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Q74.

Are the principal aspects of the financing package surrounding major arms deals, (such as payment timelines, interest rates, commercial loans or export credit agreements) made publicly available prior to the signing of contracts?

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Some details on the financing package of the procurements contracts adopted by the parliament [1] or the Council of Ministers [2] are made public. General financial details on procurement deals such as the total amount of the contract and the identity of the provider are provided by the minister of defence during the discussion on the budget. During the discussion of the budget for the year 2017, the minister announced the spending of 10 million USD for the acquisition of light weapons from Italy and 15 million USD on the acquisition of armoured vehicles from the US [3]. In 2017, the minister announced the spending of 20 million USD for the acquisition of the Integrated Airspace Surveillance System from the US [4]. No further detailed information is made available on financial and procurement details of the arms acquisitions made by the MoD.

The 2016 Public Procurement Law requires the publishing of aspects of the financing package. According to Art. 65, the call for tenders, specifying the price and the time limit for performance where possible. The tender should be published in the BOMOP and at least two national daily newspapers (1). The assessor was not able to check whether tenders on arms deals were published in the BOMOP in recent years (2). No public information on finance packages for defence deals could be found.

Under the 2016 Public Procurement Law, arms deals can be declared secret and are thus exempted from the application of the law (Art. 7, 1, b) (1).

Resolution 14/2018 of the Ministry of Defence established that the implementation of the import process established by the Joint Resolution on the procedure for importing war material will be assisted by the Electronic Document Management System (GDE) and the documents will be processed on a reserved basis. [1] [2] This implies that a large part of the contracts with foreign companies in the purchase of armaments will not be publicly accessible. [3]

General defence procurement is regulated through the procurement legislation, in particular, the Law on Procurement, and Decree N526-Ն, and other related documents. Clause 1 of Article 11 of the Law on Procurement provides that the announcement on signing the Agreement should be posted on the web portal (official Bulletin) no later than the next working day [1].
A randomly selected Agreement ՀՀ ՊՆ ՆՏԱԴ-ԳՀԾՁԲ-10/10-1 signed on August 10, 2017, on the delivery of the equipment renovation and maintenance services provide all the details anticipated by the contract, i.e. the payment timeline, the service delivery scheme, the total price of the contract, etc. [2].
The arms acquisition, though regulated by the Law on Procurement, does not have the same level of transparency as the general procurement. The confidentiality and state and official secrecy are applied to the arm acquisition agreements: financial packages, payment timeline, interest rates (in case of loans) are not disclosed to the public.

While limited details of contracts that are valued over the reporting threshold must be publicly reported [1, 2], this does not include details of any financing package. An expert on Defence procurement said Defence does not generally use financing packages in procurement, with only a small amount of financing available under a Defence Industrial Policy finance vehicle [3]. For Defence exports by Australian companies, the Australian government has established a Defence Export Facility pool of finance worth a fairly modest US$3 billion [4]. However, the terms of these loans are not publicly released, and in fact are specifically exempted by the Freedom of Information Act 1982 from public disclosure in most cases [5].

Contracts, payments, and so on are fully closed. The Ministry of Defence and other military organizations do not disclose this information and in most cases refer to the Law on State Secrets (1).
According to Article 5 of the Law on State Secrets (2), the following information in the field of foreign policy constitutes state secrets.
On Foreign-Political and Foreign-Economic Activity of the Republic of Azerbaijan:
If premature disclosure can damage the state’s security (Article 5.3.1);
Cooperation of the Republic of Azerbaijan with other countries in military, scientific-technical and other spheres;
If early disclosure could cause difficulties in carrying out diplomatic activities for at least one of the parties (Article 5.3.2);
According to another article (5.1.2), trends in the development of weapons and military equipment, tactical and technical characteristics of weapons and military equipment samples (5.1.3) are state secrets.

The financing packages for arms deals are not available, and when they are strategic procurements, communication from the Bahrain Defence Force and the Ministry of Defence (MoD) is absent. No timeline details are given, except when they are delivered, and most of this information comes from foreign sources [1, 2, 3]. This information is seen as strategic and confidential. Following a search of the websites of the Parliament, the MoD, the Ministry of Finance, the government and other media sources, and then verified by interviewees, no further information on this subject could be found.

In 2013, Bangladesh and Russia signed a USD 1 billion arms deal for the purchase of Russian weapons and technology [1]. In 2018, Bangladesh signed another deal with India for a USD 500 million line of credit [2]. Similar deals were also signed with China. While the existence of a financing package and the identity of the provider were made public after signing, no further details, such as payment deadlines, are available in the public domain.

This information is made available to all control organs (Inspectorate of Finance, Parliament, Council of Ministers, Cour des Comptes), but is considered commercially sensitive and therefore not publicly available [1, 2].

There is not enough information to score this indicator. According to a letter from the Ministry of Defence (MoD) written to Transparency International BiH, the MoD in the previous period did not have contracts related to the arms deals [1]. In 2016, the Security Investigation and Protection Agency of Bosnia and Herzegovina (SIPA) published a tender, Information on the Negotiated Procedure without publication of a public procurement notice (procurement of weapons), all in accordance with the Public Procurement Law of Bosnia and Herzegovina (PPL) (This procedure is used under special circumstance prescribed by the PPL) [2, 3]. When the contract was signed, SIPA published all the relevant information related to the procurement [4].

General information regarding the financing package is available [1]. However, the intrinsic details that regulate the actual operationalisation of the contract are not publicly available [2]. If an interested party requests such information, the PPADB Act makes provision for the processes that must be followed for such information to be released [2]. From the information available on the PPADB website, information regarding the financing package surrounding major arms deals, (such as payment timelines, interest rates, commercial loans or export credit agreements) is not made publicly available before the signing of contracts.

All information about acquisitions is available in the Transparency Portal from the federal government. However, there are some problems with this portal. As indicated in the Ministry of Defence’s Transparency Report – which identifies the Transparency Portal as the primary source for information about arms deals, on the website it is impossible to discern what is an arms deal or just basic material acquisition. Additionally, there is missing data in many of the processes, and the most common missing information is the opening day bidding and the legal contracting instrument. When the assessor tried to download data from 2019, the website warned that the limit to downloads is 1000 items per download, which makes it more difficult to treat the database ex-post [1, 2].

Most defence purchases are made through single-sourced procurement contracts, which raises many concerns on transparency, democratic oversight, value for money, and corruption risks (2). There is no open competition taking place for purchases in the defence sector, whether it is restrictive or single-sourced (3). The Executive Secretary of the National Anti-Corruption Network (REN-LAC) says, “most high ranking officers have no idea about how the arms purchase is made” (3), which means that the information is not made available internally either. The government, including the defence ministry, does not provide the public with access to its information (4), and no law provides the citizens with a right to request government’s information either (6). Indeed, the financing package surrounding major arms deals probably falls under the provisions of Article 6 of Law N° 039 (2016) relating to the purchase of ‘secret defence’ items, which do not comply with the publicity requirements under Article 21. Pyman, Wilson, and Scott (2009) state that, “defence tended to be treated as a special entity within government, often appearing exempt from the usual rules of scrutiny, oversight and procedures to ensure competition in its procurement processes, often justified with reference to national security concerns” (5), (6).

There is no evidence that financing packages are made public as defence and security procurement is confidential [1] [2] [3] [4].

The principle aspects of the financial package are not made available prior to signing the contracts, the completed applications by firms are considered protected information until the applications and responses to RFPs are evaluated and signed by both parties. Details regarding the financial package are made public and announced through press releases from the Department of National Defence. [1] Further details are available through the notice of contracts available through the “Defence Procurement Announcements” website, however this does not include credit or loan related information and is usually limited to the final price of the contracts (including in-service support etc.). [2] The financial information is therefore not sufficiently disaggregated.

Detailed information on the financing packages surrounding the main arms agreements in the armed forces is rarely available either before or after the signing of contracts. Institutional and regulatory practices might explain this reality. Firstly, insiders have underlined a culture of secrecy and opacity in dealing with acquisitions of war materials and the absence of long-term strategic planning for these acquisitions [1]. In addition, the use of Article 436 of the Military Justice Code has served to deny access to information that broadly defined concerns the security of the state, national defence, public order, and the security of people, including information about military equipment and war material [2, 3]. Partially recognizing this situation, after the military fraud, in 2016, the army announced the creation of an Acquisition Division intending to provide further efficiency and transparency to the procurement process and increase the control, traceability, and monitoring of these processes [4]. It remains to be seen if this and other measures will have an impact on the publicity of information surrounding significant arms deals.

There is no public information on financing packages surrounding major arms deals. The CMC Procurement Regulations (2002) do not stipulate public access to information on financing packages either prior or after the signing of contracts. It should also be noted that although information for PLA procurement is available through the website plap.cn, this does note include major arms deals that are handled by the General Armaments Department. In 2015, the GAD launched a website for military weapons procurement but relevant information is only available to registered users who have been granted special access: defence sector enterprises, military armament-purchasing departments, and military industry groups. [1,2,3]

The annual procurement plan defines the acquisition, the total value of the good or service, and the period within which the purchase process must begin. [1] This document is open to the public on the website of the Ministry and on the websites of the Military Forces and Police. It should be noted that goods and services that have reserved expenditure and procurements which represent national security issues are not published in the procurement plan, given their confidential nature. Entities in the defence sector are not obliged to publish such information, nor are they obliged to publish the opening of the call, the contract awarded, the payment terms interest rates, commercial loans, or export credit contracts in these cases. [2, 3, 4] However, the reserved-type procurement will be carried out through direct procurement processes, which for the defence sector includes a number of goods and services including hardware ammunition, vehicles, armour, tools for the training, and maintenance of the goods to be contracted. [3] The other contracts are published in the SECOP, along with previous studies and documents, the notice of call, specifications or invitations, amendments, the offer, the evaluation report, the contract, and any other documents issued by the State Entity during the Procurement Process. [5] The general information relating to procurement is published in the SECOP and in the economic transparency portal of the Ministry of Finance. [6, 7] There is no information on the publication of financial packages, the supplier entity, or additional details of the entire defence sector procurement.

Most information detailing the financing of major arms deals is not publicly disclosed in Côte d’Ivoire. Such information is considered a state secret (secret défense) and the public procurement laws prohibit public disclosure. Article 8 of the 2009 Code of Public Procurement exempts the Ministry of Defence from disseminating information about items subject to state confidentiality provisions. Since a major arms deal would fall into this category (protection of the essential State interests), no aspects of financing are disclosed by MoD (1):

“Art. 8 – Exemptions
This Code does not apply to operations, supplies and services contracts related to national defense and that are subject to security and secrecy requirements, or for which the protection of the essential interests of the State is incompatible with public dissemination” (1).

There is no evidence that finance packages and the identity of the suppliers are made public by Ivorian institutions or media. However, information on major procurement plans may be leaked by international media once the contracts have been signed. For example, as in 58B, the Strategic Bureau of Information on Defence Systems published a news piece in September 2018 about the delivery of eight armoured vehicles to the government of Abidjan. The 7-ton armoured vehicles first appeared in public during a military parade on August 7, 2018, and were assigned to the Gendarmerie Nationale and to the Ivorian special forces. No details about the procurement cycle were provided (2). Afrique sur 7 published an article on August 11, 2018, stating that the government had embarked on a purchasing frenzy after the lifting of the UN arms embargo on Côte d’Ivoire. According to the reporter, the Forces Armées de Côte d’Ivoire (FACI) acquired Mi-24 helicopters, heavy airlifting Antonov aeroplane models and battle tanks from several countries, including Belarus. The reporter added that no information on the purchases had been disclosed because of the classified status of such acquisitions (3):

“This information, long classified as a defense secret, has just been disclosed during the Independence Day. A Russian news agency published in June an article indicating that an African country – without naming it – was going to receive these 4 × 4 Cayman armored vehicles” (3).

While the DALO website contains some information on larger procurements, research did not identify specific financing package information as such [1]. Further, the defence agreement contains some limited information on planned larger procurements [2] while the overall financial aspects concerning costs, timelines and justifications of procurements are contained in the political financial application and approvals called “aktstykker” [3]. These do not contain information on payment timelines, interest rates, commercial loans and so forth.
However, if a procurement is made on the basis of a public tender, the specific circumstances in regards to e.g. payment, advanced payment etc. will be included in the material of the public tender which is made public. [4].

In sum, comprehensive and cohesive information on the financing packages surrounding major arms deals are not available.

The principal aspects of the financing package surrounding major arms deals, (e.g. payment timelines, interest rates, commercial loans or export credit agreements) are never made publicly available before the signing of contracts nor after the contracts are signed. This secrecy is protected by several legal clauses. For example, Law no. 182 of 2018 which allows the MoD and MMP to make procurement processes closed, limited or single-sourced with no bidding process (1). With regards to arms procurement, it is not subject to any form of monitoring by the MoF or the CAA as per Law 204 of 1957 (2). Moreover, Law no. 14 of 1967 prohibits the publishing or broadcasting of any information or news about the armed forces and its formations, movement, armaments and personnel, and other things related to the military and strategic issues unless written approval from the director of the military intelligence department is obtained (3).

Major arms deals are not very common in Estonia. The latest deal was investing in hand-held firearms for the Scouts Battalion (a battalion of the Estonian Land Forces), [2] and before that, in 2014, in infantry fighting vehicles. The procurement documents are published in the Procurement Registry and a notice is sent to the Publications Office of the European Union. [1] However, the data about financing the procurement is not made public in the registry. Larger procurements are also listed in the defence budget. [3] Again, the financing sources of the arms deal are not made publicly available. The Procurement Procedure of the Ministry of Defence stipulates that all procurement plans have to include information about the financing sources, and that those procurement plans have to be made public. [4,5] In reality, this is not the case. The hand-held firearms’ procurement is published in the EU Tender’s E-registry where there is no information about the main financing conditions and payment arrangements. Therefore, it could be concluded that the financing packages are not made publicly available, even if the procedure foresees it.

In one case, the National Audit Office inspected the ongoig HX-project twice, in 2016 and 2020. In 2016, the evaluation concerned industrial participation in the HX project (the impact of industrial participation in overall expenses and hence to the state economy) [1]; in 2020 the evaluation covered the project’s expenses and funding [2]. Even if planning and preparing of the project was evaluated as well done, the NAO recommended improved transparency in industrial participation.

Some details of the financing package are made publicly available. However, traditionally, in industrial participation the contract details have been concealed on the basis of industrial secrets, but NAO suggested that opportunities for increased transparency should be examined. [3] The 2020 inspection report is mainly secret and only chapter 4 is available online in a redacted format. YLE published a piece of news on the latter report on the day of its publication providing the information that NAO considers planning and preparing of the project well done, but that there are shortages in the transparency of expenses [5].

In a YLE interview, the Chief of Staff noted that the final expenses of the acquisition are not known yet, but will become more precise when the final offers are received (currently the deadline for sending out the call for final offers is in January 2021). [6] In 2019, the acquisition budget was set to 10 mrd euros and the cap for annual use and maintenance costs to 10 per cent of the annual expenses of military defence [7].

According to the HX project’s website maintained by the Ministry of Defence: “HX Program – new fighters for Finland by 2025. The planned service life of Hornets, Finland’s current fighters, will end by 2030. The HX Program was set up to replace the current fleet with new fighters. Fighters are a significant part of Finland’s defence capability. The primary purpose of Finland’s defence capability is to establish deterrence against the use of military force and the threat of its use, as well as to repel attacks on Finland. To perform this task, Finland needs fighters. They are an essential part of the air defence system and Defence Forces’ capability in engaging land- and sea-based targets. The fighter fleet’s capabilities also supplement the Defence Forces’ intelligence, surveillance and command environment. Fighters cannot be replaced by other systems. Ground-based air defence systems and unmanned aerial vehicles would not have the same capabilities. Hornets’ service life will end by 2030.

Currently, the Finnish fighter fleet consists of Hornets. They were commissioned in 1995–2000. At that time, their service life was expected to be 30 years. The last Hornets will thus be phased out by 2030. Extending the service life of the Hornet fleet would be neither a cost-effective solution nor sufficient in terms of Finland’s defence. The Hornets’ service life cannot be extended as it is limited by the aircraft’s weakening comparative capabilities and structural fatigue. The possibility of obtaining system support, spare parts and software is another factor that influences the decision. HX Fighter Program will take 10 to 15 years to complete. The HX Fighter Program will take about 10 to 15 years to complete. Requests for information and the first requests for quotations were sent out during the government term 2015–2019. The best and final offers will be requested and the actual procurement decision will be made in 2021.” [7]

Details of the financing package are not publicly available. There may be no information on whether a financing package exists at all.
According to an interviewee, a researcher specialised in French arms deals, [1] it is up to the will of the buying country to decide whether it wants to publicise or not a potential financing package and its details. The selling country has no say in this.
For instance, no information was released on the Rafales contract with India, whereas many details about the offsets were given about the submarines contracts with Australia, [2] or about the mine-hunters contract with Belgium or the Netherlands. [3] According to the interviewee, Australia, Belgium and the Netherlands have a culture of transparency on arms deals, and willingly released information about these deals.
However, one should note that the exact amount of the contract is never publicly released (nor is – even in the Australian case – the proportion of the economic offsets in the total amount of the deal), except if it is an open public offer, which is never the case for sensitive material.

Some details of the financing package are made publicly available and key elements, such as the sums involved and payment deadlines, are included. However, details on matters such as interest rates and rules and regulations on default penalties are likely to be limited. For example, a contribution to the Budget Committee of the German Bundestag as part of a so-called ‘EUR 25 million Vorlage’ (‘submission’) from the Federal Ministry of Finance, which can also contain, for example, payment plans. This contribution is generally categorised as ‘classified information’. In this respect, it is not publicly accessible.

These are business secrets that cannot be made available to the public by the contracting authority. Public procurement law provides for the publication of the contract notice, prior information, or order changes. Public limited liability companies are also not obliged to publish individual details if doing so would impede law enforcement, run counter to the public interest, damage the legitimate business interests of a company or affect fair competition between companies (and it is also not legally possible for them to disclose business secrets) [1].

Details of financial packages that include vital issues like payment timelines, interest rates, and so on are not made public (1), (2). Mid-term expenditure framework publications from the Ministry of Defence do list itemised procurements, such as vehicles, furniture, etc. However, they do not list specific item type and cost.

The existence of a financing package surrounding major arms deals is almost always made public, but no further details are usually available (e.g. cost of the package, identity of loan provider). Only the relevant parliamentary committee has full access to the financing package. [1, 2].

The website of the Office for Defence Management of the Ministry of Defence (MoD) [1] is responsible for publishing information on defence procurement processes. It publishes public procurement notices and contracts, which contain details about financial packages and payment conditions. The notice about the winner of the tender is published before the actual contract is concluded and published. However, at present defence procurements are conducted without disclosing practically any aspects of the principal financing package. The 2011 law makes it possible for the Committee on National Defence of the Parliament to exempt even major procurements from transparency rules. According to an interview with a member of the Committee on National Defence [2]. In 2018 the committee exempted procurements worth more than 300 billion HUF. Moreover, the exemption was made in a package, and after even committee members were not given access to the details of the procurements. The public does not know about the various financing packages, not to mention the details.

Elements of the principle aspects of the financing package surrounding arms deals are publicly available prior to the fulfilment of contracts. These are primarily the value of the deal and the proposed timeline [1][2][3]. Draft payment terms such as deadlines, interest rates and rules and regulations surrounding default penalties are as per the Defence Procurement Procedure (DPP) [4].

The financial aspect of arms procurement falls under the authority of the Ministry of Finance and the Ministry of National Development Planning (Bappenas), which determine the source of financing. The government does not provide detailed information on aspects of defence equipment financing, such as payment schedules and interest rates, before the signing of the procurement contract. However, information is shared with the DPR during the discussion of the state budget (APBN), and therefore also with the public, about foreign loans being used to finance arms procurement in the budget year. But this information is limited to the total amount, the type and the weapons to be procured [1,2]. There are four kinds of financing for arms procurement: foreign loan, domestic loan, pure rupiah and pure rupiah accompanying a loan. The DPR can address the issue of procurement financing and advise the government on which loan should be used [3]. A comprehensive report on government management of loans can be found in the Ministry of Finance’s report, which is issued twice a year [4]. The report contains details such as the loan amount, signing date, maturity, closing date, interest rates, front-end fee and executing agency.

Details of any financing package are never made publicly available. No information related to financing and and arms deals is provided [1, 2].

Coverage of arms deals and any controversy surrounding them is publicly available (1), (2), (3) but offers no evidence for the existence of financing packages nor are payment procedures and guidelines disclosed. Information on defence expenditure is generally hard to come by as a source told Transparency International, “this information is rarely made public to safeguard the confidentiality of affairs concerning national defence and security under a non-disclosure policy” (4). In coverage of the now-defunct arms deal with Russia, some outlets referred to a five-year payment package, a detail that was attributed members of the parliamentary security and defence committee (5). The deal as local outlets reported was ultimately marred by payment delays and irregularities (5). Publicly disclosed details as far as previous deals are concerned are also shrouded in contradiction, which raises defence transactions into questions and practices that fall outside the MoDs formal chain of command.

Foreign military sales struck between the Pentagon and Baghdad after 2003 offer one such example. The fact that some deals were financed in exchange of Iraqi resources (6) has left Pentagon and Iraqi government officials open to accusations of procurement corruption, from which one may conclude that there is no framework to guide financial transactions in arms deals. Similar to conclusions raised in Transparency International’s 2015 Iraq Assessment, the existence of such packages has proven impossible to verify — despite ample evidence of inflated contract princes, kick-backs and delayed payments (3), (5).

Details of the financing package are not publicly available. There may be no information on whether a financing package exists at all (1). Only general tender terms are publicly available and this only for non-classified procurements, which often excludes major arms deals which are confidential owing to their sensitivity.

After the award of the contract, some information is published on the website of the Ministry of Defence, specifically on the budget and timeline of the contract, including option clauses and testing timelines [1] [2]. Nonetheless, information on financial credit or other finance mechanisms that are assigned beyond the annual budget are not publicly available.

Key information on public procurement is published in monthly summaries of contracts published on the websites of the procuring institutions within the Ministry of Defence (MOD). These summaries state the product or service that is to be delivered, the number of deliveries, the contact details of the official at the Acquisition, Technology & Logistics Agency (ATLA) in charge of the listed contract, the date on which the contract became effective, the name and corporate number of the contracting enterprise and the contract sum. They sometimes include an anticipated price as well. On ATLA’s website, these contracts are divided into competitive bidding contracts and discretionary contracts. The lists of discretionary contracts also give information on why the contract was not awarded following competitive bidding. Information on payment timelines, interest rates and commercial loans or export credit agreements is not included. [1] To apply for eligibility as a bidder on defence contracts, a corporation must submit a balance sheet, profit-and-loss statement and statement of profit dealing covering the last year, and an individual must submit a statement of net capital and statement of revenue and expenses, also for the previous year. To bid on or enter into a defence procurement contract, one must also pay a deposit. [2] A scholar who has published several academic articles on Japanese defence procurement, with good knowledge of accounting as an academic subject, said at interview that financing of Japanese enterprises is seldom linked to specific contracts. [3]

There is no transparency of defence decisions, budgets, expenditure, procurement and contracting. In fact, the only defence institution that publishes its tenders is Royal Jordanian Airforce [1, 2]. There are rare occasions during which the armed forces publish their tenders through the Directorate of Defence Procurement for the Jordanian Armed Forces [3]. However, the number of available competitions does not match with the armed forces’ needs, given that it is the largest public sector employer in the country. There is rarely any information about defence procurement, and there are also no details of the financing package which are available to the public. There is no information on whether a financing packages exist at all. Besides that, it is very hard to access information about financing, budgets, expenditures or loans. There are some cases in which the US army publishes information about donations to the defence forces, which constitute the only occasions where the public are informed about weapon or military expenditures in Jordan in the press [4,5].

The procurement activities of the military are shrouded in great secrecy to safeguard state security. [1] Information regarding major arms deals is thus not comprehensively made available to the public. Any information available through the media only gives a glance into few details such as the cost and the list of items covered in the deal. An example is the arms deal between Kenya and the United States negotiated in 2017 valued at $414 million. [2] Details about interest rates, commercial loans or credit agreements are not available before the signing of contracts.

Even though Kosovo does not possess a military industry yet, procurement activities for arms deals (like other procurements) do exist. The Public Procurement Regulatory Commission (PPRC) publishes on its website a contract signing notice document for procurement activities, for contracting authorities and economic operators [1]. This contains information about the subject of the procurement activity, the type of contract, details of the contracting authority, details of the awarded economic operator, the contract duration as well as the value of the awarded contract [1]. Other sources, particularly external sources from media or Civil Society Organisations, do not sufficiently address the issue of major arms deals.

No information about the financial packages are made public. Sometimes even the auditors and lawmakers fail to access this information, officials and activists said (1, 2, 3, 4, 5 and 6).

Usually major details of major procurements’ financing packages are made publicly available to include the sums involved and the timelines of delivery (e.g. CVR(T)s, Austrian M109 155mm self-propelled howitzers [1] [2]). However details on matters such as interest rates and rules and regulations surrounding default penalties are rare or not provided at all (e.g. neither sums, nor amounts were provided when procuring Stinger man-portable air-defense systems in 2017 [3]).

According to the government reviewer, all defence contracts mentioned above are G2G type contracts and are subject of restricted information. However, full text of all public procurement contracts organized under framework of public procurement laws are published in the homepage of Electronic Procurement System – www.eis.gov.lv under section of e-tenders. This includes information on payment and penalties details. Furthermore, the MOD doesn’t use creditlines for financing.

The existence of a financing package and the identity of the provider are normally made public. The majority of arms deals come in the form of donations by foreign countries. Basic information on a deal and the entity providing it usually make headlines without providing many details. For example, in March 2018, the UK announced $13m assistance to the LAF without indicating more details about the contracts (1). In February 2019, the US announced the delivery of laser-guided rockets APKWs worth more than $16m (2).

All public procurement tenders (including procurements in national defence and security) are published on the central public procurement portal [1]. Each tender has a folder with documents relating specifically to public procurement: the application form, declaration of the supplier, specification and characteristics of purchased goods, products and services, draft of preliminary contract, draft of contract (general terms and special terms), etc. The draft contract and other documents (annexes) provide information such as the type of procurement, the object and the duration of the contract as well as occasionally some basic financial information (interest rates, payment timelines etc.) [1].

Information relating to arms deals is generally limited. Typically, information relating to arms deals is made public through the media following announcements at the annual Langkawi International Maritime and Aerospace Exhibition (LIMA). [1] [2] [3] However, details of the financing package are not made publicly available for national security reasons. [4]

The government generally does not disclose financial information relating to large defence purchases even after purchases have been made, let alone in advance. Major arms deals are generally exempt from the Code des Marches Public therefore it is unlikely that the government would disclose related information. In fact, most of the limited information revealed about such procurements comes from the companies that have won the contracts rather than the MDAC.
The LOPM outlines that between 2015 and 2019, the MDAC will have a budget of:
– 200 billion CFA to purchase aircraft and technical support equipment for the armed forces
– 100 billion CFA to buy combat vehicles and modern transport vehicles
– 70 billion CFA for equipment specifically for the security forces, notably for the national guard and the national gendarmerie.
– 20 billion CFA for intelligence and communications equipment.⁸
Beyond the re-publication of the LOPM in its full form on a Malian news website (it is not available on either the government’s website, the FAMa website, nor in the Journal Officiel database), no further breakdown is provided. But the LOPM at least shows that money for these subsequent purchases is included in the defence budget over the coming five years.
In February 2016, Airbus announced it had received an order for a C295W from the Malian government, the first public record of this contract.¹ The aircraft was delivered In December 2016.² Similarly, MDAC’s purchase of Russian attack helicopters in September 2016 was not revealed by the government, but was reported in November 2016 thanks to a source within the Russian company Rosoboronexport.⁴ The company delivered two attack helicopters to Bamako in October 2017.⁵ But again the government has still not disclosed how much it paid for these helicopters, let alone gone into the precise details relating payment schedule, interest rates etc.
Another major defence purchase was reported in June 2015. Brazilian company Embraer Defense & Security announced that Mali had ordered six A-29 Super Tocano combat planes.⁹ An unpublished report by the BVG notes that the Malian government agreed to pay USD 88.7 million (51.7 billion CFA) for the six planes.⁹ The BVG shows that the Malian state had paid two of the three instalments of the contract by 2016 (the third was scheduled for 2017), but Embraer is now set to deliver only four of the six planes.⁶ In none of the cases above has the government publicly revealed what it has paid for the aircraft, although the unpublished BVG audit does contain these details.¹ ² ³ ⁴ ⁵ ⁶ ⁷ ⁹

Information on the financial package for arms contracts is not publicly available. [1] This type of information is protected as reserved, although the regulations do not indicate it as such.

Although information about it can be requested through the transparency system, it is not specific, and more is known about the subject through research. [2] [3]

The existence of a financing package and the identity of the provider are made public, [1][2][3][4] but all further details related to the equipment, education, maintenance etc. are claimed to be secret, [5] for example in cases related to government-to-government contracts procuring helicopters. [5]

According to the MoD reviewer, most of the details of the financing package surrounding procurement of arms, equipment and other assets in the security and defence sector are publicly available prior to the conclusion of the contract, starting with the information in the Public Procurement Plan which is publicly available regarding the amount and source of financial resources provided for certain public procurement. Some details such as payment timelines a for the specific procurement subject are available in the tender documents and contracts, though some aspects of the package are less precisely detailed than other aspects. [6]

Myanmar’s military mostly makes its defence purchases in secret and rarely makes them public. Therefore, we are not able to access information about financing packages for defence. A retired military officer said that certain military contracts and tenders, especially those concerning armaments, cannot be made public [1]. Myanmar does not have a procurement law [2].

The Ministry of Defence publishes the Defence Projects Overview annually, which details progress stages, strategy/policy framework, changes, timelines, implementation and corresponding parliamentary papers, for procurements over 25 million euros in disaggregated form [1]. The Overview does not include details on interest rates, commercial loans or credit export agreements, though this may be classified and provided to Parliament. Some major arms deals are financed from the state budget and no financial credits or other finance mechanisms are used [2].

All aspects of any finance arrangement and the payment schedule are covered under reporting requirements to Central Agencies and the Government prior to a contract being signed. Consequently, all applicable Government Procurement Rules must have been met before signing [1, 2]. The financial details are reported in New Zealand dollars. There are no associated interest rates or default penalties. It is the Defence’s practice to only work in cash and not engage in complex financial arrangements such as separate commercial loans. In cases where the Government is required to indemnify a supplier, and the potential liability exceeds $10 million, the Public Finance Act requires a public notice to be presented to Parliament. [3]. The actual cash appropriation is arranged through the New Zealand Debt Management Office (Treasury), a unit of the Treasury. The Treasury has published full information on its financial borrowing and lending regime on its website [4, 5, 6]. Specific project documentation detailing the appropriations is accessible pursuant to the provisions of the Official Information Act 1982. The Major Projects Report includes a comprehensive level of detail on financial arrangements and performance, including project milestones, the appropriation, and spending against each appropriation [7]. Financial information can also be found within MoD Annual Reports [8].

Despite the processes recorded above, not all information is proactively released prior to the signing of contracts, as admitted by the Minister of Defence to Cabinet in July 2020 and released publicly in October 2020; however, as noted, it can be requested through the Official Information Act 1982. At least parts of the requested information could be redacted on the basis of possible commercial prejudice, as seen by previous proactive releases by the Minister of Defence surrounding the procurement of protected vehicles for the NZDF [9]. This means not all details are published publicly. Documents released under OIA on the P-8A procurement redacted almost all costing figures, under the guise that such information may prejudice the commercial position of the supplier, or to prevent a minister, department, or organisation holding the information to conduct commercial activities [10]. The redactions, which are repeated on similar procurement project documents, are curious since they were released after the contract had been approved. It is questionable whether withholding this information is in the best interests of transparency, since some, if not all the costs, would be revealed in Annual Reports.

There is no evidence that the existence of a financing package and the identity of providers is usually made public (1,2). However, some major procurement plans may be made public through international media after the contract has been signed. Furthermore, purchases and in-kind donations by Niger’s international partners are often lumped together, and these financial aspects may sometimes be disclosed by the international media.

Details of defence procurement transactions are not made public. In discussions with a source, details were described as “highly confidential” and unlikely to be disclosed as they are not generally considered to be subject to disclosure in the public interest (1). Section 37 of the PPA 2007, provides for interest on delayed payments but this must be assessed in the overall context of Section 16 of the PPA 2007, which provides a wide exception for defence and security contracts from the ambit of the Act unless the presidential discretion is exercised. The recent purchase of Tucano planes by the government is subject to secrecy as far as the detailed terms of the agreement are concerned (2). For example, the basic unit cost has not been disclosed to the public, which has increased speculation that the contract cost has been inflated. Further, the information available in the public domain was only released after the deal was signed and not before the agreement was concluded (3).

Detailed information of the financing package surrounding major arms deals prior to the signing of contracts is not available. Both the Law on Public Procurement [1] and the Law for Production and Trade of Arms and Military Equipment regulate these deals [2]. The first Law ensures the confidentiality of defence and security procurements (Article 6-11) [1]. The second stipulates that data on the capacities for the production of arms and military equipment, programs, development plans, imports and exports of arms and military equipment, scientific and technical cooperation with foreign countries in the field of production and trade with the armament and military equipment, are considered as secret information within the sector of defence and security of the Republic (Article 45) [2].
No major arms deals have taken place in the past decade or so. Military equipment came mostly from grants. In 2016, the details of a financing package and the identity of the provider were made public. The Ministry of Defence announced a major 300 million-euro plan for the modernisation of the Army and noted that the provider would be sought from amongst NATO-members and partners countries. Eventually, the plan did not materialise, but it was still publicly communicated [3]. Grants from partner countries and their details are published. For instance, a 2014 donation by the US Army for the needs of the Army of the North Macedonia (valued at 850 000 USD) was published by the Ministry of Defence and by most of the media in the country [4].

Due to competitive, negotiating and contractual considerations, information regarding financing major arms deals is not published prior to the signing of contracts [1]. The Defence Acquisition Regulation is subject to the Freedom of Information Act, meaning that individuals may request and receive information on details of procurement actions with the exception of information that is confidential for business reasons [2]. In the case of the purchase of F-35 Lightning II Joint Strike Fighter jets from the American company Lockheed Martin, the Norwegian Government has regularly released and updated information on the costs involved, but details of the financial package are not publicly available [3, 4].

The government does not publish any information about defence purchases or arms deals. The data published by the media is either via western media or is speculation (1). There is no verified information available on major arms deals before or after contracts are signed from the government. There is also no information available detailing principal aspects of financial packages surrounding deals, such as payment timelines, interest rates, commercial loans and export credit agreements on the MoD or the Secretary-General of the MoD websites (2), (3). The lack of government transparency around issues of defence and security is justified on the ground that national security is considered sensitive information (4), (5). There is no information on whether a financing package exists at all.

There are no financing packages within the national forces sector. All ammunition, weapons, and needs are provided through donations from foreign countries (USA, EU). If acquisitions are needed urgently, a request would be sent to the USA, and the EU police, to coordinate with Israel to allow the arms, ammunition or equipment that are needed (1).

Some details of the financing package surrounding major arms deals are disclosed on the DND’s website; namely, the identity of the provider and the sum amount involved [1, 2].

Some information on the financing package is made publicly available, such as the sums involved in a tender advertisement. However, there are several cases when this information has been limited by using the clause “detailed financial terms will be specified in the contract template attached to the Contract Terms of Reference, which will be forwarded to the Providers invited to submit initial offers” [1].
There are also cases when after signing a contract, only the remuneration package and the name of contract provider was made public, for example, the delivery of command vehicles worth 80 Mn PLN (19 Mn EUR) [2]. Industry media outlets also noticed that there is no information on what exact type of vehicle was bought and which military unit would use it [3].

Existing information on arms deals [1, 2, 3, 4] does not provide details on financing and does not disclose whether a financing package exists at all.

There are no details available to the public about financing packages surrounding arms deals, and there is no evidence whether a financing package exists at all. [3] It has already been established that there is a general lack of transparency in defence decisions, budgets, expenditures, procurement and contracting. [1,2] The Ministry of Defence does not have a web-presence other than a Twitter account.

Non-secret defence contracts are publicly available on the official state procurement portal [1].

However, the number of secret parts of MoD sales is quite considerable and there is no information about such contracts [2]. Sometimes, major arm deals are announced by the MoD or other government officials. In these cases, only a few details are revealed: the name and basic nature of the arms [3,4,5] or the number of purchased items and a basic description [6].

According to our sources, arms deals occur in the Crown Prince’s office and not through the MoD. Therefore, the MoD is unaware of the financial planning and details of such deals( not before, and not after)(3,4). The Saudi government does not release any financial details surrounding major arms deals prior to the signing of contracts. Neither does the government publish such information after contracts are signed. Broad financial details are typically released by thw selling country, for instance in parliamentary filings, or in industry-specific journals and publications. However, these usually only cover the overall value of the deals and do not address issues such as payment timelines, interest rates, commercial loans or other aspects of the financial package (1). Since 2017, Saudi has been reforming its military procurement procedures, including with the establishment of two military industry bodies partly intended to regulate and streamline the procurement process – Saudi Arabian Military Industries and the General Authority for Military Industries. No evidence was found in the public domain that these reforms have or will lead to increased transparency surrounding financial packages of major arms deals negotiated between Saudi Arabia and international contractors (2).

Neither the MoD nor the government systematically publishes information on procurement in the field of defence and security. While the MoD’s procurement portal provides overview of implemented public procurement in the field of defence and security (without disclosing values of individual contracts or names of contractors) [1], there is no public evidence of procurement in the field of defence and security to which the law does not apply, where at least existence of particular contracts could be verified. Major arms purchases are implemented within the latter category. Therefore the most relevant official source of information about arms purchases are ad hoc press statements by high state officials. From 2015-2018, there were three completely confirmed major arms deals: 1) procurement of two Mi-17 helicopters from Russia; 2) donation of six Mig-29 fighter jets by Russian Federation with Serbia covering overhaul and modernisation costs as well as 30 tanks and 30 armoured patrol vehicles [2] and 3) procurement of nine helicopters H145M from Airbus Group for the SAF and the police in a deal which includes certification of the SAF aeronautical institute for the overhaul of one type of Airbus helicopters. In the first case, the total value of the contract and contribution of donations by external actors for the procurement were revealed by then prime minister at a press conference [3]. In the second case, the then minister of defence and other MoD officials on several occasions stated the value of overhaul and modernisation package and the foreseen timeline of payment, but there has been some confusion about what exactly this package entails (especially what is meant by modernisation) [4, 5]. In the third case, no financial details – not even the overall value of the contract – were revealed [6]. In November 2018, the president confirmed a purchase of five helicopters from Russia for an undisclosed amount (the number varies in different statements, though – please refer to the example for indicator 61B) and the purchase of RPAS from China for USD 30 million with a possible technology transfer [7]. No official sources, such as the MoD website issued any written information about the latest contracts, not even a confirmation that they had been signed.

Details of the financing package behind procurement programmes are not released to the public. The only information available to the public on defence procurement is presented in the annual budget debate, and it is highly aggregated [1]. Industry watchers have also expressed frustration in seeking financing information on defence acquisition activities [2].
However, as a policy, MINDEF does not require offsets, export credit financing or any other forms of financing arrangements. Instead, major acquisitions are financed directly from the defence budget which requires Parliament’s approval.[3].

The only arms acquisition of the past twenty years to have been financed with commercial loans or external credit agreements was the 1999 Strategic Defence Procurement Package. While the South African government later revealed some information such as the total interest paid in response to Parliamentary questions [1], full details only emerged as a result of an investigative commission.

However, there have been no recent examples to judge progress against. Recent acquisitions have been Projects Hoefyster and Biro [2], for the acquisition of new infantry fighting vehicles and new offshore patrol vessels respectively, but there have been no reports that any financing was involved in either. Instead, both have relied upon the rollover of funds in the Special Defence Account, with the Secretary for Defence stating in 2014 that the funds for Hoefyster had been financed in that manner [3].

Nevertheless, the government has routinely refused to make details of the total cost of acquisitions public, insisting in parliamentary questions and replies that such details may only be revealed in closed sessions to the Joint Standing Committee on Defence (JSCD) [4]. Reviews of the Special Defence Account financial statements for the 2017/18 Financial Year do not show any evidence of external financing [5].

A review of the Defence Acquisition Programme Act and relevant defence documents suggest that details of the financing package regarding major arms deals are not available publicly prior to the signing of contracts in South Korea. While the government can partially subsidise expenses for defence contractors within budgetary limits under the terms of Article 38 of the Act, detailed information regarding the financial support is not published. [1] The DAPA shares information on defence contracts via its website, but details are lacking, such as payment timelines, interest rates and commercial loans. [2] Due to the lack of information publicly available, the existence of the financing package remains unknown.

Since South Sudan’s independence in 2011, there is no history of government engaging in an open process to buy military hardware that details aspects such as payment timelines, interest rates, commercial loans or export credit agreements. In 2013, the defence ministry purchased rifles from Israel. There was no evidence of a transparent and public process in the purchase of these weapons. The public itself was unaware until a UN report exposed the fact [1]. Another example of this lack of transparency became apparent in 2018 when the research group, Conflict Armament Research (CAR) wrote a report that exposed the fact that South Sudan was buying weapons from Europe (despite an EU arms embargo) through third parties, namely Uganda [2]. Even though these purchases happened when the procurement act was not passed, there is a minimum of oversight that needs to be exercised, such as via the defence and security committee in the legislature and the office of the auditor general. There is no evidence in the public domain that this happened.

Article 35 of Law 24/2009 on Contracts in the Public Sector in the Areas of Defence and Security states that “the award of contracts and framework agreements, whatever their amount, will be published in the contracting body’s contractor profile”, but it adds “once they have been formalised” [1]. The award notice of contracts worth €100,000 or higher must also be published in the Boletín Oficial del Estado (BOE) or the respective regional official bulleting, in a period not exceeding 48 days from the date of formalisation of the contract. Also, for contracts subject to harmonised regulation, the notice must be sent within 48 days to the “Official Journal of the European Union” (Art. 35.2) [1]. The contracting authority may not publish certain information related to the award of the contract in justified cases affecting the public interest, particularly the interests of the defence or internal security sector, or where the legitimate commercial interests of candidates or public or private bidders, could harm fair competition between them (Art. 35.3) [1].

The information provided is limited; it includes the identity of the winner company, the sum of the contract, deadlines and other aspects. There are certain media groups or highly specialised new sources (e.g. Infodefensa [2] and Defensa.com [3]) in defence that provide information on contracts, but not on issues such as interest rates, commercial loans, export credit agreements.

No evidence could be found, for example, on the websites of the Ministries of Defence, Interior or Finance [1,2,3], that the Government of Sudan releases any financing information about arms deals; on the contrary, nearly all of Sudan’s purchases of weapons and related defence equipment are not publicly reported before or after contract signature dates, nor is it clear that the country’s acquisition of arms relies exclusively on monetary payments to sellers (as opposed to in-kind exchanges of goods, services and/or politically motivated actions by governments and their affiliates). An expert on Sudan’s defence sector additionally verified that this is the case [4]. A Conflict Armament Report published in 2017 reported that the ‘Sudanese government has continued and extended its efforts to conceal the origin of weapons and ammunition it uses on the battlefield, possibly to conceal violations of end-user agreements with supplier governments’ [5]. The International Budget Partnership’s 2017 Open Budget Survey for Sudan scored Sudan’s transparency 2 out of 100, its public participation 0 out of 100 and its budget oversight 31 out of 100 [6]. Sudan’s security and defence activities are exceptionally secret and opaque.

For imported materiel and procurements administred by the Swedish Defence Materiel Administration Agency (FMV), information regarding the post-award stage – including total value, financial package, identity of provider – has been frequently and systematically lacking, to the extent that the Swedish Competition Authority has called Sweden’s post-award transparency ‘the worst in the EU’ [1]. For ongoing or planned procurements and imports, FMV publishes only basic information such as timelines and descriptions of the materiel on their webiste [2] [3], and they have been reported to break parts of the procurement law multiple times by not disclosing the supplier or value of defence contracts in their follow-up reports and press releases [4] (see also Q58 and Q61). For arms export deals, details on financial packages or the identity of providers are not made publicly available; rather, fragmented information regarding these packages tends to be provided by investigative journalists or activists. When it comes to preparing and negotiating arms export deals abroad, for instance, representatives from the government, Saab and their corporate group Investor, and Swedish Export Credits (SEK) have travelled together in international delegations to potential buyer countries such as Indonesia, the Philippines, and India, and presented complex financial packages involving export credits and offset deals [5] [6]. Very little information is released publicly regarding the purpose of these business trips or the delegation members and their specific roles. Contracts may also involve lucrative export credit opportunities for both the exporting firms and the buyer countries, and these credits are ususally offered by the state-owned firm SEK [7]. Export credit evaluations by SEK as well as the Swedish Export Credit Agency (EKR) – and whether these at all include an assessment of e.g. human rights and sustainability in potential buyer countries – is another area which severely lacks transparency, according to an interviewee [8]. The same interviewee claims that, with regards to arms trade negotiations, the ‘financing solution should most certainly be seen as part of Sweden’s (that is, the arms firms’ and the government’s) package deal to the buyer country, and something which is used to gain a competitive advantage over other states in international arms trade’ [8].

Even for major arms deals, details such as payment timelines, interest rates, commercial loans, etc are not publicly available. However, due to the direct democratic nature of the Swiss political system, they are typically politically contested. This means that there is a threat of a referendum. As a consequence of this public interest, they are also scrutinized and deliberated. Citizens can request a referendum, with 50000 signatures, on any law passed by the Federal Assembly (“optional referendum,” Article 141 of the Swiss Constitution) or use popular initiatives (Article 139 of the Swiss Constitution) [1] to block procurements with 100000 signatures. The purchase of fighter jets has spurred such referenda in the past, for example in 1992 an initiative of the groups “Swiss Without Army” launched an initiative to stop the purchase of a set of F/A 18 fighter jets [2], in 2012 in an optional referendum on the purchase of Gripen jets [3] and most likely in 2020 again [4, 5]. However, sometimes larger purchases are not separate from the general armament budget. This removes the option of an optional referendum for the specific purchase as was done when separating the purchase of the new fighter jets from the surface to air missiles procurement [5]. There is still a parliamentary debate within the regular framework of the armament programme and the option to launch a popular initiative to block such a purchase.

Currently, there are two mechanisms through which Taiwan can acquire armaments from foreign countries (especially the US): foreign military sales (FMS), and direct commercial sales (DCS) [1]. Budgets for defence procurements are required to be accessible to the public; however, details of financial scheme are not always disclosed.

If open tender applies, principal aspects of the financing package applied to major arms deals are comprehensively detailed and made publicly available in the MND General Conditions of Contract with the notice of open tender. Financial package includes the payment of the contract price, adjustment of the contract price, terms of payment, adjustment by price index, tax, insurance, guarantee bond, warranty, delay of contract performance, and Letter of Credit. [2]

Taking the procurement of cell batteries, for example, the information on performance bond, shipment, insurance, payment, liquidated damages, export license, tax and duties, and letters of credit were included in the “Terms and Conditions for Foreign Procurement of Supplies or Services”. The price term, payment schedule, guarantee bond, and interest were clearly stated in the Procurement List. [3]

According to senior personnel from the Ministry of Defence and National Service, some details of the financing package are made publicly available to all citizens as the Ministry receives its budget from the Government and authorised by the Parliament, whereby, before signing the contracts, the permanent Parliament Committee for foreign affairs, defence and security scrutinises the process of how funds are utilised. After a whole process, the Committee prepares a report that analyses compliance on signed contracts and therefore a budget report is publicly available on the Parliament website, and also on the official website of the Ministry of Defence and National service, which shows the total funds received from the Government and key elements such as the sums involved and the payment deadlines are included in the report. However, details on matters such as interest rates and rules and regulations surrounding default penalties are likely to be limited because most of the potential procurement in the Military, including purchase of modern technology and other military equipment, are top secret and classified information that is not publicly accessible. In the Public Finance Act 2001, Cap. 24, where for the purposes of any development project which has been approved by the National Assembly by resolution or otherwise, a contract for the supply of goods or services is entered into on behalf of the United Republic, which provides that any payment (other than a payment charged on the Consolidated Fund by virtue of the provision of this or any other Act) is to be made on or after the first day of July, the Minister shall as soon as possible give notice thereof to the National Assembly and every such notice shall specify: (i) the names of the contracting Parties; (ii) the nature of the goods or services to be supplied; (iii) the total amount payable by the United Republic in respect of such goods or services and the date or dates on which payment is to be made; (iv) the development project to which such contract is referable.

According to the Public Procurement and Supplies Administration Act B.E. 2560 (2017), Section 7, even though financing packages for public procurement must be submitted to the audit committee, this Act shall not apply to the procurement of armories and services related to national security by the government-to-government method or by procurement from a foreign country, for which the law provides otherwise [1]. There was a case of a procurement plan only coming under scrutiny after the Defence Security Cooperation Agency (DSCA) announced the State Department’s approval of the possible sale, which cost around 12 billion baht. The high price of this procurement provoked public scrutiny, forcing Army Chief Gen Apirat Kongsompong to defend the plan. Nonetheless, the general insisted that the proposed purchase was above board [2].

According to our sources, the MoD and the armed forces publish no data on the financing packages (1,2). Other sources argue that this aspect needs to be developed within the MoD( 3). Details of the financing packages are not publicly available. A review of official sources of information confirms that the Ministry of Defence does not officially communicate principal aspects of the financing packages surrounding major arms deals (1).

As observed through open-source research into major defence procurements, such as the S-400 air and ballistic defence systems, the Altay tank project, the armed drone procurement, the TFX aircraft project, the TRMotor engine procurements, the MRAPs and other land systems, the upgrade of submarines and the upgrade of M60 main battle tanks, details of the financing package of these contracts are not publicly available. There are many reports and articles criticising transparency issues relating to the principal aspects of the financing packages of major defence procurements [1,2,3,4,5,6,7,8].

According to two MPs, details of the financing package are unknown to the public because they are considered security matters and are, therefore, classified information. That type of information is not available even to MPs; they simply stay classified [1, 2].

The financing package surrounding arms deals (including major arms deals) is not publicly available, although the State Service for Export Control of Ukraine publishes general information on exported items, for example, items, quantity and end-user [1]. Similar information is also published by the media [2, 3]. There is also lack of information on the arms that Ukraine procures, these arms are procured under the State Defence Order which is classified.

There is no available information about financing packages for arms deals. Moreover, the topline figure representing the defence budget is available via media platforms, rather than on official government websites. No details or any information about the financing packages of major arms deals are available, even though there are these kinds of packages according to sources (1), (2), (3).

Key information about the total spend on procurement and the date of planned spend is published in the MoD’s Defence Equipment Plan [1]. This report does not include detailed information such as payment schedules or interest rates. The MoD does not appear to publish detailed information on prospective contracts ahead of signing them, although further data could potentially be accessed with the Freedom of Information Act. MoD Contract tenders are published online to encourage bidding, although the site is aimed at businesses only and requires commercial information from the user to register [2].

For major weapons systems, which are capital intensive and take a long time to produce, contract financing is used by the DoD to support the contractor in managing expenses. The GAO recently undertook a study on DoD contract financing, which found that no comprehensive analysis of changes to policies relating to contract financing has been undertaken since 1985 [1]. No public record of the aspects of a financing package was found to be published by the DoD.

Publications on weapons procurement are issued sporadically as part of government propaganda to demonstrate increased defence capabilities [1, 2]. When new acquisitions have been announced in the context of government speeches, no details have been provided on value, the financial package, or the equipment purchased. The National Assembly Defence Committee is also unaware of the financial packages used to acquired these weapons and military equipment. Although previous governments also did not regularly publish on or detail the purchase of weapons, the legislative was aware of letters of guarantees, negotiations on acquired debts, and other kinds of financial information [3].

According to information compiled by civil society organisations – that make estimates based on press announcements and the export records of international organisations – Venezuelan weapons acquisitions have shown some signs of decrease in recent years [4]. Although they have decreased, acquisitions have not stopped altogether; information has even been made public about recent debts owed by the Venezuelan state to arms suppliers [5, 6], as well as the delivery of equipment in recent years [7]. However, information about the purchase causing the debt and instalment times and amounts are not disclosed.

The primary financial aspects of major arms deals are not made publicly available prior to the signing of contracts. This goes against the requirement that any publicly funded purchases financed through the governments consolidated revenue fund must be disclosed to Parliament, which is the principal overseer of public funds (this includes payment timelines, interest rates, commercial loans or export credit agreements) [1]. In practice, details of arms deals and military transactions, in general, are not made public, nor are they submitted to statutory or constitutional bodies such as the Parliament [2]. Requests to have access to this information on arms deals/purchases are turned down by the Ministry of Defence and the military command on the vague basis of the Official Secrets Act and protection of national security interests [3].

Country Sort by Country 74. Sort By Subindicator
Albania 25 / 100
Algeria 0 / 100
Angola 0 / 100
Argentina 0 / 100
Armenia 0 / 100
Australia 0 / 100
Azerbaijan 0 / 100
Bahrain 0 / 100
Bangladesh 25 / 100
Belgium 0 / 100
Bosnia and Herzegovina NEI
Botswana 0 / 100
Brazil 0 / 100
Burkina Faso 0 / 100
Cameroon 0 / 100
Canada 50 / 100
Chile 0 / 100
China 0 / 100
Colombia 0 / 100
Cote d'Ivoire 0 / 100
Denmark 50 / 100
Egypt 0 / 100
Estonia 0 / 100
Finland 50 / 100
France 0 / 100
Germany 50 / 100
Ghana 0 / 100
Greece 25 / 100
Hungary 0 / 100
India 75 / 100
Indonesia 50 / 100
Iran 0 / 100
Iraq 0 / 100
Israel 0 / 100
Italy 25 / 100
Japan 0 / 100
Jordan 0 / 100
Kenya 0 / 100
Kosovo 25 / 100
Kuwait 0 / 100
Latvia 75 / 100
Lebanon 25 / 100
Lithuania 50 / 100
Malaysia 0 / 100
Mali 0 / 100
Mexico 0 / 100
Montenegro 25 / 100
Morocco
Myanmar 0 / 100
Netherlands 50 / 100
New Zealand 50 / 100
Niger 0 / 100
Nigeria 0 / 100
North Macedonia 25 / 100
Norway 0 / 100
Oman 0 / 100
Palestine 0 / 100
Philippines 25 / 100
Poland 25 / 100
Portugal 0 / 100
Qatar 0 / 100
Russia 0 / 100
Saudi Arabia 0 / 100
Serbia 25 / 100
Singapore 25 / 100
South Africa 0 / 100
South Korea 0 / 100
South Sudan 0 / 100
Spain 25 / 100
Sudan 0 / 100
Sweden 0 / 100
Switzerland 0 / 100
Taiwan 50 / 100
Tanzania 50 / 100
Thailand 0 / 100
Tunisia 0 / 100
Turkey 0 / 100
Uganda 0 / 100
Ukraine 0 / 100
United Arab Emirates 0 / 100
United Kingdom 50 / 100
United States 0 / 100
Venezuela 0 / 100
Zimbabwe 0 / 100

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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