquisition of the Ukrainian carrier Varyag (Liaoning), with the help of businessman Xu Zengping who acted as the PLAN’s intermediary. [2]

Τhere is no information regarding the control of intermediaries in military procurement. We have very limited information regarding their use, such as the case of businessman Xu Zengling and the acquisition of the Liaoning aircraft carrier. [1] As such, it is not possible to score this indicator and it is marked ‘Not Enough Information’ instead.

The use of intermediary agents in the defence sector is common in contracts related to maintenance, sourcing, and transport. Its procurement is regulated under Law 80 of 1993, [1] Decree 1510 of 2013, [2], and Law 1150 of 2007. [3] Article 6 of Law 1150 of 2007 states that “all natural or legal persons, national or foreign, domiciled or with a branch in Colombia, seeking to execute contracts with state entities will register in the Single Registry of Bidders of the Single Register of Corporations of the Chamber of Commerce with jurisdiction over the main domicile.” This registry requires bidders to disclose their experience, and their legal financial and organisational capacity. This seems to be the only mechanism through which use of agents and intermediaries could be restricted. However, some sectors are excluded from this requirement that may be relevant to the defence sector. For example, “acts and contracts that have as their direct object commercial and industrial activities of an industrial or commercial state corporation” and “concession contracts” are excluded from the registry requirement. In these cases, the entities themselves must verify the bidders.

With regard to anti-corruption clauses, the signing of anti-corruption commitments by the proponents is encouraged. [4] (Colombia Compra Efficient s.f.). Although such regulation exists, there is insufficient evidence regarding its effective implementation and related to the monitoring or verification of related information. Interviewee 7 states that the Ministry of Defence is planning to develop its own system that allows for the registration of all suppliers and contractors in the sector, including records of contracts awarded, the corporate mission of the supplier, contract performance, and other data, so as to identify possible acts of corruption. [5] (Interview 7 2019). Therefore, while there are some controls, there is no clear policy on the matter of intermediaries.

With regard to the application of sanctions when policies and laws on the use of agents are violated, it is clear that on many occasions these agents and intermediaries are powerful and influential in the defence sector. These agents and intermediaries often generate alliances with Generals to win bids or contracts, adjust specifications, and generate surcharges on the costs of the services and goods offered. Media outlets such as the Semana Magazine expands on this, reporting that there are some investigations that have been in the Prosecutor’s Office for some years that have not generated results and that some Commanders involved in acts of corruption are not removed from their posts. [1] This also has to do in part with the Colombian criminal system, in which sanctions cannot be generated on contractors until charges are made, and therefore they can continue to be hired. [2]

The behaviour of “private agents” (agents privés) can be sanctioned by the ANRMP during the procurement cycle, as per Articles 11, 183 and 184 of the 2009 Code of Public Procurement. However, despite these nominal controls, there are no clear and detailed government restrictions on the use of agents and intermediaries by bidding companies. The 2009 Code of Public Procurement refers to “private agents” in Articles 11, 183 and 184. Private agents are subject to the same penalties as public officials for having favoured the awarding of a public contract, as per Article 11. For other violations of the Code, private agents can be temporarily or permanently excluded from public tenders, as per Article 183. If the private agents are found guilty of irregularities, fraud or corrupt acts, they can be subject to monetary fines and criminal convictions, as laid out in Article 184 (1). Given that the role of “private agents” working on behalf of bidding companies is at least acknowledged and subject to controls by 3 provisions in the 2009 Code of Public Procurement. But the controls are restricted to sanctions without spelling out the scope of work that private agents can carry out in procurement.

Articles referenced in the above paragraphs:

Art. 11 – Approval of public contracts
Public contracts must be approved and notified before the execution begins.
Any contract awarded in violation of Articles 43 and 45 of the present Code is null and void… Civil servants, public officials or private agents of the persons referred to in Article 2 above, who by their acts, acts or omissions have favored the award or performance of such a contract are punishable by the penalties provided for in Article 183 below and by the laws in force (1).

Art. 183 – Contracts approved, executed, controlled, or settled in violation of this Code
Without prejudice to legal sanctions, public servants, public or private agents working on behalf of the legal persons referred to in Article 2 shall be temporarily or permanently excluded from participation in any public procurement procedure, depending on the seriousness of the offense committed… (1).

Art. 184 – Irregularities, acts of corruption and fraudulent practices
In addition to the penalties provided for in Article 183 above, the civil servants, public or private agents referred to in Article 2 of this Code, who are found guilty of irregularities, fraudulent practices or acts of corruption committed within the framework of the public procurement procedure, are punishable with monetary, disciplinary and criminal sanctions (1).

Though there are some government controls over private agents (agents privés) in the procurement cycle, there was no mention in the ANRMP’s 2017 Annual Report on Public Tender Audits (Rapport De L’Audit Des Marched Publics De La Gestion 2017) about any decisions regarding a bidding company’s misuse of private agents or intermediaries (1). There is also no mention of the role of private agents in the 2017 Open Contract Scoping Study for Côte d’Ivoire (2). Of the 17 ANRMP decisions uploaded to the roster of redlisted companies (Liste Rouge) on the ANRMP website, none are linked to the Ministry of Defence because public procurement for items requiring strict confidentiality are exempted from the provisions in the 2009 Code of Public Procurement (Art. 8). However, this does not necessarily imply that a company/supplier to another government ministry was not sanctioned for the misuse of private agents (3). In general, there is heightened control over the procurement cycle in Côte d’Ivoire since the creation of the ANRMP in 2009.

According to an RTI source, the ANRMP has imposed sanctions on 36 companies found guilty of irregularities, fraud and corrupt practices since 2014. This may have included sanctions on companies that misused their private agents in violation of the Code (4). The RTI source reported that ANRMP Chief Executive Non Karna Coulibaly told reporters in Yamoussoukro that the democratization of the debates over public tenders and the birth of a culture of complaint in the procurement process had ended the era of impunity that existed previously and had allowed for fraud and corruption. Coulibaly added that the ANRMP audits had also contributed to lower levels of corruption in procurement (4). The ANRMP has been proactive about imposing sanctions on those who violate the 2009 Code of Public Procurement. But no evidence of ANRMP decision against a bidding company due to the misuse of a private agent.

Research found no available information on regulations on the use of agents and intermediaries in the procurement cycle [1, 2]. The Law on Commercial Agents regulates the relationship between agents and the principal (in this case the supplier), and as such the law has no implications or relevance for public procurement [3, 4]. All commercial contact with DALO is directed through the DALO Industrial Office (Industrikontoret), which thus functions as a contact point between the Defence and industry [5]. As described in Q65, a circular letter from the Ministry of Defence regulates the obtainment and processing of tender bids made from current or former employees of the combine of the Ministry of Defence [6]. However, none of these measures constitute actual controls over the use of agents and intermediaries. It was confirmed by DALO that the use of agents and intermediaries is not forbidden, but that DALO generally seek to deal directly with the supplier [7].

This indicator has been marked Not Applicable, as the country has no restrictions on the use of agents and intermediaries.

The use of agents and intermediaries in defence procurement is generally banned in Egypt (1), However, despite the ban on the use of commercial agents, the use of Egyptian “consultants or representatives” may be allowed (2). According to our interviews, there is some governmental control over the use of agents and intermediaries.

Since defence procurement is often single-sourced and secret, it is impossible to know whether the ban on commercial agents is effectively enforced. There is evidence to suggest that “informal” agents have been used and paid bribes or facilitation payments to influence procurement decisions, such as in the case of the Mercedes deal or the case of the Military Aircraft depot case (1).

Public procurement contracts are elaborated based on the Law of Obligations Act, which does not prohibit the use of intermediaries, although some obligations do apply. [1] For example, a broker is obliged to preserve relevant documents related to the professional activities for more than three years. The Strategic Goods Act regulates brokering of military goods. [2] The law stipulates the registration of the broker in a database, and the additional documents that need to be added, for example, an overview of previous business activities and the quality of goods. The application could be rejected based on the suspicion that the applicant may pose a threat to Estonia’s national security or interests, or if misdemeanour proceedings have commenced with regard to an applicant, provider of service or related person.
The holder of the licence is required to keep records and preserve the documents concerning the transfer of strategic goods and the provision of the service for at least ten years. This data include the quantity and the value of the goods.
There are no anti-corruption clauses that would be required to be added to contracts. The law also does not stipulate the forms of remuneration nor the accounts.

The Strategic Goods Commission, which operates under the Ministry of Foreign Affairs, and consists of members from different governmental institutions, is created to strengthen the control mechanism over the issues involving strategic goods. [1] The Commission publishes reports annually. [2] They have been made publicly available until 2015. There have been several cases where a criminal investigation was started, but was soon closed, due to several reasons (mainly those involved being from foreign countries and unreachable). A recent criminal case involving an Estonian company (not defence-related) that acted as a broker was also closed in 2016 without charges. The legal entity had to pay a fee to the state revenue. [3]

Research did not identify any legislation prohibiting the use of agents in procurement. The Ministry of Defence’s Instruction on Procurement and Conveying of Property mentions that “direct contacts to the original manufacturers of products should always be the aim in procurement. Representatives/agents may only be used if it is estimated that this provides relevant and justified benefit.” [1]

There is not enough evidence to score this indicator, as no publicly available data of sanctions relating to the use of agents was found. As such, this indicator is marked ‘Not Enough Information’.

The French State works with intermediaries in the procurement cycle, especially when the buyer is a foreign country outside of the EU or NATO. [1] These intermediaries have to be validated by the Ministry of the Armed Forces (MOAF), which issues an “authorisation of manufacturing, trade or intermediation” for a maximum period of 5 years (renewable). [2] The MOAF states that “the exercise of this activity is subject to conditions and under the control of the State”, but doesn’t specify how this control is implemented.
According to an anonymous source, a high official within the ministry of foreign affairs, quoted by Romain Mielcarek, a journalist and researcher specialised in international relations and defence issues, [3] there are no intermediaries anymore on major arms deals, since the big country clients now have their own compliance rules they must abide by, but intermediaries are still often used for small contracts with small countries, orchestrated by the Secretary General of Defence and National Security (SGDSN).

Very little information is available on whether policies and laws on the use of agents were violated, as no monitoring by the MOAF or any external oversight entity exists. Therefore, it is hard to assess whether sanctions are applied or not. No record of sanctions was found in the press, but that doesn’t necessarily mean that no breach of conduct happened.
A semi private-public company working as an intermediary in arms exports to Saudi Arabia, ODAS, was recently dismantled, but it appears the reason was rather political than linked to a violation of the laws. [1]

The lack of information on this issue means that it is not possible to score this indicator and, as such, it is marked ‘Not Enough Information’.

Article 8.2.1 of the ‘Zusätzliche Vertragsbedingungen des Bundesministeriums der Verteidigung zur Verdingungsordnung für Leistungen Teil B’ (Additional Terms of Contract of the Federal Ministry of Defence to Part B of the General Terms and Conditions Concerning Contracts for Supplies and Services of 28 February 1998 as amended on 10 May 2001) states that the contractor is not allowed to involve third parties as intermediaries. An exception to this rule only occurs when the procurement agency (BAAINBw) expresses its consent or if the consultation only concerns ‘legal, tax-related, business/economy or technical matters’ [1,2]. The process of the audit is defined in the Customer Product Management, particularly in Article 2.2.4 ‘Integrierte Nachweisführung’ (Integrated Compliance Demonstration) [3].

Agents and intermediaries are controlled and limited, but they are not forbidden by the Government. Generally, there are no legal limitations on the use of agents or representatives. The German military has adopted general terms that require the approval of intermediaries. Approval will only be granted if it is commercially appropriate to use a broker. This is not the case if the contractor can be expected to deal with the procuring department directly. The use of general commercial agents who have due authority to contract on the contractor’s behalf and are instructed to negotiate for the contractor in particular areas of business not specifically related to military or public contracting is usually deemed appropriate. Commissions are only accepted if the military has approved the agent, the contractor discloses the commission and the amount is fair and reasonable. Commissions are also acceptable if the contract is awarded in an open or restricted (i.e. non-negotiated) procedure. Furthermore, lobbyists and commercial agents are not generally required to register with any government entity (in addition to general business registration requirements). However, a contracting authority may require commercial agents to register for specific procurements [4]. There is no nationwide corruption register; country-specific regulations are summarised here, for example [5].

Sanctions are usually applied when policies and laws on the use of agents are violated. This is also related to the Ministry of Economic Affairs and Energy and the publication of the annual Military Equipment Report [1]. However, there is no explicit oversight of Germany’s export policy for military equipment, so there might be some loopholes related to the use of agents and the relevant sanctions [2].

The government does not have a publicly published policy that directly deals with the use of agents and intermediaries in the procurement cycle, although intermediaries are sometimes employed (1), (2).

Because the government does not have a relevant policy on the use of agents and intermediaries in the procurement cycle, this indicator is marked Not Applicable.

The use of agents and intermediaries is prohibited by Law 2978/2011: the law states that “it is prohibited for suppliers or their legal representatives participating in the procedures for concluding and executing procurement contracts, services or projects in the field of defence to own and use any intermediary or agent in the process of concluding and executing the contract” [1, 2].

Sanctions are usually applied when policies and laws on the use of agents are violated [1]. There have been no known cases because the 2011 law is very strict regarding the use of intermediaries in the procurement cycle [2].

Official public announcements do not mention the use of intermediaries during procurements [1]. Clear rules on the use of them are also missing. However, during unofficial interviews, former MoD leader [2] explained that intermediaries often play a role, particularly while procuring used equipment from abroad. This is confirmed also by press reports [3]. Besides, intermediaries are also used while selling surplus or decommissioned equipment, also confirmed by press reports [4]. Regarding the use of intermediaries, the most important regulating policy is that they have to meet the relevant NATO standards set for intermediaries [5]. When it comes to NATO Security Investment Program (NSIP) procurements, those can be done only through NATO Agencies. In this case, integrity is ensured by NATO’s procedures and regulations. However, it must be stressed that NATO regulations apply only to NATO common funded (so not Hungarian) projects.

There are no known cases where sanctions have been applied, as such we are not able to provide a score for this indicator and it is marked ‘Not Enough Information’.

In NSID procurements, NATO’s rules on integrity ensure that no violations occur [1]. In fact, for NATO procurements, Hungary has a role, but it’s a mostly supporting role. NATO spends its own organisational sources in Hungary in these cases, but NATO does not have the legal power to sanction Hungary. The NATO agency makes sure that everything is done appropriately, and this way there is no need for sanctions.

Historically, the ‘dalal’ or broker has been an integral part of business dealings for time immemorial in the subcontinent. In recent times, India has had a chequered past with suspicions of ‘middlemen’ cutting deals when this was strictly banned by the government [1][2][3]. In modern times, with the relaxation in procedure, the government has regulated the use of intermediaries and agents, though guidelines have been contradictory. Defence Procurement Procedure (DPP) required foreign vendors to give details of any agent they have engaged yet in the same vein had stated that a seller will be debarred if engaging an agent on their behalf [4].

The DPP-2016 brought better clarity. The new guidelines allow companies to appoint agents, with strict oversight from the government. The vendor is required to disclose full details of agent engaged by them for marketing of their equipment in India, either on a country-specific basis or as a part of a global or regional arrangement [4][5][6].

The DPP-2016 guidelines clarifying the nature and use of agents, brings better transparency and probity in defence dealings. Violations of the guidelines would lead to penal action but the nature of punishment is not specifically prescribed [1]. A middleman in the AgustaWestland deal was extradited to India in December 2018 and taken into Central Bureau of Investigation (CBI) custody [2]. In 2019, a Swiss company Pilatus was suspended for the engagement of agents [3].

Law No. 16/2012 attempted to prevent the intervention of brokers by regulating the process of direct procurement, in which only three parties may be involved: the government, the original equipment manufacturer (OEM) and the national defence company with the user. This particular rule is intended to prevent any intermediaries influencing the decisions of the primary actors, in this case state delegates [1]. Unfortunately, supporting regulations such as Minister of Defence Regulation No. 17/2014 or Chief of Police Regulations do not stipulate the details of the mechanism. The absence of regulations on brokers in Law No. 16/2012 on Defence Industry is filled by Minister of Defence Regulation No. 17/2014. Rather than clearly regulating the important issues (which should include definitions, roles, obligations and payments, as well as a code of conduct for brokers), the regulation is limited to acknowledging the market representatives of principals and stipulating administrative requirements for the involvement of market representatives in procurement, as well as their rights to represent the principal during special procurement processes or direct appointments [2]. The President himself has forbidden the use of brokers in arms procurement [3]. Civil society organisations have warned that brokers could receive around 30-40% of the procurement contract value [4], constituting one of five conditions in procurement that make it vulnerable to corruption [5]. At the opposite end of the spectrum however, procurement personnel have argued that market representatives have their uses [6]. They enable more effective communication between users and suppliers and help to speed up the process by circumventing bureaucratic barriers across ministries/agencies. While the controversial issue continues to plague the field of procurement, there has been no initiative from the government to push principal suppliers to apply due diligence and a Code of Ethics to its representatives. In 2016, President Joko Widodo instructed the Defence Industry Policy Committee to not use intermediaries or brokers in defence procurement and to instead only procure through government to government (G2G) deals [7]. However, in practice this was not supported by a formal policy and the involvement of third parties is still possible.

The existing legislation only stipulates six offences that, if committed by suppliers, are punishable by sanctions. These offences include influencing the procurement committee, conspiring with other providers to regulate the bid price and secretly diverting work to other parties (see Article 66 of Minister of Defence Regulation No. 17/2014) [1]. There is no article that regulates sanctions imposed on market representatives. But in reality, in the three cases of procurement of defence equipment brought to court, it has always been the market representative who is found guilty, whereas the supplier companies were not charged [2].

The use of intermediaries is widespread in the procurement cycle, and there are no known restrictions on their use [1, 2, 3, 4].

This indicator is marked Not Applicable, as the use of intermediaries is widespread in the procurement cycle, and there are no known restrictions on their use [1, 2, 3, 4].

The law that regulates commercial agents stipulates that agents must be Iraqi nationals and reside in the country, be above 25 years of age and without a criminal record (1). They must be approved by the Minister of Commerce whose mandate allows him to suspend the commercial activities of firms and agents that fail to comply with the above. The extent to which the above-mentioned legislation is upheld cannot be commented on without relevant literature to reference. Extant coverage of high-profile arms procurement corruption cases offers evidence that brings into light a weakly controlled procurement environment, with no traceable chain of accountability or procedural requirements on the use of intermediaries.

Intermediaries and commercial agents are well placed in terms of political proximity to powerful parties and security actors. Despite their common use, existing regulations offer no definitive guidelines on how to best manage them, or more to the point, prevent them from securing bribes and improper business advantages. Presented with the ‘Commercial Agency Regulation Law’ (1) an Iraqi lawyer interviewed (2) for this assessment stated that “this is a general law that gives the right to people and companies to act as intermediaries for other firms which says little about enforcement or penalties in the event of failure to enforce. The GoI Contracts Implementation Guide (3) offers a legal framework that applies to actors within the defence and security establishment offers few details on implementation other than an emphasis on upholding contractual agreements, certification and the need to assess defence corruption cases to determine whether a penalty or pardon will be issued. Other local sources also generate content which allegedly reveals the involvement of non-Iraqi nationals, against what statutory law demands (4), (5).

A Lebanese arms dealer who spoke to Al Sharqiya News (6) on the condition of anonymity, was identified as one of the intermediaries involved Iraq’s 2012 arms deal with Russia, liaising with officials from both sides, and negotiating his cut directly with GoI officials. His involvement violates Iraq’s Law for Regulating Commercial Agencies (No. 51 of 2000) in which Article 4A. stipulates that “the commercial agent must be Iraqi and must reside in the country” (1). The problem, a lawyer (7) interviewed for the assessment described, is that “intermediaries are not restricted” adding that “they find ways of circumventing existing laws. An agent can be brought from outside of the country and given false Iraqi nationality, simply to clean money. A fake front company is formed, and fake contracts are generated. There are various cases where faulty products are purchased at a cheap rate, rehabilitated and sold as “new” to the GoI. Cases of defence fraud in the form of inflated sale prices and the misalignment between intended and actual allocations are widely cited as evidence of weak control of the procurement cycle and widespread corruption implicating a string of officials (8,9,10) .

The use of agents and intermediaries is allowed under Israeli law. The 1965 Agency Law and the 2012 Agency Contract Law permit companies’ usage of agents and intermediaries to distribute goods and services (1). The use of agents in arms deals ic common (2). There are some laws to restrict rights of agents to get commission, such as the Commodoties and Services (Controll) law of 1957, but there are few restrictions on agents’ ability to operate in the sector (2). The Ministry of Defence’s use of agents has been criticised in the past (3). Currenlty, there is a debate around the use of agents, as a result of Benjamin Netanjahu and his cousin who was an intermediate for the German submarine deal.

Sanctions are usually applied when policies and laws on the use of agents are violated (1).

There is no legislation limiting the use of intermediaries or agents. It is worth noting that, despite the absence of national legislation, the limitation to use intermediaries or agents is generally present in internal regulations of companies, in order to guarantee a more direct and transparent relationship with the Ministry of Defence [1]. Law 185/1990 [2] regulates the export, import and transit of armaments. In particular, art. 10 foresees the necessity to receive an authorisation to start contractual bargaining for export. In order to receive this authorisation, companies need to undergo a certification process that also includes the necessity to indicate a director (intermediary) personally responsible for its actions [3]. In the performance of their activities, both the director and the company need to comply with national and international legislation, but there no specific anti-corruption clauses are mentioned.

This indicator has been marked ‘Not Applicable’, as there is no general prohibition or clear restrictions on the use of agents and intermediaries

General imports of defence equipment from foreign (often US) manufacturers, which is distinct from imports through Foreign Military Sales (FMS) managed by the US Government, made up about 7% of the amount that Japan spent on defence procurement in 2017. [1] The Ministry of Defence (MOD) has employed the services of Japanese trading houses as agents to handle such general imports. Over the years 2006-2009, it became known that the trading houses Fuji Industries, Yamada Yōkō and Kyokutō Bōeki Kaisha had submitted inflated invoices to the Ministry of Defence. [2] Awareness of this increased due to investigation into the misconduct of former Administrative Vice-Minister Moriya. In 2008 he was sentenced to prison and to paying a fine for accepting bribes from the trading house Yamada Yōkō. In addition to trading houses, two other types of agents are often mentioned. One is agents (代理人) representing a company registered in Japan vis-à-vis the MOD, designated “representing agents.” The other is agents operating as intermediaries between a Japanese importing company (often a trading house) and defence manufacturers in a foreign country, designated “foreign trade agents”. There are no limitations on the use of agents or representatives that earn a commission on a defence procurement transaction in Japan. [3] Nevertheless, according to a 335-page long notice from the Acquisition, Technology & Logistics Agency (ATLA) with rules on contract affairs, a contract party to a procuring institution within the MOD that entrusts all or part of business affairs regarding the contract to a representing agent must report this to the official for Treasury in the Ministry. [4] The contract party must submit documents showing a) the name and position of the representing agent; b) the range of business matters to be handled by the representing agent and c) other items determined necessary. [5] The notice from ATLA covers payment for fulfilled contracts but does not include rules about remuneration of the representing agent. However, under Japanese law, with a few exceptions such as when the amount paid is very small, all remuneration, whether it be a salary or a honorarium, and whether it is paid to an individual or to a corporation, must be declared to the tax authorities. [6] The above-mentioned legislation describes administrative and business practices in a Japanese context, and no procedures for making payments to other countries. It is therefore fair to assume that payment to a representing agent is made into local (Japanese) accounts. Foreign trade agents are mentioned in an appendix to this notice from ATLA as well as in a circular from the administrative vice-minister of the MOD on measures to ensure credibility of documents submitted by contract parties. The two ordinances do not mention a duty to register foreign trade agents, to declare remuneration to them or to make payments into local accounts, however. [7] [8] The “Guidance on Bidding and Contract,” (see Q62A) applies to both businesses that sell equipment to a procuring institution and to bidders. [9] Core anti-corruption measures from this “Guidance” are therefore mentioned in the MOD circular “On measures to ensure credibility of documents submitted by contract parties,” which applies to importers of defence equipment. These measures include a duty to accept company audits by the MOD [10] and to inform company staff of MOD whistleblower procedures, conduct regular internal audit of the company’s defence related departments and to change company rules that do not satisfy such anti-corruption measures imposed by the Ministry of Defence. [11] The documents cited thus far do not impose any explicit anti-corruption requirements on representing agents. However, although the above cited ATLA notice regarding contracts does not specify which of the several categories of “representing agent” that are found in Japanese law the rules in this notice apply to, no category of “representing agent” is, for example, allowed to conduct acts of fraud. [12] The only anti-corruption related requirement imposed with regard to a foreign trade agent in the cited documents is that the contract party’s contract with the foreign trade agent must be in line with ordinary business practices. [13] Following the concern since 2006 about inflated invoices submitted by trading houses, the Ministry introduced new items in contracts with trading houses as of Fiscal Year 2008. Trading houses were thereafter obliged to submit the original estimation sheet, certificate of quality and invoice from the manufacturer from which they purchased a piece of defence equipment. [14] The contents of these clauses are not a part of what the MOD publicises from its defence procurement contracts (see Q61A). [15] Documents on this topic from the timeframe of this research that were found in the MOD’s database of ordinances when searched, contain implementing guidelines for the policies determined in 2008, but no new policies introduced after that. A professor with good knowledge of accounting within the Japanese defence sector said that the Board of Audit has the same right to audit Japanese trading houses as it has to audit other private Japanese enterprises. [16] The Board’s audit of trading houses, published in 2009 was based on of the Board of Audit Act, in particular the right to audit the accounts of a supplier of goods to the State. [17] The Board was, however, not able to get a clear picture of the payment of fees by defence manufacturers to trading houses or the content of the trading houses’ contracts with foreign trade agents and enterprises in foreign countries. [18] No reports were found in a search of the mainstream newspapers Asahi Shimbun, [19] Nikkei Shimbun [20] and Yomiuri Shimbun [21] on the role of trading houses in the procurement of defence equipment, indicating that there have not been scandals within this field or changes to practices seen to warrant media attention. The use of agents and intermediaries is not prohibited. Audits of contract parties such as trading houses by government agencies is well described in the laws and regulations and often implemented. The evidence indicates that company registration of agents, declaration of remuneration and payment of agents into local accounts are implemented for representing agents but no clear evidence has been found that these measures are implemented for foreign trade agents.

The Ministry of Defence introduced several measures in 2008 to prevent corruption by trading houses that act as agents when the Ministry imports defence equipment from foreign enterprises. The Ministry did not demand that trading houses that had submitted inflated invoices pay back money before it had gotten a full overview of the transactions. [1] However, whereas a penalty of the same amount as the inflation of the invoice had been imposed in the past, the penalty was doubled as of Fiscal Year 2008. [2] In addition, the MOD did demand that production enterprises that had submitted inflated invoices pay penalties, as reported in, for example, the Nikkei Shimbun in 2017 [3] and the Asahi Shimbun in 2018. [4] Nevertheless, no reports were found on the homepages of the MOD [5] or Board of Audit [6] or the mainstream newspapers Asahi Shimbun, [7] Nikkei Shimbun [8] or Yomiuri Shimbun [9] of corrupt defence procurement practices by Japanese trading houses or other agents within the timeframe of this research. The imposition of stricter contracts on trading houses after 2008, and of penalties for inflated invoices on production enterprises, indicates a willingness to use sanctions, and they may not have been used because there were no major cases of corruption involving trading houses in this period.

Procurement laws in Jordan do not include any policies about the use of agents and intermediaries in the procurement cycle. However, both also allow the use of ‘consultants’ and ‘experts’ during the procurement process, when needed, which imply that a third party is regulated, yet not in detail [1]. There are also no restrictions on what qualifies as a need to consult a third party during the procurement cycle [2,3].

This sub-indicator has been marked as Not Applicable, as defence institutions in Jordan do not have restrictions on the use of agents and intermediaries.

The Public Procurement and Asset Disposal Act of 2015 does not contain any provisions for the use of intermediaries or agents in procurement. [1] Similarly, there is no information available from the Ministry of Defence about any agents or intermediaries used in procurement activities.

Defence procurement information available in the media has no indication of the use of cartels and intermediaries. All procurement activities are controlled by the Supply Chain Management Services Division in the Ministry of Defence, through the guidelines provided in the Public Procurement and Asset disposal Act. [2] The new procurement regulations provide additional guidelines that regulate the use of agents in procurement processes. All agents are now required under section 38 and 39 of the regulations to be registered, licenced annually and cannot conduct both procurement functions and contract management functions.

In addition, in cases where the procurement entity transfers procurement responsibilities to another agent according to the regulations, this can only be done under specific conditions and the accounting officers or head of the procuring entity who requests transfer functions remains accountable for all decisions taken by the agent. [3]

In the past there were guidelines around the use of intermediaries and agents in procurement, and hence there were sanctions that existed, if at all, procuring entities used agents or intermediaries. There have been reports, in the past, of powerful politicians close to the presidency who influence procurement decisions in government. [1]

Although no direct evidence exists to show that such influence is used in defence procurement, cases of corruption that go unpunished in the ministry may indicate undue influence. New regulations indicate that the accounting officers or head of the procuring entity who use agents remain accountable for all decisions taken by the agent. This means that the officer will be in the event of being involved in irregularities such as conflict of interest, manipulation etc, will be subject to sanctions under the act. Given that the government imposes no restrictions on the use of agents and intermediaries, this indicator is marked ‘Not Applicable’.

The current legislation and policies on public procurement does not specifically reference agents or intermediaries. The Law on Public Procurement stipulates that the tenderer must indicate in the tender dossier any share of the contract that they intend to subcontract to third parties; and any of those proposed subcontractors [1]. Furthermore, the law states that such indication has no effect on the contractual liability of the tenderer in relation to the contracting authority or others [1].
Each proposed subcontractor must meet eligibility requirements and submit evidence of compliance with those eligibility requirements [2]. Subcontracting may not exceed 40% of the total contract value; but two economic operators could nominate the same sub-contractors [2]. The economic operator that is awarded the contract bears full responsibility for fulfilling the contract in accordance, regardless of any part being subcontracted to third parties [2]. The economic operator must notify the contracting authority of any changes to the subcontracting plans that occur after the submission of the tender [2]. Finally, the contracting authority may reject any proposed subcontractor if they do not meet the eligibility requirements.

There is not enough information to score this indicator. No information is available with regard to sanctions when there are cases of violations of policies and laws by such agents. The current legislation and policies on public procurement does not specifically reference agents or intermediaries. With regards to sub-contractors or third parties, the Law on Public Procurement does outline certain rules and regulations, although does not specifically reference agents and intermediaries [1].

There appears to be no restrictions on the use of intermediaries and agents in the procurement cycle, and there appears to be no will to change this.

For starters, the procurement of “defence materials,” which covers the vast majority of all defence and security expenditure, is shielded from public view and the Government’s own Doing Business booklet says that the internal laws that regulate these processes are “flexible” (1).

This, analysts and activists say (2, 3, 4, 5, and 6), suggests that the process is deeply flawed, and that the role agents play are unregulated — we know that the use of agents is not prohibited because the few laws that discuss security expenditures, like Law no. 25 of 1996, say that officials and companies must simply state the name of the person who represents the known or unknown agents behind the deal in Kuwait along with the amount of money or nature of goods or services they received as a reward.

The fact that the security agencies have made a point of not discussing these aspects of deals with SAB auditors and even lawmakers at times (as is made evident by the kind of basic questions they ask in Parliament sometimes previously mentioned) suggests that this problem, along with others, is present.

This sub-indicator has been marked Not Applicable because there appear to be no restrictions on the use of agents and intermediaries in the procurement cycle. Moreover, auditors and activists do not know what, if any, sanctions can be imposed to punish this practice, which appears to be legal in Kuwait (1, 2, 3 and 4). So they naturally could not comment on how frequently these sanctions would be applied, assuming they exist in the first place.

The use of agents and intermediaries is technically allowed according to the legislation as far as the contractor is able to prove its eligibility and capability. Thus, the requirements are identical regardless of if the contractor is or is not an agent or intermediary (Law on Public Procurements [1], Defence and Security Procurements Law [2]). This information was also confirmed in the interview. [3]

Sanctions have to be applied according to the legislation (Law on Public Procurements [1], Defence and Security Procurements Law [2]). There have been no public reports indicating non-enforcement of terms. This information was also confirmed in the interview. [3]

Article 13 of Decree no. 11574 indicates that agents or company representatives are not allowed to represent more than one bidder per bid in the defence sector(1). Furthermore, the decree requires companies to register agents (2), but it does not require them to set a contract with an agent that includes an anti-corruption clause and declare all forms of remuneration (3).

This indicator has not been assigned a score due to insufficient information or evidence.

It is unclear if sanctions are applied when policies and laws on the use of agents are violated due to the lack of publicized information from the LAF (1). However, according to an interviewee, laws, rules, and procedures are firmly applied (2).

There is some control on the use of agents and intermediaries but there is no clear policy. With regard to criminal offences (bribery), Article 20(4) of the Criminal Code lays down that a parent company may be held liable for foreign bribery committed by a subsidiary if the criteria in arts. 20(2) and (3) are met, that is, a person in a management position in the subsidiary paid the bribe, or an employee or authorised representative paid the bribe as instructed or authorised, or as a result of insufficient supervision or control [1] Moreover, detection and reporting of bribery detected in the course of tax assessments are governed by Law on Tax Administration Art. 127(2) which requires tax administrators to report to law enforcement authorities suspected
criminal acts detected in the course of tax inspections and the STI’s binding “Rules on the identification of cases involving indications of alleged corruption-related offences and communication of information of such cases to Special Investigation Service (STI Rules). Pursuant to the STI Rules, tax examiners should examine payments for intermediary or consultancy services; legal and business services (if amounts appear excessive); advertising and promotion; payments for goods and services higher or lower than market value; transactions where key terms differ from other transactions, especially if payments are made in cash. [2] Moreover, with regard to subcontractors, they have to be clearly indicated and can be resorted to in line Directive 2009/81/EC on (…) award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence by obliging the successful supplier to organise a transparent and non-discriminatory tender for having subcontractors, amounting to the maximum of up to 30 per cent of the procurement contract. [3)

There is no evidence available to establish that violations have been detected and sanctions have been applied. As such, this indicator cannot be scored and has been marked ‘Not Enough Information’.

There is no evidence that Malaysia has a specific law or mechanism to control the role of middlemen. The absence of a law has led to corrupt practices occurring, for example, using a political position to win the tender. The malpractice does not only exist in the defence and security-related ministries but is prevalent in all government agencies. [1] The Pakatan Harapan government was undertaking steps to overcome the issue. [2] In one case, the Defence Minsitry, for instance, decided to end the direct negoation approach, but the idea was shot down by the Prime Minister, who argued that in certain senstive defence procurements it is still needed due to technological advancement and sensitivity. [3] [4]

There is no evidence that Malaysia has specific legislation to prohibit middlemen or agents from lobbying for procurement projects. [1] As such, this indicator is scored ‘Not Applicable’.

The public procurement code (Code des Marchés Publics et des Délégations de Service Public) regulates the use of agents or intermediaries in procurement processes, albeit to a fairly limited degree.¹
Article 29, which is dedicated to mitigating the risks of corruption, stipulates that:
“Offers and submissions must contain a commitment by the candidate or tenderer to:
– neither grant nor promise to grant to any person involved in the process of awarding a contract an improper advantage, financial or otherwise, directly or via an intermediary, with the intention of securing the contract.
– inform the contracting authority of any payment, advantage or privilege accorded to the benefit of any person, acting as an intermediary or an agent, to recompense them for any service provided”.¹
Meanwhile, article 20 states that “any person who personally or via an intermediary in the form of their spouse, parents or children, notably in the capacity of director, associate or employee at a company that is bidding for a contract from a tender board on which he or she is participating, must declare this interest, withdraw from the board and not participate in any aspect of the tender process”.¹
Articles 127 and 128 state that entities found guilty of acts of corruption via intermediaries can have their contracts confiscated and be banned from competing for public contracts for a variable period of time, the length of which is determined by the seriousness of the offence(s) committed.¹ Such bans can extend to companies holding a majority share in firms that contravene the rules and for companies in which the offending entity retains a majority stake.¹ The procurement code underlines that any sanctions issued under the code are not prejudicial to any legal prosecution that may follow.
However, beyond saying that candidates or contract holders must not seek to bribe public officials via intermediaries and must avoid conflict of interests via direct family members, there are no further controls imposed on the use of agents or intermediaries in the procurement process.
The Penal Code reinforces this message. Article 121 notes that anyone seeking to offer gifts, promises, threats, presents or any kind of benefits or favours, directly or via an intermediary, can face five to ten years imprisonment.²
The assessor found no evidence of policies that would directly apply also to the defence procurement cycle.

Cases of possible corruption involving intermediaries in defence contracts are seldom investigated and there have been no signs that the authorities are willing to or capable of prosecuting offenders. Indeed, there have been no such prosecutions since IBK became president in 2013.
The judicial system in Mali is unable to efficiently deliver prosecutions as a result of internal corruption. For example, in December 2013, judicial representatives threatened to hold an indefinite strike due to state interference in arrest warrants against judges accused of corruption.¹¹ The same month, four judges and a court clerk were arrested on suspicion of corruption.¹
A US State Department report also noted in 2013 that “corruption and limited resources affected the fairness of trials. Bribery and influence peddling were widespread in the courts … There were problems enforcing court orders. Sometimes judges were absent from their assigned areas for months at a time”.¹
When the IMF, the World Bank and the EU suspended their aid programmes to Mali following reports of the off-budget purchase of a new presidential jet in 2014, the BVG audited the account (see Q16C). The BVG determined that the former Minister of Defence, Soumeylou Boubeye Maïga, and the Minister of the Economy incorrectly interpreted article 8 of the Procurement Code that allows for certain acquisitions to be off-budget (see Q29A).²
The audit found that the government had spent 87.77 billion CFA (USD 163.44 million) on defence items that were not declared in the official budget.² ³ The report found that 18.59 billion CFA went towards the presidential jet, of which CFA1.4 billion were commissions and fees paid to a broker linked to the president’s friend, Michel Tomi.⁵ It is not clear what Tomi did to warrant the fee, nor is it clear whether his deployment as an intermediary was lawful or unlawful.
The public prosecutor launched an investigation into the affair, but as of April 2018, no charges had been brought against Tomi or any of the other individuals or companies implicated in the BVG’s report.⁶
Meanwhile, a further 69.18 billion CFA was spent on other military equipment, primarily transport vehicles.⁹ The BVG found that the MDAC had failed to respect the 2014 Finance Law requiring it to register these contracts and submit them as part of the annual budget. Many of the contracts were found to be heavily overpriced, strongly suggesting that these acquisitions involved substantial illicit activity.³ ⁴ ⁵ The Defence Minister responsible for signing these contracts, Soumeylou Boubeye Maïga, has since returned to government as Prime Minister.
This is despite the fact he was reportedly arrested in Paris by French police in 2014 in connection with an ongoing investigation into French businessman, Robert Franchitti. Franchitti, whose company MagForce bought military equipment from Guo Star and sold them to Mali for ten times the price, was arrested on arrival at the hotel where Maiga was staying.⁷ ⁸ Franchitti reportedly had EUR 10,000 in cash on him, which he was intending to pay to Maiga.⁷ ⁸
Moreover, IBK’s special advisor, Sidi Mohamed Kagnassy, was reportedly Director General of Guo Star at the time of the deal (he denies this), indicating an obvious potential conflict of interest and a significant potential for collusion.⁹ Although Franchitti was the subject of a police investigation in France, there is no evidence that the Malian authorities have launched their own investigation into why Franchitti was allegedly seeking to give Soumeylou Boubeye Maïga EUR 10,000 in cash.
Similarly, there is no evidence to indicate that Kagnassy has been investigated by the Malian authorities for his role as intermediary between IBK and the MDAC and his own company, Guo Star.

Controls for the use of agents and intermediaries are minimal, and there is no clear policy in this regard either. The LAASSP indicates that the agencies will refrain from awarding contracts to companies that hire advisory, consulting, and support services from any type of person regarding government contracting, if it is found that all or part of the compensation paid to the service provider is received by public servants. [1]

Recent journalistic investigations and reports have shown the use of intermediary companies to simulate operations in serious cases of corruption, such as that of Odebrecht [2] [3] or PEMEX. [4]

Although the SFP will impose financial fines and temporarily disqualify companies from hiring advisory, consulting, and support services from any type of person in the area of government contracting, [1] there is no documentary evidence to indicate that sanctions are applied in this regard. [2] [3]

The government imposes no restrictions on the use of agents and intermediaries, nor has it publicly committed to doing so. [1][2][3]

The government imposes no restrictions on the use of agents and intermediaries, nor has it publicly committed to doing so. [1][2][3] As such, this indicator is scored Not Applicable.

The 2013 version of the Code of Public Procurement Contracts provides a legal framework for the use of agents and intermediaries, allowing subcontracting under a certain number of conditions (1). Subcontractors are not legally bound to the public body that subcontracts, but to the successful candidate, who takes all legal responsibility for the actions of the subcontractor.

Article 158 of the 2013 Code of Public Procurement Contracts is entirely devoted to subcontracting. It states that:
⁃ Subcontracting is a written contract in which the tenure holder entrusts the implementation of a part of his procurement contract to a third party.
⁃ The tenure holder is free to choose his subcontractors under the condition that he informs the contracting authority about the type of services he wants to subcontract, the identity and the address of the subcontractors as well as a certified copy of the aforementioned contract.
⁃ However, the contracting authority can specify that the tenure holder must subcontract with Moroccan companies (especially small ones).
⁃ Subcontractors must fill the conditions required for contestants in article 24.
⁃ The contracting authority can reject the subcontractors within 15 days if they do not qualify for the conditions stated in article 24.
⁃ The tenure holder is held personally responsible for all obligations towards the contracting authority, workers and third parties.
⁃ The contracting authority does not have any legal link with the tenure holder’s subcontractors.
⁃ Subcontracting cannot account for more than 50% of the contract or concern the main activity of the contract.
⁃ The special prescription book must specify which activities constitute the main activity as well as the services that cannot be subcontracted.

Both interviewees confirmed that restrictions were in place in theory and in practice in procurement contracts linked to the public sector in general, without particular mention to the military sector (2)(3). There is no anti-corruption clause required.

No evidence of cases involving recent (less than 3 years) violations of policies and laws on the use of agents and subsequent sanctions was found in the local or international press (1-10). Therefore it is not possible to verify that sanctions are regularly enforced: absence of cases might indicate either an absence of violations of policies and laws, or a politically-motivated decision not to implement sanctions. Yet, no evidence of recent alleged violations were found.

Both foreign and local brokers arrange the deals for the Myanmar military’s defence procurement. Myanmar does not have a procurement law [1], meaning there is no mechanism through which to control agents, intermediaries, and brokers.

This indicator is marked ‘Not Applicable’, as there is no general prohibition of, or clear restrictions on, the use of agents and intermediaries.

The Defence and Security Procurement Act contains provisions on the use of agents and third parties in the procurement cycle (Article 2.82) [1]. Article 28 of the General Government Terms and Conditions for Public Service Contracts forbids parties from engaging in corruption with third parties [2]. However, no clear policy exists regarding anti-corruption clauses in third-party contracts.

There is not enough information to score this indicator. Currently, no evidence exists to suggest that sanctions are not applied in accordance with policy and law. The frequency of sanctions is not reported and could not be verified through interviews.

Under the Government Procurement Rules (Rule 23), third-party agents may be used, but their activities must comply with relevant regulations including the disclosure of who they are acting on-behalf. Despite this permission, and according to the Ministry of Defence, Defence has a policy of not contracting with agents and intermediaries [1, 2].

Due to the Government’s policy requiring third-party agents to comply with all standard procurement rules and principles, and because Defence has a policy of not contracting with agents and intermediaries, no evidence of enforcement could be found. The lack of evidence suggests that relevant policies are effective and have successfully deterred persons from attempting to breach them. The OIA response in Q66A provides supporting evidence. Given that there is no specific evidence for this indicator, it is not scored and is marked ‘Not Enough Information’.

There is no indication that the government imposes any restrictions over the use of agents or intermediaries. No relevant provisions were found in the legislation covering public procurement (1,2).

There is no indication that the government imposes any restrictions over the use of agents or intermediaries. No relevant provisions were found in the legislation covering public procurement (1,2). Therefore this indicator has been marked Not Applicable.

There are no public policies on the use of agents. The government is often reluctant to acknowledge the use of such intermediaries. In discussions with a source at the MOD, it was highlighted that intermediaries are not currently used, though that might have not been the case in the past. The recent example of the TUCANO fighter plan purchase which was a government to government transaction with no middlemen involved illustrated the point (1). The privileging of military procurement and its subjection to confidentiality has been highlighted as a reason why defence procurements often have complications, are inefficient, and prone to corruption scandals. Section 16 of PPA 2007 sets out fundamental principles of procurement including that all procurement should be conducted in a manner that is transparent, timely and equitable for ensuring accountability and conformity with the provisions of the PPA 2007. Defence and security contracts are expressly excluded under Section 15(2) PPA 2007. The Act itself does not expressly preclude the use of intermediaries (2).

The FGN rarely acknowledges the official use of intermediaries. The high cost of the Tucano purchase was “most likely through intermediaries in which case 95 percent of the deal is backed by corrupt practices which makes it so expensive” (1). The media reported that intermediaries were used in the Tucano deal, which would explain the high cost of the aircraft (1). The FGN insists it is a government to government transaction with no intermediaries used; however, it fails to explain the inflated cost of the contract when compared with the unit cost per plane. There are reasonable grounds to doubt whether it is a government to government transaction, given the requirements that the U.S. requires. “The propeller-driven plane with reconnaissance, surveillance and attack capabilities, is made by Brazil’s Embraer. A second production line is in Florida, in a partnership between Embraer and privately held Sierra Nevada Corp of Sparks, Nevada” (2).

In the official self-assessment document, provided by the Ministry of Defence in 2015, it is reported that the Ministry of Defence does not use agents or intermediaries in the procurement cycle [1]. However, the current version of the Law for Production and Trade of Arms and Military Equipment regulates the procurement cycle [2]. Mediation (or brokering) is defined as “negotiating transactions for the purchase, sale or supply of military products from one country to any other.” A intermediary (or broker) is therefore a trade company or sole proprietor performing brokerage services (Article 4b) [2]. These services may be performed on the basis of prior consent from the Government of the North Macedonia and a certificate issued by the Ministry of Economy, confirming that strict criteria have been fulfilled, including registration, appropriate human resources and facilities for storage and preservation of the equipment and documents, and prove that security measures have been respected (Articles 23 and 24) [3]. Explicit anti-corruption clauses are not included in the Law [2].

There is not enough information to score this indicator due to lack of evidence to establish whether sanctions are applied.

In the official self-assessment document, provided by the Ministry of Defence in 2015, it is reported that the Ministry of Defence does not use agents or intermediaries in the procurement cycle [1]. The current version of the Law for Production and Trade of Arms and Military Equipment, includes a ban on performing an activity of a trade company or a responsible person in a company [2].

The use of agents and intermediaries in the procurement cycle is not prohibited in Norway [1]. The only limitation concerns contracts which fall under EEA Article 123, where the procuring authority may not enter into a contract with an agent [2]. If the procuring authority signs a contract with an agent, the Defence Acquisition Regulation (§17-3) states that the procuring authority may require disclosure of the commission or agreement between the agent and the contractor [2]. In 2016 the Norwegian Centre for Integrity in the Defence Sector (CIDS) took up the question of intermediaries in the procurement cycle, both agents and lobbyists [3]. While admitting that the use of intermediaries is related to a variety of corruption risks, the CIDS did not recommend any specific guidelines in this regard. The main reason for this is that it is not easy to provide a clear definition of intermediaries; they can be advisers, brokers, lobbyists or a combination of them. In addition, Norwegian industry often depends on intermediaries and agents, especially abroad. The CIDS concluded that any regulation could potentially have negative consequences. According to the CIDS, the use of intermediaries is covered by the same regulations as the use of subcontractors. However, the Defence Acquisition Regulation does not state this explicitly, and it is not possible to verify how it works in practice.

There are no restrictions on the use of agents and intermediaries apart from the limitation concerning contracts which fall under EEA Article 123, where the procuring authority may not enter into a contract with an agent [1]. As such, this indicator is marked ‘Not Applicable’.

The use of intermediary agents is permitted, but there are some forms of control over them. This means that in many cases, the use of a third agent can be prohibited based on the type of purchases and the contractors (1). The Oman Authority of Partnership for Development (PFD) recognises foreign companies sub-contracting to local businesses as part of the In-Country Value thus reducing PFD offset obligations (2). Oman has legislation addressing agency and distribution agreements, the Law of Commercial Agents (RD 26/77) with amendments RD 73/96, RD 66/2005 and RD 34/2014 stipulates that any Omani company intending to act as an agent to foreign companies must be established under Omani law as a commercial agency business (3). Agents are liable for penalty payments in cases of non-compliance with the Law of Commercial Agents (3). The details of the law focus upon Omani ownership of agencies (at least 51%), registration and termination, no clear policy is set out how and under what jurisdiction defence-related procurement cycles fall under (4). The legislation in place offers some controls over the use of agents and intermediaries but lacks clear policy relating to defence-related procurement cycles.

The use of agents is permitted; however, there are conditions and restrictions based on the purchases and the contractor. According to our source, when the contract is violated, there are sanctions in almost all cases (1).

It is difficult to assess or validate its existence as there is no information concerning the use of agents and intermediaries. As the vast majority of procurements and purchases are national, and they are usually small in amounts, no third parties (intermediaries) or agents would be involved in that type of process. However, some contractors may hire other sub-contractors (1).

This indicator is marked Not Applicable because there is no explicit policy of sanctions against the contractors or sub-contractors in general (1). As contractors and purchases politically influenced, sanctions may never exist. Political influence means that the agencies prefer a Fatah member rather than other companies. According to Hadil Kazaz (2), in a report published by Aman (2), conflict of interest and tribalism is connected in all political, social and economic life and embedded within the PA institutions.

There are some controls over the use of agents and intermediaries. The Philippine Bidding Documents and IRR of Republic Act No. 9184 stipulates that companies must register agents and declare all forms of remuneration, and that agents must receive payments via a local bank duly licensed by the Central Bank of the Philippines [1, 2, 3, 4, 5, 6].

No specific enforcement percentage has been publicly issued but wider problems with enforcement have been detailed in public media accounts on several occasions [1, 2, 3, 4, 5, 6]. Sanctions were applied following a Blue Ribbon Committee hearing in which an agent-turned-whistleblower revealed corrupt practices in a procurement involving the DND and a US company [7].

The State has no legal control tools for use of intermediaries and company agents [1].

The State has no control tools for intermediaries and company agents, as such this indicator is scored Not Applicable.

Intermediation is regulated by Law 49/2009 [1], Law 37/2011 [2] and Decree-Law 19/2019 [3]. Intermediaries must be registered with the Ministry of Defence (MoD) [4] and follow guidelines [5] that do not include explicit anti-corruption clauses.

There is no publicly available database on the enforcement of sanctions. Existing reports on defence imports and exports date from 2011 to 2014 [1, 2, 3, 4] and allow for some insight into licensing activity and controls/audits, but there are no data on sanctions. There is no publicly available information from 2015 on. Given the lack of specific evidence on this subject, this indicator is not scored and is marked ‘Not Enough Information’.

There is a law that manages and restricts the work of agents and intermediaries. Law No. 8 (2002) on Organization of Business of Commercial Agents, also applies to the MoD. [1] However, there are no clear policies in many aspects of the law that concern the armed forces and MoD. [2]

Sanctions apply whenever agents are misused. But this has happened very few times in the last five years. [1]

Neither Federal Law No. 44 ‘On the Contract System for the Procurement of Goods, Work and Services to Meet State and Municipal Needs’ [1] nor Federal Law No. 223 ‘On the Procurement of Goods and Services by Legal Entities’ [2] impose any restrictions on the use of agents or intermediaries. Using agents, intermediaries and sub-contractors is a widely known technique for completing state procurement tenders [3,4]. Although the use of agents might cost the Russian government around 1.5% of the procurement budget [5], there is no evidence that the government plans to solve the problem.

This indicator is scored Not Applicable because the Russian government neither imposes any restrictions on the use of agents.

Saudi law previously prohibited the use of agents and intermediaries in dfence procurement via the Royal Decree M/S (1978 – commonly known as the Service Agents Law) and the Council of Ministers Resolution No 1275 (1975) (1). Three months after passing the latter, Crown Prince Fahad bin Abdulaziz made a public announcement that there was “no objection” to arms manufacturers appointing Saudi agents “in the fields of maintenance, service and construction” (3). Moreover, the Service Agents Law was repeated in its entirety in 2001 (2).

This sub-indicator is scored Not applicable as it is widely known that despite the existence of vague regulations banning the use of foreign agents in defence procurement, these have been regularly flouted. Historically, the use of intermediaries in the procurement cycle was extremely common and considered a standard facet of the procurement process in Saudi Arabia. This can be demonstrated by the high-profile examples or prominent “fixers” or intermediaries on Saudi defence contracts, such as Adnan Khashoggi and Wafic Said, and more recently Salah Fustok, who respectively made fortunes out of commissions on defence and security deals (1), (2), (3). Historical US lawsuits and investigations show further than Saudi princes have also been accused of corruption and bribery while acting as intermediaries on defence deals during the 1980s and 1990s, notably Khalid and Bandar, the sons of the late Minister of Defence Sultan bin Abdulaziz (4).

That being said, military procurement procedures in Saudi Arabia appear to be undergoing a substantial change as part of Crown Prince Mohammed bin Salman’s broader reform programme. He has already consolidated his control over the various defence and military branches (5). These reforms include the goals of localising military production, as well as streamlining procurement processes and tackling inefficiency in the sector. As part of these plans, two new military industry bodies were created in the last year, Saudi Arabian Military Industries (SAMI), which will manage new local manufacturing projects, and the General Authority for Military Industries, set up as an industry regulator to handle the procurement and other regulatory functions (6), (7). Additionally, Mohammed bin Salman has been actively sidelining erstwhile key figures and “intermediaries” that were responsible for negotiating major contracts between the Saudi military and foreign companies, for example, Saudi businessmen Salah Fustok, who had a long-established relationship with French weapons manufacturers Thales and Nexter. The goal appears to be to abolish deal-making channels so that foreign companies will have to go through SAMI, which is chaired by Mohammed bin Salman (8), (9). However, it remains to be seen whether the role of intermediaries in Saudi defence procurement will be curtailed.

The Law on Export and Import of Arms and Military Equipment aims to regulate brokering services and technical assistance [1]. Brokering services are defined in such a way to exclude financial services, insurance, transportation and advertising [2]. According to the law, technical assistance in research, production, testing, overhaul and maintenance of arms and military equipment could only be provided by legal persons registered in Serbia [3]. Both brokers and providers of technical assistance have to enrol in a registry maintained by the ministry responsible for trade [4]. Furthermore, they need to request a licence from this ministry for each business arrangement and provide information about payment modality, licence deadline and other relevant details [5]. Finally, they are obliged to report to the ministry about performed services for which they were licenced [6]. However, this law contains no specific provisions regarding anti-corruption measures or subjecting bookkeeping records of companies involved in arms trade to additional scrutiny, beyond general obligations for all companies in Serbia stemming from the Law on Accounting [7].

Recent developments involving, among others, the Serbian Minister of Interior’s father, who acted as an intermediary for the state-owned company Krusik, in selling weapons to Saudi Arabia and UAE but ending up in Yemen, are indicative that the government does not sanction brokers and intermediaries when respective laws are violated [1, 2, 3, 4].

Clearly defined punitive measures are stipulated within the overarching Prevention of Corruption Act for corrupt transactions with company’s agents [1]. Regulations are also in place to ensure that only authorised persons within government agencies can approve transactions [2]. Further, the Defence Science and Technology Agency (DSTA) regulates the transparency of company-agent interactions in defence procurement, and it has provisions for the recovery of funds from the primary supplier should the Ministry of Defence (MINDEF) and Singapore Armed Forces (SAF) incur losses from rogue agents [3, 4, 5]. All forms of remuneration agents receive are also declared.

There is evidence that sanctions and remedial actions have occurred as a result of agent violations, with the MINDEF publicly acknowledging recent lapses flagged up by the Auditor-General’s Office (AGO) and outlining its responses [1]. For example, the MINDEF stated that it had investigated lapses in the management of user access rights to the Electronic Procurement System had been attributed to non-adherence to established processes and disciplined the personnel and agent responsible for the lapses. It also rectified the system following the AGO’s findings [2].

For both procurement and acquisitions, there appears to be little control over agents and intermediaries. Third-party private agents and even the military attache and diplomatic network are all complicit in soliciting contracts where their host nation or company might be interested [1].

Agents face no real restrictions, as such this indicator is scored ‘Not Applicable’

While the use of agents and intermediaries in the South Korean defence procurement sector is not legally prohibited, defence agents are regulated by the Defence Acquisition Programme Act and the Directive of Defence Acquisition Programme Management. [1] [2] Article 57.2 of the Act requires defence arms sales agents to register for the DAPA’s system and report a contract fee to the DAPA. The Act was amended in 2016 in order to enhance transparency in the defence procurement process by implementing a formal registration system for agents, and only approved agents can work legally. The Act includes requirements for agents, and those who have a criminal record leading to imprisonment or a heavier punishment within 5 years are not allowed to register as an agent. [3]

The Amendment of the Defence Acquisition Programme Act came into effect in June 2017, containing restrictions on registered agents and intermediaries. If registered agents do not follow the pledge of integrity, which includes anti-corruption standards, their qualifications will be cancelled, according to Article 57.3 of the Act. In addition, those who do not report a contract commission to the DAPA or report false data will be punished with a fine up to 10,000,000 Korean won or imprisonment for up to 1 year. [1] [2]
However, enforcement of the law does not seem successful. Research on the use of agents and intermediaries reveals that some agents change their job titles to “consultant” or “coordinator” in order to avoid the legal duty to register with the DAPA system, which shows a loophole in the law. [1]

A thorough review of the procurement act, with special focus on the parts that determine the qualification criteria for bidders, indicates that there is no language that touches on the role of agents and intermediaries in the procurement cycle [1]. The focus is on bidders as being the ultimate representative of themselves [2].

A thorough review of the procurement act, with special focus on the parts that determine the qualification criteria for bidders, indicates that there is no language that touches on the role of agents and intermediaries in the procurement cycle [1]. The focus is on bidders as being the ultimate representative of themselves [2]. As such, this indicator is marked ‘Not Applicable’.

Defex was a public company (51% of shares were owned by the Sociedad Estatal de Participaciones Industriales (SEPI) while the remaining 49% was in the hands of the private arms industry). It was created in 1972 to promote and export goods and services from Spanish companies, but it has mainly been known as a mediator in arms exports through private intermediaries. Defex has acted as a contractor for its foreign clients and then subcontracted to domestic companies. Defex has been the first public company in Spain prosecuted because of corruption, involving the entire leadership. Because of the reputational damage and the ongoing cases of corruption, on 10 October 2017 Defex decided to dissolve, its liquidation period being open, the board of directors ceased and its liquidation body designated [2]. It is estimated that, only in the cases involving Angola, Saudi Arabia, Brazil, Cameroon and Egypt, the money paid in illegal commissions and bribes to public officers and leaders in the selling countries and the Defex leadership amounted to more than €220M [1]. The two top managers are accused of charging a commission of 0.5% of the value of each contract managed by Defex [3]. The Civil Guard identified Defex in a report as a “criminal organisation”. The judge has stated that Defex “lacked any internal organisation and control system for its commercial operations” and that crime prevention mechanisms “were simply non-existent” [4].

The practice of using intermediaries and the cases of corruption affecting intermediations have been notorious in the last decades. One of the most scandalous allegations was the use of at least six intermediaries to contract the flights for the Spanish troops deployed in Afghanistan. An investigation into the case of a crash that killed 62 people (the Yak-42 case) indicated that almost half of the money paid by the Ministry of Defence was used to pay the intermediaries, and that only 27% of the total sum was used to pay the Ukrainian company that operated the air service [5].

There are no known restrictions or specific public policies on the use of agents and intermediaries in the procurement cycle in the defence sector, as outlined in 73A. As such, this indicator is marked ‘Not Applicable’.

There is no evidence in Sudan’s Procurement Act that the government imposes restrictions on the use of agents and intermediaries during procurement processes in the defence sector [1]. Nor did an internet search of media reports yield any evidence of any pronouncements by senior officials committing to restrict the use of agents and intermediaries in defence procurement activities (or any procurement activities).

There are not any known restrictions or public-specific policy on the use of agents and intermediaries in the procurement cycle in the defence sector. As such, this indicator is marked ‘Not Applicable’. Additionally, there is no evidence in the media that the government has interrupted, discontinued or punished anyone using an agent or intermediary, or the agent or intermediary themselves, for a violation or crime related to a prohibition on such agents or intermediaries.

The government imposes no restrictions on the use of agents and intermediaries, nor has it committed to doing so in any explicit or substantial sense. The proposition on legal sanctions against companies [1] recently voted through parliament represents an important first step towards strengthening the overarching anti-bribery framework in Sweden. The law amendments in this proposition, however, focus on improving the procedures for company fines in cases of reported bribery or misconduct, rather than regulating or blocking the ongoing use of agents and intermediaries. Indeed, despite recent reforms, the use of agents, intermediaries, and bribery in Swedish arms trade continues to be an issue in practice. For instance, investigative journalists have shown how the ongoing export deal of Saab’s JAS Gripen to Brazil has involved cases in recent years of Swedish agents paying bribes to Brazilian officials [2]. Second, continued media scrutiny has also shown how Saab’s decades-long export of JAS Gripen to South Africa has been littered with cases of bribery and corruption [3], and in light of new revelations, SPAS recently reported Saab to the police for crimes of bribery [4]. Third, new findings have also surfaced regarding the use of bribes (by agents from Ericsson, and later Saab as they took over the contract) in the export of radar systems to Greece [5]. The Brazil, South Africa, and Greece cases are all examples of the finding in Q5 that Sweden has, in practice, repeatedly failed to adhere to the OECD Convention on Combating Bribery [6].

The recently adopted government proposition to strengthen the legal sanctions against companies [1] includes a series of law amendments that focus on improving the procedures for company fines in cases of reported bribery or misconduct. It does not, however, cover specificially the use of agents or intermediaries, nor the sanctioning of such misconducts in arms trade. Given that the government imposes no restrictions on the use of agents and intermediaries, this indicator is marked ‘Not Applicable’.

There is no publicly available evidence on the use of agents, nor could an audit on the issue be found (while RUAG has been criticized in an audit report on the use of agents [1]). An official at Armasuisse was not aware of Armasuisse dealing with agents. The contact is usually directly with Swiss firms [1, 2].

There is no publicly available evidence on the use of agents, nor could an audit on the issue be found (while RUAG has been criticized in an audit report on the use of agents [1]). An official at Armasuisse was not aware of Armasuisse dealing with agents. [1, 2]. Given that the government imposes no restrictions on the use of agents and intermediaries, this indicator is marked ‘Not Applicable’.

There are no government regulations for using agents or intermediaries for defence and security procurements [1, 2, 3]. The government of Taiwan imposes no restrictions on the use of agents and intermediaries, nor has it publicly committed to doing so. Taking the ongoing Indigenous Defence Submarines (IDS) programme as example, the navy has been accused of fraud by local journalists for using a shell company based in Gibraltar [4]. The navy, however, has denied any wrongdoing [5].

There is no government regulation for using agents or intermediaries in defence and security procurement. As such, this indicator is marked ‘Not Applicable’. The government is keen to ensure cases of fraud in government procurements are brought to justice [1, 2]. For example, under different ruling parties, the government took almost 20 years to bring the Lafayette Frigate scandal of the 1990s to justice [3].

Legislation does not rule out the use of agents in public procurement. Section 86 of the Public Procurement Act 2011 notes that “any conduct engaged in or on behalf of a body corporate […] by a director, servant or agent of the body corporate […] shall be deemed, for the purposes of this Act, to have been engaged in by the body corporate.” [1]

However, the legislation does not go on to regulate the behaviour of agents further.

There is not enough information to score this indicator. Use of agents is not recorded in the Annual Performace Evaluation Review of the Public Procurement Authority. There have been no reported cases arising in the reporting period of misuse of agents being prosecuted. [1]

It is widely known that the key to successfully bidding on Thai government contracts and supply tenders is to have a reputable local representative with good access to the procuring agency and knowledge of specific procurement requirements. Without this intermediary, it is very difficult to win a government project [1].

There are no specific controls encoded in legislation regarding the use intermediaries in procurement processes. Moreover, there are contradictions between the Regulation of the Office of the Prime Minister on Procurement B.E. 2535 (1992) and the Regulations of the Office of Prime Minister on Electronic Procurement B.E.2549 (2006), which leads to confusion among public procurement agents [2]. The Regulation of the Office of the Prime Minister on Procurement B.E. 2535 (1992) prohibits the bribery of officials, including bribery done through intermediaries, but it does not prohibit the use of agents and intermediaries [3]. According to Interviewee 1, a political scientist, it depends on the situation; in the junta government, individuals such as Deputy PM Prawit Wongsuwan, PM Prayuth Chan-ocha and Interior Minister Anupong Paochinda have enormous power over security institutions because of their experience as Army Chiefs, so the government can exercise strong control over these matters. Before, when ‘true’ civilians such as Chuan Leepkai or Apisit Vechachiwa held the role of Prime Minister, and companies included relatives or cronies of powerful military officials as their agents, the government tended to exercise less control over them [3, 4].

Thailand has no restrictions on the use of agents and intermediaries, as outlined in 73A. As such this indicator is marked ‘Not Applicable’.

According to our sources, the use of agents and mediators in military expenditures is forbidden by law in Tunisia. This policy is applied to all military purchases (1,2). Bidders are obliged to provide a written engagement (honor declaration) to avoid illegal, corrupted and influential practices (3). The use of intermediaries is strictly forbidden and it is mentioned as an article in every concluded contract. Such practices may be sued in justice in addition to the dispositions of articles 177, 178, and 179 (4) (5).

According to our sources, sanctions are applied in cases of the use of agents and intermediaries. There are clear mechanisms on applying these sanctions(1,2). The Ministry of Defence affirms that these rules are strictly followed (3). No new reports could be found mentioning the use of agents and intermediaries in the procurement cycle (4).

Interviewees 3 and 4 suggested that there are some controls over the use of agents and intermediaries, as regulated in the Law on Public Procurement and SSB documents [1,2], but no clear policy on how to control companies’ use of agents in the procurement cycle [3,4]. Interviewee 6 suggested that there are law firms and some representatives of foreign and national defence industry firms in Ankara, mostly retired military personnel and retired bureaucrats from the SSB, playing intermediary roles. However, confirming the assertions of Interviewees 3 and 4, he said that there is no legislation or regulation issued by the government that provides a framework about the roles/responsibilities and limitations of the intermediaries in the procurement cycle [5].

The assessor could not find anything through open-source research about the policies implemented by the government on this issue in the past two years.

Given the lack of conclusive evidence on this issue, this indicator is not scored and is marked ‘Not Enough Information’. Interviewee 6 suggested that, due to the absence of coherent and clear legislation and regulation about the roles and responsibilities of intermediaries in defence procurement, the only viable means for enforcement in cases of corruption or integrity-related problems is the Law on Public Procurement and Article 252 of the Turkish Criminal Code [1,2,3].

In their open-source research, the assessor could not find any reports published in the last two years about the enforcement applied by the government to intermediaries in defence procurement.

There is no policy regulating the use of agents. In the past, there have been reported cases of intermediaries and agents involved in the procurement process. An MP [1] stressed that during the procurement of bad helicopters from Belarus, the agent involved was a civilian, who got away with his commission for linking the Ministry of Defence and Veterans Affairs (MoDVA) and the supplier. However, in 2016, the MoDVA’s spokesperson Lieutenant Colonel Paddy Ankunda noted that Captain Ronald Muhoozi and a civilian Sam Ssimbwa had been arrested for allegedly posing as agents of the MoDVA to con a Polish company (BMP Poland SP) to allegedly secure a deal to supply arms to the MoDVA. The company paid the men €520,000 to help it secure the arms deal, on the pretext that the men were representatives of Prima Investments Uganda, a company allegedly affiliated with the MoDVA. Ankunda denied there was such a company and said that the men defrauded the Polish company. Muhoozi at the time was an aide of President Yoweri Museveni’s brother, Salim Saleh [2].

This indicator is marked Not Applicable as there is no policy to enforce. But the use of agents and intermediaries are a common occurence in the defence sector.

Classified procurement:
Ukrainian legislation on State Defence Order [1, 2] does not include any ban or restriction on the use of intermediaries. Moreover, there is evidence that the government engages intermediaries in procurement under the State Defence Order [3]. Additionally, the use of intermediaries is also included in the Law on State Export Control [4]. The law outlines that business entities of Ukraine intending to carry out international transfers of goods, including intermediary (brokering) activities related to international transfers of military goods, shall be registered as subjects of implementation of international transfers of goods. The MoD uses intermediaries, which are enterprise-participants of the Ukroboronprom (Ukrainian state-owned defence industry conglomerate) and are empowered to export and import military goods [5]. These enterprises can also be seen as intermediaries, although most of them are state-owned.

Non-classified procurement:
Ukrainian legislation on public procurement [6] does not provide any ban or restriction on the use of intermediaries.

Given that there are no restrictions on the use of agents and intermediaries, this indicator is scored Not Applicable.

Non-classified procurement:
Ukrainian legislation on public procurement [1] does not ban or restrict the use of intermediaries.

Classified procurement:
Ukrainian legislation on State Defence Order [2, 3] does not ban or restrict the use of intermediaries

This assessment has demonstrated that defence procurement in the UAE is excluded from the federal legislation, namely Resolution No. 32 of 2014, amended in Resolution No. 43 of 2016, which is concerned with procurement by the government, explicitly states it does not apply to the defence sector. Furthermore, there are no restrictions on the use of agents and intermediaries, nor has it publicly committed to doing so (1), (2), (3).

This sub-indicator has been marked as Not Applicable because the UAE government does not have direct control over defence contractors, as defence procurement is partially privatised, and thus an assessment of the enforcement of governmental policies that do not apply to defence procurement is irrelevant (1), (2), (3).

According to a report published by the Bird & Bird Law Firm, public sector procurement in the United Kingdom is based on free and open competition designed to achieve value for money for the taxpayer, with a high level of transparency of the procurement process and tender terms. Part of the objective is to discourage the perceived benefit of using intermediaries to liaise with government procurement officials, and thereby put a given supplier at an advantage.

As a result, it is uncommon to use success-fee-based agents and intermediaries in the way that happens in certain other markets, although some suppliers do use external assistance to help them understand the procurement process. However, there is no general prohibition on the use of agents or on their levels of remuneration, although individual tenders may include specific disclosure requirements [1].

The Ministry of Defence has an internal company policy statement that regulates the use of agents and intermediaries called “Agents and the Law of Agency.” Though the policy is not publicly available, information provided by the MOD on the policy shows that the use of agents is regulated and subject to some standards, although there is no evidence of anti-corruption clauses [2]. The UK Bribery Act does contain provisions on third party use, making it an offence to “offer promises or give a financial or other advantage”, either directly or through a third party [3].

There is limited evidence of the enforcement of policies and procedures related to the use of agents in defence. However, it should be noted that the majority of convictions under the UK Bribery Act have involved the use of third parties, including agents [1]. As a result, many contracts with suppliers/third parties no contain standard requirements requiring adherence with the Bribery Act and with stronger anti-corruption clauses [2]. However, the use of agents continues to represent a significant corruption risk in defence contracts and the lack of transparency around their use means that many cases of corruption will go undetected [3].

Part 129 of the Code of Federal Regulations concerns the registration and licensing of brokers [1]. It provides that agents (“persons engaged in brokering”) need to register and pay a registration fee to engage in such activities (as outlined in Section 38(b)(1)(A)(ii) of the Arms Export Control Act) [2]. Every prospective agent/broker is required to register with the Directorate of Defence Trade Controls (aside from foreign government officials, people involved in a limited capacity such as air carriers or freight forwarders that merely transport goods) as per Article 129.3 [1] Registration entails providing: name, address & registration code; certification that agents and company officials are not subject to an indictment and a description of the activities the broker will engage in. However, there is no clear requirement for anti-corruption clauses to be included in contracts with agents, or of the right to audit financial accounts by government agencies [1]. Agents and subcontractors are subject to the same ethics regulations as the primary contractor itself, which are outlined in Q62. This is made clear throughout the entire Federal Acquisition Regulation. As such, the Contractor Code of Business Ethics applies to the agents and is inserted into contracts [3].

There is not enough information to score this indicator. The Commerce Department does not collect key information on agents before approving arms deals [1]. It’s also not clear whether the DoD uses the State Department’s Watch List to verify that none of the prime/ subcontractors, brokers or agents are listed as risky [1]. These issues point to concerns over enforcement and may represent potential gaps in US regulation of agents, brokers and intermediaries in arms sales and acquisitions.

Among the different regulations for public procurement [1], administrative procedure laws [2] and anti-corruption laws [3], no regulations have been introduced prohibiting the use of intermediaries in government procedures, including procurement with the public sector.

Although there are no explicit regulations or government policies that seek to prevent the use of intermediaries in public procedures, differenet entities have made independent announcements warning against the risk of using third parties in administrative processes. The National Contractors Service (SNC), in promoting online registration with the National Register of Contractors (RNC), mentions that their facilitation of the process seeks to avoid the use of intermediaries, describing all the steps that contractors must follow in the registration manual [4].

This indicator is marked ‘Not Applicable’. Given that there are no regulations prohibiting the use of intermediaries [1, 2, 3], the warnings issued by state agencies are only recommendations to the user of the services and procedures [4]. The government imposes no restrictions on the use of agents and intermediaries.

No regulations are restricting the use of intermediaries or agents in the procurement laws of the country [1]. The government and military have previously used intermediaries to procure military equipment, and this has been justified by the government as finding a way to avoid sanctions (which include defence embargoes) [2, 3].

This indicator is marked “Not Applicable,” due to the fact that the country has no restrictions on the use of agents and intermediaries.

Country Sort by Country 73a. Policies Sort By Subindicator 73b. Enforcement Sort By Subindicator
Albania 0 / 100 NA
Algeria 0 / 100 NA
Angola 50 / 100 0 / 100
Argentina 0 / 100 NA
Armenia 0 / 100 NA
Australia 50 / 100 NEI
Azerbaijan 0 / 100 NA
Bahrain 0 / 100 NA
Bangladesh 50 / 100 NEI
Belgium 75 / 100 NEI
Bosnia and Herzegovina 0 / 100 NA
Botswana 50 / 100 25 / 100
Brazil 100 / 100 NEI
Burkina Faso 25 / 100 NA
Cameroon 0 / 100 NA
Canada 50 / 100 NEI
Chile 25 / 100 NA
China 25 / 100 NEI
Colombia 50 / 100 0 / 100
Cote d'Ivoire 50 / 100 25 / 100
Denmark 0 / 100 NA
Egypt 50 / 100 0 / 100
Estonia 50 / 100 0 / 100
Finland 50 / 100 NEI
France 50 / 100 NEI
Germany 50 / 100 50 / 100
Ghana 0 / 100 NA
Greece 100 / 100 100 / 100
Hungary 25 / 100 NEI
India 75 / 100 75 / 100
Indonesia 50 / 100 50 / 100
Iran 0 / 100 NA
Iraq 0 / 100 NA
Israel 50 / 100 50 / 100
Italy 0 / 100 NA
Japan 50 / 100 100 / 100
Jordan 0 / 100 NA
Kenya 0 / 100 NA
Kosovo 50 / 100 NEI
Kuwait 0 / 100 NA
Latvia 50 / 100 75 / 100
Lebanon 50 / 100 NEI
Lithuania 50 / 100 NEI
Malaysia 0 / 100 NA
Mali 50 / 100 0 / 100
Mexico 25 / 100 0 / 100
Montenegro 0 / 100 NA
Morocco 75 / 100 50 / 100
Myanmar 0 / 100 NA
Netherlands 50 / 100 NEI
New Zealand 100 / 100 NEI
Niger 0 / 100 NA
Nigeria 0 / 100 0 / 100
North Macedonia 50 / 100 NEI
Norway 0 / 100 NA
Oman 50 / 100 100 / 100
Palestine 0 / 100 NA
Philippines 75 / 100 50 / 100
Poland 0 / 100 NA
Portugal 50 / 100 NEI
Qatar 50 / 100 100 / 100
Russia 0 / 100 NA
Saudi Arabia 0 / 100 NA
Serbia 50 / 100 0 / 100
Singapore 75 / 100 100 / 100
South Africa 0 / 100 NA
South Korea 75 / 100 50 / 100
South Sudan 0 / 100 NA
Spain 0 / 100 NA
Sudan 0 / 100 NA
Sweden 0 / 100 NA
Switzerland 0 / 100 NA
Taiwan 0 / 100 NA
Tanzania 25 / 100 NEI
Thailand 0 / 100 NA
Tunisia 100 / 100 100 / 100
Turkey 0 / 100 NEI
Uganda 0 / 100 NA
Ukraine 0 / 100 NA
United Arab Emirates 0 / 100 NA
United Kingdom 75 / 100 50 / 100
United States 75 / 100 NEI
Venezuela 0 / 100 NA
Zimbabwe 0 / 100 NA

With thanks for support from the UK Foreign, Commonwealth and Development Office (FCDO) and the Dutch Ministry of Foreign Affairs who have contributed to the Government Defence Integrity Index.

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