The companies are subject to audits conducted by the Ministry of Defence’s (MoD) auditing department [1] and the external audit conducted by the Supreme State Audit Institution (SSAI), following the international auditing standards [2]. However, there have been problems with the financial accountability of MoD businesses. The most prominent case is the mismanagement and sale of excess ammunition and weapons, which led to the explosion of a dismantling site in 2008 and the publication of information that revealed large scale corruption [3, 4].

Despite some improvements, such as the publication of military business activities, the MoD does not publish any financial information and data on the activities of its companies, nor the results of the internal audits [1].
Audit reports are made public by the SSAI; however, no details on the incomes generated by these companies appear in the SSAI reports on the budget [2]. In the auditing process, the SSAI found misuse of funds generated by MoD businesses in procurement processes [3].

In theory, military-owned businesses could be subject to an auditing process by the Court of Auditors. Since the military has disallowed any civilian oversight, as has been noted by Yazbeck (1, p. 7, see as well 2), doubts are justified that the Court of Auditors actually audits military businesses. Moreover, the auditing organ lacks independence and reliability.

The Court of Auditors (La Cour des Comptes, sometimes also refer to as the Supreme Audit Institution, SAI) shall generally audit public industrial and commercial establishments and public undertakings and bodies carrying on industrial, commercial or financial activities, whose funds, resources or capital are entirely of a public nature (see Art. 8 of law 95-20/1995, 3). This would formally include businesses undertaken by the ministry of defence.

As has been outlined under question 17B, the Court of Auditors’ formal independence is only limited. Law No. 80-05/1980 puts it under the authority of the President of the Republic (4). Current President Bouteflika is also Minister of Defence which is why SAI cannot considered to be independent of the ministry of defence. The Court of Auditors’ formal discretion to undertake audits is further undermined by the fact that its head is not appointed by the legislature or judiciary. According to the Open Budget Survey, the Court of Auditors only provides weak budget oversight (5).

Details of audits are not available to the public (see the answer to question 17C). Annual reports from the Court of Auditors for the years 2015-2018 could not be found online (1). Only the annual reports of 1995 and 1996-1997 are made available on the website. The content of both reports does not suggest that they contain information from the Ministry of Defence (2), (3). According to Art. 192 of the Algerian Constitution (2016), the annual reports are sent to the President of the Republic, the President of the Council of the Nation, the President of the APN and the Prime Minister (4). In 2017, there was a report, that there were leaks of SAI’s annual report to the press (5).

The Defence Ministry runs two known public companies: Aerovia, tasked with maintaining roads and airports, and the military procurement company, Simportex. Both appear to lack effective independent scrutiny in Angola, though the Angolan Audit Court has the mandate to review contracts of state-owned companies. According to reports in Angolan and international media, Simportex has long been controlled by senior officials of the presidency and been used for corrupt dealings by Angolan senior officials, including with foreign companies (1), (2), (3), (4).

Recently, both employees of Aerovia and former business partners of Simportex have publicly addressed complaints about corruption and mismanagement to President Lourenço (4).

There is no audit evidence available to the public.

The companies linked to the defence jurisdiction, as in the case of Fadea, have had an international external audit by Deloitte in the analysed period in order to comply with international standards. [1]

With regard to transparency and in terms of auditing, it is not clear that they, even when performed, are made public. It is also difficult to find the information openly or in a timely manner. It is complex, for example, to rebuild the various components that are in an airplane, such as the Pampa III, and the hiring process in its assembly. [1] In this regard, federal prosecutor Graciela López de Filoñuk charged 13 former Fadea officials who performed tasks between 2011 and 2015 for fraudulent administration to the detriment of public administration. [2]

This indicator has not been scored due to insufficient evidence.

This indicator has not been scored due to insufficient evidence.

The military does not have beneficial ownership over any commercial businesses (see Q31A).

This indicator has been scored ‘Not Applicable’, as the military does not have beneficial ownership over any commercial businesses (see Q31A).

There is not enough information to score this indicator. In fact, there is no official information that the defence and security institutes in Azerbaijan are involved in commercial businesses. Information relating to businesses owned by the military is not available (1). The Ministry of Defence Industry produces military and civilian products (2). There is also no information on the audit of this activity (3). And the Defence Industry Ministry’s entities are not commercial ones; the entities are part of the institution, and this is public knowledge.

Audit details are not available to the public, and there is no information on audits of enterprises relating to the Ministry of Defence Industry. There is no audit-related information on the website of the Ministry of Defence Industry (1) and the Chamber of Accounts (2).

There is no evidence of military-owned businesses; even so, there would not be any external or internal scrutiny over business or any military-related business activities [1, 2]. No oversight is allowed over this sector per Article 33g in the Constitution [3].

As outlined in 31A and 32A, there are no military-owned businesses in Bahrain and therefore, this indicator has been marked ‘Not Applicable’ [1,2].

The Bangladesh military has its own bank, approved by the government. Trust Bank is sponsored by the AWT and the Chair is also the Chief of Army Staff. The Vice Chair and 6 of the Directors are serving officers in the Bangladesh military [1]. The Dhaka Radisson Blu hotel, also owned by Bangladesh’s Army Welfare Trust [2], was built on dedicated military land. Trust Bank’s activities are monitored by Bangladesh Bank. However, the reliability and full independence of auditing and monitoring processes cannot be confirmed.

As an example, Trust Bank’s annual reports and audited financial statements are available on its website [1]. The independent auditor’s 2019 report to the shareholder, comprising 100 pages, includes complete disclosures of all aspects of audit risk issues. Trust Bank is also listed at the Dhaka Stock Exchange and discloses risks to its investors. The bank’s Board Audit Committee was set up under the instruction of the Bangladesh Securities and Exchange Commission. Still, it has not been possible to publicly access audit details for other military-owned businesses.

There is no evidence that there are military-owned businesses [1, 2]. For example, reviewing the list of arms-producing companies in Belgium, some are owned by regional governements (e.g. Walloon) but the rest is owned by third parties [3].

There is no evidence that there are military owned businesses in Belgium, and as such this indicator is marked ‘Not Applicable’ [1].

National defence and security institutions do not have beneficial ownership of commercial business [1, 2, 3, 4, 5, 6].

National defence and security institutions do not have beneficial ownership of commercial business [1, 2, 3, 4, 5, 6] and, therefore, this indicator is marked Not Applicable.

There are no military owned businesses [1,2].

There are no military owned businesses [1,2]. As such, this indicator is scored ‘Not Applicable’.

The only military-owned businesses [1] are the company Amazul [2], IMBEL [3], Emgepron [4] and NAV Brasil [5]. These companies are subject to the Federal Court of Auditors (TCU).

On Amazul’s website, citizens have access to basic information that is mandatorily disclosed due to the Brazilian FOIA, and so does IMBEL and EMGEPRON. NAV Brasil was recently created, so it is still not operating. The most transparent military-owned company is IMBEL, which disclosed internal audits from 2016, 2017 and 2018 [1]. Since only one of the three companies makes their audits public, and no other external audits are available in the TCU’s website.

There is no evidence of military institutions being involved in business or taking part in commercial enterprises. However, they have been rumours that military staff members are involved in businesses, even though the law prohibits it. There is no independent scrutiny of funds derived from such illicit activities (1).

There is no evidence of military institutions being involved in business or taking part in commercial enterprises. However, they have been rumours that military staff members are involved in businesses, even though the law prohibits it. There is no independent scrutiny of funds derived from such illicit activities (1).

There is no evidence that military institutions in Cameroon own businesses. However, some military officers are involved in microbusiness activities such as farming or writing [1] [2].

There is no evidence that the military owns any form of business. Therefore this indicator has been marked Not Applicable.

According to an IMF review (July 2018) of Cameroon’s fiscal transparency, “the extent of government holdings in the commercial sector is significant … these holdings are detailed in an annex to the budget law; however, this annex is not made public” [1]. Therefore, it is difficult to ascertain the involvement of military and security institutions in commercial activities as this is not declared publicly.

Military-owned businesses are subject to some scrutiny. However, revenue generated by the CFMWS is not reflected in the Departmental Reports for DND within financial statements. [1] The CFMWS publishes their performance Measurement (i.e. from their operations), which includes data that is labeled “TBD” and “Internal Documents” (p. 65-64). Though a NPP Financial Flow (diagram) is provided in Annex B (p. 56), financial information, including revenue, is provided in a highly aggregated manner (p. 60). [2]

DND Audit and Evaluation Reports are published, some which address Non-Public Property, and others having few redactions; however, such reports are done by DND (not independent scrutiny). [1] Results of PSPC tender “External Audit of Non Public Property (NPP) Entities/Components” may benefit public interest if or when released. [2]

Formally, the external audit and financial scrutiny of the organisms of the military industry and other businesses related to the defence sector can include the actions of the Office of the General Comptroller (CGR), the commission for the financial market (former SVS), the Internal Tax Service (SII), and the budget direction of the Ministry of Finance [1]. However, the evidence suggests that the exercise of this scrutiny is limited. First, the CGR’s does not register any audit of these institutions since 2015, and all previous audits were considered “reserved”, and there is no access to resolutions or recommendations [2]. Secondly, accusations of malfeasance and corruption in the armed forces have involved some of these companies, as was the case with allegations of duplicated invoices in the army’s Fábricas y Maestranzas del Ejército (FAMAE) [3]. Third, while there is evidence of internal mechanisms of audit, there is no access to information about the subjects of investigations and recommendations.

There is little evidence of the existence of external audits of companies in the military industry. Audits are conducted in specific cases, are ad hoc rather than systematic, and their content and results are not made available to the public. Between 2007 and 2015, the General Comptroller made five “reserved” audits in the sector: one to the General Directorate of Civil Aeronautics (DGAC), related to irregularities in the bidding processes; one to the navy’s factory ASMAR, related to the company’s accounts; and three to the army’s factory FAMAE, related to irregularities in the processes of contracting and financial systems. There is no access to the details of the audits, nor their main findings and conclusions. Although there is some evidence of internal audits, there is no transparency in the details and findings of these processes [1, 2, 3].

Military-owned businesses are scrutinised by organs of the Chinese Communist Party. The CCP has its own anticorruption organ, the Central Commission for Discipline Inspection, which is politically and organisationally dependent on the CCP. [1,2] There is no legislative or judicial scrutiny involved, but even if there were, the fact that there is no separation of powers in the Chinese political system means that it would not qualify as “independent” by any definition. [3]

Audit details of military-owned businesses are not routinely made available to the public. Some information on cases involving corruption is released occasionally [1] but the CCP enjoys complete discretion concerning releasing relevant information.

The GSED brings together 18 military-owned businesses and companies that support the mission of the Military Forces and the National Police in Colombia. These entities have a wide range of services for education, transport, recreation, housing, and production of equipment and elements for military and civilian use. [1] Given their status as linked or affiliated entities, they are audited by the supervisory bodies of the Colombian State. It is for this reason that the Comptroller General of the Nation through its tax surveillance and control plan includes some of these companies to be audited. The audits carried out by the Comptroller review the financial functioning of the entities, and make calls regarding non-compliance with processes, poor execution of resources, and lack of accountability in the implementation of improvement plans by the entities. [2] In 2019, supervision and surveillance were limited to the following entities: Retirement Salary Fund of the National Police, The Corporation of the Colombian Aeronautic Industry (CIAC), the Corporation of Science and Technology for the Navy, Maritime, and Rivers (COTECMAR), and the High Technology Corporation for Defence (CODALTEC). [3, 4]

According to the Transparency Act (Law 1712 of 2014), the Comptroller General of the Republic (CGR) makes public exclusively the results of its audits, but not the progress of its processes on its website. [1] There are year-to-year and supervised entity reports, plus a list of all audited entities from the previous year and audit planning for the current year. It also publishes audits of entities subject to supervision, released audits, and special actions. All documents submitted are signed received from the public entity subject to supervision. In 2017 the CGR carried out audits of the Civil Defence, Military Club, CREMIL, CODALTEC, INDUMIL, Logistics Agency of the Military Forces, CREMIL, COTECMAR, and Rotary Fund of the Police (FORPO). In 2018, INDUMIL, COTECMAR, CODALTEC, Hospital Militar, CREMIL, Military Forces Logistics Agency, Supervigilance were audited. 2019 audits of INDUMIL, CREMIL, CODALTEC, and COTECTMAR have also been published. [2]

There is no evidence of MoD-owned commercial businesses.

There is no evidence of MoD-owned commercial businesses. Therefore this indicator has been marked Not Applicable.

As stated in Q31, research indicates that the Danish Defence does not own any commercial businesses at the moment [1]. As all government accounts are subject to audit by the Danish National Audit Office, income/expenditure related to military-owned business would be included here [2]. The audits of the DNAO are based on national standards for public sector auditing which are in compliance with the fundamental international principles for public-sector auditing [2].

This indicator has been marked Not Applicable, as there are no military-owned businesses.

Although the CAA has a right to scrutinize all public enterprises, the military institutions and their enterprises have never been and they were expected from such scrutiny measures (1), (2), (3), (4). The news regarding independent scrutiny of military-owned businessmen has been very conflicting. On the one hand, former CAA chief Hisham Geneina complained about the lack of access to Armed Forces businesses. Geneina in April 2013 before the military power takeover said: “the economic projects, companies, social clubs and hospital of the ‘sovereign entities’ are not subject to the scrutiny of the CAA” (5). It is difficult to believe that after Geniena was sacked and the military consolidated its political power that CAA oversight has improved. On the other hand, President Sisi and senior military officials have insisted that military-owned business are subject to CAA audits (6). However, there is no evidence of that given that these audits and the company’s accounts are not made public. Even if some audits have taken place, one can only wonder about their effectiveness given that they are secret and given the institutional power dynamics that have brought the CAA under the control of the executive, and has, in turn, brought the executive under the control of the military (7), (8).

According to our sources, there are no auditing reports that contain information about the military-owned businesses. Despite there are some reports about the general budget, there is a strong believe among sources that there are no details about the defence sector (1), (2), (3), (4). The fact that the debate is still at a point where discussion about mere independent oversight is not a given, and there is a strong reason to believe that military businessmen are not subject to independent audits (see 32A). this is evidence that audit information not made public. Egypt still has no freedom of information act (5) or any other laws that explicitly require the Armed Forces to disclose audit information on its military business. Also, for the CAA, there is no obligation to make any of its reports public. The only disclosure requirement is for the CAA report on the budget’s closing account to be given to the members of parliament. However, even then, members are not allowed to disclose this report (6).

In accordance with the Military Service Act, an active public servant was not allowed to engage in business activity until very recently. [1] However, the voluntary-based Defence League has a different legal status (a legal person governed by public law, stipulated by the Estonian Defence League Act) and is allowed to make profit from different activities. [2] Since 25 November 2017 the internal audit unit at the Defence League was liquidated. There is an external audit procedure in place. At the moment, an annual accounting statement audit is conducted by BDO Eesti As. [3] The audit unit at the Ministry of Defence as well as the National Audit Office of Estonia are involved in the oversight of the activities by the Defence League. The National Audit Office finished an assessment on the Defence League’s development in mid-2018. [4] As a supreme audit institution of a member state of the EU, the National Audit Office proceeds from the legislation of Estonia and the EU as well as international audit regulations, accounting and reporting standards. [5]

All annual reports of the Defence League have been made public since 2002. However, the internal audit reports are not public. [1] The National Audit Office often makes its audit reports public, even though they are rarely conducted. The last time the National Audit Office assessed the legality of the Defence League’s economic transactions and organisation of accounts was in 2007. [2] The highest supervisory body of the Defence League is the Central Review Committee which, in addition to other assessments, audits the financial transactions made by the Defence League, its financial situation and the feasibility of expenses of the non-state budget income of the League. Their assessments are also not public. [3]

As noted in 31A, there are no military owned businesses in Finland. The state owned businesses operating in the field of defence are governed by the Prime Minister’s Office or Solidium, and not the Ministry of Defence or the Defence Forces. [1]

This indicator is marked ‘Not Applicable’ as there are no military owned businesses.

The Cour des comptes evaluates all state-owned entities, military entities with commercial activity as well as state-owned defence-related companies. It does so based on relevant international auditing standards, but its scrutiny isn’t exerted on a regular basis: the latest report by the Cour des comptes on the topic was published in 2013. [1] A previous report on “State-owned arms industries” was published in 2008. [2]

The Cour des comptes audits and reports are available online for everyone to read. However, only one example of an independent audit on state participation in defence-related companies was found, [1} tending to show that the topic isn’t addressed often or extensively enough.

Military-owned businesses are subject to independent scrutiny by private audit companies according to international standards as well as by the Federal Audit Office, which acts independently as an external auditor of the German Defence Budget (see Q15). If it is a business pursuant to private law, it must, for example, follow all accounting standards (including the obligation to publish their accounts); it must also report to a parliamentary committee (although their meetings might not be public if national security is concerned) [1].

There are several units/branches of the BMVg or Armed Forces that are organised as private-sector businesses, such as BwConsulting, Bw Bekleidungsmanagement GmbH, BwFuhrparkService and BWI GmbH. In order to answer this question, it must be assumed that the majority of the companies listed in the answer to Q31, which are federally owned, are to be classified as military-owned companies within the meaning of Q32A, although the BMVg only acts as a representative of the shareholder the Federal Republic of Germany. It forms part of the Federal Government, rather than the Armed Forces. In addition, it must be noted that the accounting standards in the ‘Handelsgesetzbuch’ (German Commercial Code – HGB) only apply in Germany, but are internationally recognised [2].

Audit details are available to the public. The combined findings are published in the annual ‘Beteiligungsbericht’ [1]. Legislative scrutiny is regulated by Article 69 of the ‘Bundeshaushaltsordnung’ [2]. The ‘Beteiligungsbericht’ includes the shareholder structure, the company purpose, the annual accounts as well as an excerpt of the financial report (rough income statement, balance sheet and equity ratio). It also includes financial contributions, management salaries, earnings of the board of directors and the name of the auditor of each company. The ‘Beteiligungsbericht des Bundes 2019’ of May 2020 is a significant improvement compared to the last few years in terms of information details. It provides information on the direct holdings of the Federal Ministry of Defence as at 31 December 2018 (see pp. 112-130) and provides key information on the individual companies – for example, on their field of business and business development, on the remuneration of senior staff, the amount of grants from the Federal Budget and more [3].

However, the audit details only seem to be available in this abbreviated form in the ‘Beteiligungsbericht’, as the companies do not seem to publish annual reports on their websites. It is the sole responsibility of the Federal Audit Office to decide on the type and scope of the publication of its audit results. These critical reports by the Federal Audit Office are often debated in public.

The principal businesses of the military are the Defence Industry Holding Company (DIHOC), a defunct shoe factory in Kumasi, 37 military hospitals, and a micro-financing company, and a bank (1), (2), (3). There is a board in place to oversee the DIHOC’s operations, and the Auditor General is also an external oversight, but there is no evidence of thorough financial scrutiny for any DIHOC-related businesses.

The principal businesses of the military are the Defence Industry Holding Company (DIHOC), a defunct shoe factory in Kumasi, 37 military hospitals, and a micro-financing company, and a bank (1), (2), (3). There is a board in place to oversee the DIHOC’s operations, and the Auditor General is also an external oversight, but there is no evidence of thorough financial scrutiny for any DIHOC-related businesses. There are auditing records for DIHOC related businesses that are available in the Auditor General’s audit reports, but they are not detailed.

There are no military-owned businesses in Greece [1, 2].

This indicator is scored ‘Not Applicable’, as there are no military-owned businesses in Greece [1, 2].

The Supreme Audit Office (SAO) audits companies [1, 2], but they are not a fully independent organisation at a recognised international standard. External auditors other then governmental institutions have not audited the Ministry of Defence (MoD) [3].

Supreme Audit Office reports are available online [1, 2]. However, there is no information about how often the SAO audits these companies. There is also no information on the auditors. The report shows that SAO auditors have no military expertise, therefore they can only audit if budgetary records are accurate. Reports only include budgetary findings, and there has been no reference to international standards [3].

Military-owned businesses are audited by the Comptroller and Auditor-General of India (CAG); Defence Estates Management is reported on too [1]. CAG can audit all business undertakings such as Base Repair Depot of the Air Force, Naval Dockyard and Army Base Workshops [2].

In Section 312A of the Rules of Procedure and Conduct of Business in Lok Sabha, the function of a Committee on Public Undertakings is stated:

“312A. There shall be a Committee on Public
Undertakings for the examination of the working of the
public undertakings specified in the Fourth Schedule. The functions of the Committee shall be—

(a) to examine the reports and accounts of the
public undertakings specified in the Fourth
Schedule;
(b) to examine the reports, if any, of the
Comptroller and Auditor-General on the
public undertakings;
(c) to examine, in the context of the autonomy
and efficiency of the public undertakings,
whether the affairs of the public undertakings
are being managed in accordance with sound
business principles and prudent commercial
practices; and
(d) to exercise such other functions vested in the
Committee on Public Accounts and the
Committee on Estimates in relation to the
public undertakings specified in the Fourth
Schedule as are not covered by clauses (a),
(b) and (c) above and as may be allotted to
the Committee by the Speaker from time to
time:” [3]

The DSPUs which come under the Committee’s jurisdiction are Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Mazagon Dock Shipbuilders Limited (MDL) and Garden Reach Shipbuilders and Engineers Ltd. (GRSE) [4].

Therefore there is an independent oversight mechanism in-line with international standards.

Generally, audit details are publicly available. In a slight departure from this, according to a recent Times of India article, CAG has stopped putting defence reports publicly online [1]. None of the seven defence reports from CAG in 2018 are available online. This is verifiable on the CAG website where no 2018 reports from the Defence and National Security sector are available [2][3]. CAG reports must be submitted to Parliament so are therefore public documents and are available in the Parliament library.

There is no information confirming whether the audits of financial statements of cooperatives, including TNI business, are carried out by independent auditors. Yayasan Adi Upaya (Yasau) that belongs to the Air Force [3] acknowledge that oversight is carried out by inspectorate general of Air Force (Irjen AU) on annual basis. The audit focus on the utilisation of state-owned goods (BMN) in the cooperation between the Air Force and cooperatives (Yasau and Inkopau), adherent to law, cash deposit obligation to the state, and follow up findings from previous audit. It is not clear whether cooperatives of lower level follow similar process. There was a claim that the Puskopau audit was conducted by a public accountant [1], but it was not possible to trace who the auditor was or whether the report was publicly accessible.

The audit result regarding the financial condition of cooperatives is said to have been discussed during the annual members’ meeting (RAT) [1], but it is not disclosed to the public.

Military owned businesses may be subject to some scrutiny, but such processes lack independence or reliability. The Audit Organisation claims that it has audited Islamic Revolutionary Guard Corps (IRGC) affiliated companies; however, there is no indication that this audit process is carried out according to international auditing standards [1].
The BBC Monitoring investigation into the IRGC’s private enterprises seems to indicate that there is an IRGC auditing company in place, indicating that some type of internal audit may now be starting up in an irregular way [4]. However, little is known about this internal audit [2].

Audit details of military owned businesses are not made available to the public [1].

Evidence of state-owned enterprises is widely available online but no active military-owned businesses. Many of these were dissolved since the former Iraqi regime was toppled in 2003 (1). As many as 190 [SOE’s] are recognised as operational. Warehouse maintenance and repair garages do not constitute military-owned businesses as in the absence of legally binding contracts.

It’s relevant to add that following the issuance of CPA order No. 75 of the year 2004, Iraq’s Military Industrialization Authority — which ran a range of state-owned military firms and enterprises — was disbanded. The inventory of its property, supplies and machinery were turned over to other Iraqi ministries. Shares in these firms were split between the Ministry of Labour and Social Affairs, the Ministry of Science and technology and the ministry of finance. Very few of these entities exist other than repair warehouses and factories. Another source interviewed reveals that the MoP is presently the custodian of military businesses that are largely dormant (2), (3), (4). However, the latest news coverage reveals efforts to establish a near-identical authority to Iraq’s Baath-established Military Industrialization Authority which would consist of various military entities which the Ministry of Industry and Minerals would have custody of alongside the GoI.

Although the military does not own private businesses, financial generating activities (1) of other military institutions such as the PMF Commission and the militias it commands, lack transparency. While this year’s federal budget law reveals an increase in the sum allocated to the PMF (2), (3), there is little disclosure of how expenditures are managed or its financial records. While political officials openly discuss these allegations, the government has yet to conduct investigations into the income PMF factions accrue through extortion activities (1), (4). Available evidence demonstrates Iraq’s militia factions disregard for both local and international standards. These activities continue in the absence of political and parliamentary scrutiny in fear of reprisal.

There are no military-owned buisnesses in Israel. There are 4 state-owned companies, which operate in the defence market, two of them are global.: Israel Aeorpsace Industries (IAI), Rafael Advanced Defense Systems, Elbit Systems and Israel Military Industries (IMI – recently acquired by Elbit) (1). The Government Companies Authority (GCA), which regulates state-owned companies, obligates the companies to publish their annual financial reports in the GCA’s website (2). As an authority that carries out the role of the government as a shareholder in all government companies, and as the authority responsible for protecting the public’s interests in government companies, the GCA representatives attend and supervise all of the companies’ board meetings. Moreover, the GCA accompanies the companies in structural changes, ongoing activities, and assist with compliance with the recommendations of the State Comptroller.

This indicator is marked Not Applicable as there are no military-owned businesses in Israel. The Government Companies Authority (GCA) publishes annual reports on state-owned companies alongside their financial statements and other operational assessments (1)

The budget of “Difesa Servizi SPA” is subject to external audit, as required by law and defined in the Statute of the company[1], and it is carried out by the Court of Auditors, the main national organ devoted to the scrutiny of budgets of the public administration, according to art. 100 of the Constitution [2]. Although auditing standards are adequate, there are concerns from the Court of Auditors itself on the comprehensiveness of data provided by “Difesa Servizi” [3].

In the section Transparent Administration it is possible to access information both on the personnel management and anticorruption measures, as well as reports on the financial administration of the company [1]. For what specifically concerns the budgetary management, it is possible to access both estimated and final budgets of the company [2]. These are reviewed by the Court of Auditors, which publishes annual reports on its website [3]. Please note that although reports are proactively published, the reports themselves highlights lack of clear data provided by the company.

As explained in a report from 2014 on an ATLA webpage dedicated to Japan’s strategy on defence production and technological bases, Japan has no government-owned arms manufacturers. The government therefore depends on the arms industry in the private sector for arms production, provision of arms technology, and maintenance and servicing of defence equipment. [1] There were no reports in documents from subsequent years on the same website of any change regarding the government’s ownership of defence manufacturers. [2] No information was found on the website of the MoD [3] or in the mainstream newspapers Asahi Shimbun [4] or Yomiuri Shimbun. [5] One of ATLA’s tasks is, however, to ensure, that commercial businesses that it enters into contracts with are subject to inspections and audits. ATLA is working to make a database with component and labor costs that can be used to calculate the price of producing defence equipment for which market prices do not exist. The Board of Audit pointed out in its audit of the Fiscal Year 2017 accounts, that this database lacked data on several cost components and asked the agency to redouble its efforts, in cooperation with commercial defence manufacturers, to receive such data. It also stated that the design of the database had defects that should be rectified. [6] Referring to the Board’s report, the newspaper Asahi Shimbun pointed out in 2018 that, despite having received much funding, a lot of work still remained before the database would be completed. The Japanese government has aimed to have the database in operation from 2022. [7]

This indicator has been marked ‘Not Applicable’ because there are no military-owned businesses in Japan (see Q32A).

Military-owned businesses are not subject to any scrutiny or auditing processes. There is no evidence at all of any of the military businesses, mentioned on the armed forces website [1], being scrutinised or audited. The businesses are also not included in the list of audited entities by the Audit Bureau, and they are not included in the Government’s final annual accounts produced by the Ministry of Finance of either 2016 or 2017 [2,3,4]. There is also no mention of these businesses being addressed or questioned by the Parliament at all in the past three years, neither on its website or news sections [5,6,7]. These businesses are not subject to any independent scrutiny either by the legislature or the Audit Bureau.

None of the military-owned businesses are subject to an external audit, and thus there is no financial information publicly available about them. The businesses in question namely KADDB, JLVM, JORDANAMCO, JMSS, JADARA, JORAMMO, and ARM [1], do not appear on the list of audited entities by the Audit Bureau, and do not appear on the Ministry of Finance’s final annual accounts [2, 3, 4]. As independent enterprises from the Government, these businesses are not under the scrutiny of the governmental institutions [5,6].

Military operations in Kenya are subject to audits by KDF’s internal audit division. [1] At the same time, the Ministry of Defence is subject to auditing by the Auditor-General, an independent entity, but whose reports about the KDF can be redacted to protect matters of national security, as well as assets and liabilities. [2] It is hard to tell how reliable internal audits are especially in relation to commercial business owned by the military. Such businesses would be under the complete control of the KDF and there is no evidence of law that provides for public oversight into military-owned businesses.

Audit details from the Ministry of Defence’s audit reports are made public by the office of the Auditor-General. The details are available on the Auditor-General’s website as well as on mainstream media. [1] However, the audit reports do not contain all information on military activities because of the provision by law to enable redaction of information deemed as sensitive and which affects national security. [2] That said, it is hard to determine whether any of the commercial businesses owned by the Kenya military are directly tied to national security. The reason is mainly because there is a lack of comprehensive information available to the public on all commercial businesses conducted by the military.

The Ministry of Defence does not have ownership of commercial businesses [1].

The Ministry of Defence does not have ownership of commercial businesses [1].

There is no reason to think that the defence and security institutions own any businesses, according to activists, journalists and former and current officials (1, 2, 3, 4, 5, 6, 7, 8 and 9). Both the police and the military earn money by leasing their property to businesses, among other things, and these transactions are legally meant to be scrutinised by the SAB (14) and Parliament (13), but both institutions lack independence and are full of supporters of the royal family and the executive branch, or those are who too afraid to challenge them.

These weaknesses mean that these security agencies may actually have businesses that simply no one knows about because the auditors can’t or won’t do their jobs properly, the sources said.

This sub-indicator has been marked Not Applicable because it is unlikely that military-owned businesses exist. With regards to individually-owned businesses, only a summary of the audit report is available to the public, according to officials and journalists (1, 2, 3, 4 and 5). And these summaries are extremely opaque when it comes to military and security (business-related) revenues, separating everything into vague titles like “sales of state assets,” giving the public no information about nature of their activities (6).

There are no military owned businesses in Latvia. [1] If there were any, the State Audit functions on the basis of internationally recognised standards. The State Audit is a member of INTOSAI and EUROSAI, as well as the EU Contact group. [2]

The reports and the audit of VAMOIC and the MOD are available online. [1]

There are “private institutions affiliated” with the LAF called “military clubs” (1). For instance, according to the LAF, the Monroe Hotel in Beirut is owned by it (2). Furthermore, the Personnel Directorate (J1) is responsible for overseeing and managing the clubs (3).
There were no financial statements to an independent external audit, based on relevant international auditing standards for the military clubs (4). However, it is important to note scrutiny exists in the LAF (5)

There were no audit details published by the LAF (1).

There are no military-owned businesses in Lithuania. At the beginning of 2018, the Lithuanian Government decided that the rights and obligations of ownership of the state-owned enterprise “Infostruktūra” should be forwarded to the Ministry of Defence [1]. “Infostruktūra” is responsible for ensuring appropriate and safe data transfers between State institutions. The list of the state-owned companies is publicly available online [2]. There are no military-owned businesses.

There are no military-owned businesses, therefore the score is not applicable.

Some of the Lembaga Tabung Angkatan Tentera (LTAT, or Armed Forces Fund Board)’s majority-owned companies are traded on the Kuala Lumpur Stock Markets (BSKL). There are no instances in which the LTAT owns a company through direct ownership. LTAT’s involvement as a retirement fund agency is subject to the rules and regulations of the Securities Commission Malaysia. [1] There is evidence to indicate that the LTAT’s accounts and activities are subject to audit by the Auditor General of Malaysia, and that the LTAT’s audit committee includes the Secretary General of MINDEF [2]. Audit findings can be debated in parliament; it is not clear how regularly this takes place. Mismanagement and financial irregularities, however, do occur and are not publicised for political reasons. The previous government did not want LTAT’s problems affecting servicemen’s political support. The issues are only highlighted under the current government. [3]

LTAT’s full audit reports are tabled in parliament and can be debated by members of parliament. In addition, full audit reports are available to shareholders. Edited reports for the public can be accessed from various sources, including the Securities Commission Malaysia and the Companies Commission of Malaysia (SSM). [1] [2] [3] Furthermore, as a trust-fund company, LTAT is subject to Tabung Lembaga Angkatan Tentera Act 1973 for investment or business ownership. The entity is allowed to invest “not less than 70% of its fund in trustee investments and not more than 30% in non-trustee investments”.

As with many other defence activities, military-owned businesses are not subject to any meaningful scrutiny. The BVG is the public auditing body responsible for overseeing state finances. The body has 17 agents and publishes annual reports evaluating the government’s various spending programmes and budgets.3,4 But the BVG’s last published report came in 2015 and made no mention of defence spending or incomes.¹² The failure to publish any subsequent reports or to address the defence budget by the body supposed to monitor accountants and administrators highlights the lack of transparency relating to defence activities.
As the World Bank points out, the BVG has not specifically reviewed Ministry of Defence accounts, and only an aggregate administrative account is transmitted to the auditor when the annual budget is examined.3,4
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, it was the BVG that audited the account (see Q16C). But the BVG never received access to the plane’s operating contract, in the face of resistance from either the executive, the military or both.2
Moreover, in 2016, Mali’s authority for regulating public sector contracts and spending (ARMDS) found that it was wholly unable to audit the Ministry of Defence’s finances for 2014 because of the lack of documents provided by the ministry.1

Audit details are not generally made available to the public. As with many other defence activities, military-owned businesses are not subject to any meaningful scrutiny. The BVG is the public auditing body responsible for overseeing state finances. The BVG’s last published report came in 2015 and made no mention of defence spending or incomes.3 The failure to publish any subsequent reports or to address the defence budget by the body supposed to monitor accountants and administrators highlights the lack of transparency relating to defence activities.
As the World Bank points out, the BVG has not specifically reviewed Ministry of Defence accounts, and only an aggregate administrative account is transmitted to the auditor when the annual budget is examined.1,2

Miliary-owned companies are allowed and do exist. It is not possible to verify how many companies are owned by the military or if they are all submitted to audits, although Mexican law mandates that the Federal Superior Audit agency (ASF) scrutinise the execution of annual budget (including that of the military). [1]

One prominent military-owned business is Banjército (a public bank owned and operated by military), and it is part of the military budget scrutinised by ASF.

The ASF conducts its audits by means of the standards of INTOSAL [2], Article 74 Section VI of the Constitution, and Article 13 of the Fiscalization Law [3], which mandate that ASF conducts a revision of the public budget on 31 October each year. Recent audits on Banjército, including one conducted in 2016 [4] found a number of irregularities and evidence of misuse of funds. There does not appear to be enough oversight or enough independent scrutiny.

The information on the two audits of the ASF to Banjército are available to the public in report version. [1] [2]

However, journalistic reports show important cases of omission of information by Banjército when exercising public resources [3] [4] and indicate cases of corruption in other military companies. [5]

Basic information about the finances of the three companies owned by the Ministry is not available, as they do not submit obligatory financial reports to authorities, [1] and therefore are not exposed even to basic scrutiny by the Tax Directorate. No audit reports on the finances of these companies is available on the Ministry’s website. [2]

No audit reports on the finances of the three companies owned by the Ministry of defence is available on the Ministry’s website, [1] while obligatory annual financial reports are not submitted to Tax authorities. [2]

There are no military owned businesses in Morocco.

This sub-indicator is scored as Not Applicable because here are no military-owned businesses in Morocco.

Public scrutiny is not possible because MEHL and MEC do not release information about their financial status [1]. Both MEHL and MEC participated in the 4th EITI report as reporting extractive companies, but there were unreconciled differences between the companies’ and the government’s data [2]. There is no independent scrutiny of military conglomerates and so there is a lot of corruption in these conglomerates, according to a report by Justice for Myanmar [3].

MP U Khin Aye, Chairman of the Pyithu Hluttaw Economic and Financial Development Committee, said that MEHL lacks transparency and has not paid tax in the past [1]. MEHL and MEC rarely release information about their ownership, management or finances [2].

The military does not own any significant commercial businesses. (Partial) state ownership of companies is managed by the Ministry of Finance, which publishes extensive information on commercial ventures on an annual basis [1]. These reports are monitored by the Central Government Audit Service and the Netherlands Court of Audit [2,3].

This indicator is marked ‘Not Applicable’, given that there are no military-owned businesses.

The NZDF has a controlling interest in service museums and non-public funds established under section 58 of the Defence Act 1990. Unit and other non-public funds must be to the benefit of Armed Forces personnel and their families (serving, discharged, deceased, or visiting), or may be used for the purchase of land to be held by the Crown, sales, and proceeds of these would be considered non-public funds [1]. All non-public funds are registered as Charitable Trusts and are deemed not to be public money within the meaning of the Public Finance Act 1989, in accordance with section 58(11) of the Defence Act 1990 [2]. According to the Government, at any one time there are approximately 100 separate non-public fund entities, including service central welfare funds, welfare funds in camps, bases and units, messes and social clubs for ranks, heritage, education and benevolent funds. Other than these, there are no military-owned businesses evidenced within records of a “traditional” type and the Government employee interviewed had no knowledge of such enterprises existing [3, 4, 5, 6, 7, 8, 9].

These entities are independently audited annually. In accordance with section 58(11) of the Defence Act 1990, the Auditor-General reserves the right to audit the accounts of any entity for which NZDF has a controlling interest, which includes Non-Public Funds [1]. Non-public funds considered material by the Auditor-General are consolidated into the NZDF financial statements [2]. Revenue generated by service museums is stated in the Annual Reports.

Neither the Constitution (1) nor the Military Penal Code (2) bans defence institutions from having beneficial ownership of commercial businesses. However, Section 6, Art. 129 of the Public Penal Code provides strict regulations around which public officials can be involved in private business. Sanctions range from 100 000 FCFA to 1 million FCFA and, at least, two years of imprisonment (2). The assessor did not find evidence of any military involvement in private enterprises.

No evidence was found of any military involvement in private enterprise, the interviewees agreed that this was unlikely. Therefore, this indicator has been marked Not Applicable.

Military owned businesses are subject to some level of scrutiny by the Ministry of Defence and in theory by the NASS. The absence of reliability arises from the fact that the audited information is not readily available to the public. Allocations moving from the government to the entities are reported in the budget (1). However, the income generated by the entities is not disaggregated, so it is unclear if these entities make returns into the single treasury account.

Audit information is generally incomplete. Audit authorities failed to provide reports for many years. The budget implementation consolidated report for 2016 does not provide information about the revenue generated by these agencies (1).

The commercial activities of the defence sector are overseen by the Ministry of Defence’s Internal Audit Department (IAD) and the State Audit Office (SAO), in line with the Law on State Audit and international standards [1]. The IAD is an independent body which directly reports to the Minister of Defence [2]. It performs financial and compliance audits of all Ministry of Defence activities, including the commercial activities [3]. The SAO also conducts financial and compliance audits of the general Ministry of Defence budget (including audits of income and expenses) and of its self-financing activities [4]. The financial audit analyses whether the financial reports are correct and comply with the legal framework for financial reporting; the compliance audit scrutinises compliance with the relevant legal regulations and policies. The SAO audits therefore deal with overall financial flows within the Ministry of Defence, rather than focusing on specific aspects. It is therefore unclear which parts of the budget are related to each of the Ministry’s activities.

Audit details of the Internal Audit Department are not made available to the public. Audit details of the State Audit Office, however are publicly available. These are published on the websites of the State Audit Office and that of the Ministry of Defence [1;2]. However, these audits lack precision in their review of the commercial activities and the respective finances of the State Audit Office. Only the overall financial flows are audited, and these are presented in a very general format rather than in a fragmented and activity-specific way.

Military-owned businesses, like other state-owned enterprises in Norway, are subject to independent external audit conducted every two years by the Office of the Auditor General of Norway (OAG) [1]; accordingly, the audit includes Rygge AS. Until December 2018 the audit concerned Aerospace Industrial Maintenance Norway AS, which was sold in December 2018. The OAG is an audit agency of the Norwegian Parliament and works according ro parliamentary instruction [2]. The OAG’s quality assurance system builds on international standards for quality control which includes leadership, ethics, skills and performance of tasks and the monitoring of the organisation [3].

Full audit details are available on the website of the Office of the Auditor General of Norway [1].

There is no information on military-owned businesses in Oman available to the public. According to our sources, the military does not own businesses, and therefore, it is not subject to scrutiny and oversight (1). Apart from information about Ministry of Defence Pension Funds’ shares, the government does not declare any other military-owned businesses (2), (3). Given the special position of the army as a protectorate of the Sultanate, the Ministry of Defence has a seperate tender board, no clear audit system, or mechanisms to ensure access to information (4), (5). The sultan’s absolute power, as head of state, government and the army, suggests military businesses fall within state control, should they exist (4).

The government does not declare any military-owned businesses; an assessment of scrutiny is irrelevant in this context (1).

Most national investment projects are managed by the Palestine Investment Fund which reports to the president’s office, and it deals with any national commercial projects that generate fund for the Palestinian Authority, thus the security and defence sector do not control any commercial businesses because it is the role of the Palestine Investment Fund to manage national businesses for the Palestinian Authority (1).

This indicator has been marked Not Applicable, because there are no military owned bussinesses in Palestine (1).

Based on reported off-budget accounts in 29B, some military units receive income from other sources such as transient facilities [1,2]. These are reported, audited, and made available in public documents [3]. However, it is not known how thorough this process is.

This indicator is marked ‘Not Applicable’ as there are no military-owned businesses [1, 2].

From December 2019 MoD has not exercised property rights on behalf of the State Treasury over state defence companies which where transferred to the new Ministry of State Assets. [1]

Given that the Ministry of National Defence does not have ownership of commerical businesses, this indicator is scored Not Applicable.

From December 2019 MoD has not exercised property rights on behalf of the State Treasury over state defence companies which where transferred to the new Ministry of State Assets. [1]

The Ministry of Defence holds authority over State-owned enterprises, and where applicable, scrutiny is held to the standards specified in Q31. As State-owned enterprises, these businesses are subject to control by the Supreme Audit Institution (SAI) and the Directorate-General of Treasury and Finance (DGTF) [1]. Further, they are required by law to submit their financial accounts to an approved external auditor [1]. Military personnel are not allowed to operate business ventures while in service [2]. Recent evidence suggests that scrutiny is not reliable [3].

The most recent audit reports by the Court of Accounts (CA) of a business dates from 2012 [1] and other business ventures show no evidence of any external audits.

Military-owned businesses are not subject to transparent independent scrutiny in Qatar. The military and security sectors do not get scrutinised and/or audited, they are the only sectors in the Qatari Government that have immunity from any kind of oversight. The Emir, as the chief commander of the armed forces, has direct authority that supersedes the authority of the legislature [1]. For Qatar, defence and security is a taboo, and access to internal information is not possible. Therefore, according to our sources, scrutiny over the military or defence-related activities, including the businesses, does not take place [2,3]. There are no controls or laws that regulate the work of the defence sector, including the armed forces. The military and defence sectors are typically run by powerful Qatari families and tribes, who also keep information on military owned businesses confidential.

Audit details are not typically made available to the public, due to the lack of an oversight body that audits the defence institutions [1]. The military and security sectors are excluded from all types of state audits, whether through the State’s Audit Bureau or the Administrative Control and Transparency Authority. The government considers all information related to military, defence and security to be classified. [2]

Military-owned businesses do undergo some scrutiny, though the level of objectivity of this scrutiny is questionable because the audit agencies are either MoD-related or fail to meet international auditing standards [1].

The presidential decree ‘On Matters of the Ministry of Defence’ [2] states that the Ministry and the Minister of Defence shall organise the control of financial-economic activities in the army. The federal law ‘On Autonomous Enterprises’ stipulates that the supervisory council of each autonomous enterprise shall decide on audit issues and revise accounting documents [3]. All MoD subordinate enterprises, including commercial affiliated companies, are therefore subject to oversight either by the MoD itself or the supervisory councils appointed by the MoD. For example, commercial enterprises registered as autonomous, such as ‘OboronLogistika(DefenceLogostics)’ or the congress and exhibition centre Patriot [4], are scrutinised by their supervisory councils. Comment: in addition, military-controlled commercial enterprises are subject to scrutiny by the Federal Agency for State Property Management, which is independent from the military [5]. In addition, the Chief Prosecutor’s Office randomly audits the MoD subordinate enterprises. As mentioned in question 31B, it recently uncovered illegal business operations in OboronLes for a total sum of 623 million rubles [6]. Also, the Accounts Chamber refers to the MoD subordinate enterprises in its full audit of the federal budget, regarding their compliance with paying a percentage of their profit into the federal budget [7].

There is no detailed audit information on the official websites of the MoD subordinate enterprises or the MoD financial control departments.

The only publicly available findings are those reported by the Chief Military Prosecutor’s Office [1], though they are not considered to be audit reports based on international standards. These reports usually name the suspect, their job position and some reference to the time and place of the incident. Sometimes, reports of grand corruption lack information about the agency that uncovered it [2]. No information is available regarding whether or when the supervisory councils conduct the audits in the MoD subordinate enterprises [3,4]. Both provide reports evaluating labour conditions, but lack audit reports.

According to our sources, such industries are not controlled directly by MoD, even though they are mentioned to be under the purview of the ministry. The Office of the Crown Prince is the main point of contact and administration. Therefore, there is a lack of transparency and no public auditing over these businesses (1),(2).
There are several companies owned or linked to the Saudi military, including Military Industries Company (MIC), which is under the purview of the Saudi MoD, as well as Advanced Electronic Company (AEC) and Alsalam Aircraft Company (3). Several of these have joint operations or ventures with global arms and defence companies. In this context, there are some references to the auditing process, for example, a supplier assessment audit conducted by the Northrop Grumman Corporation into AEC in December 2014 (4). However, there are no references in the public domain to financial audits of these businesses conducted by either the Saudi government or international regulatory bodies. The Saudi Arabian Monetary Agency (SAMA) does not publish figures relating to the revenues or income of these companies or their affiliated operators, such as the MIC’s affiliate the Armored Vehicle and Heavy Equipment Factory (5). It is unclear if any financial audit indeed takes place internally. While the SAMA formally published topline figure for government spending on the MIC, it has not done this since its 2014 annual report (6).

Saudi Arabian Military Industries, the recently-formed military industry company, will act as both a manufacturer and service provider and plans to establish several local companies including through joint ventures with global equipment manufacturers (7). This includes plans to establish Raytheon Arabia, a Riyadh-based affiliate of US defence contractor Raytheon Company (8). GAMI’s mandate includes acting as an industry supervisor and regulator, which may entail scrutiny of military-owned businesses. However, there is as of yet no information available on the effectiveness of this mechanism in practice to date.

The General Authority for Military Industries (GAMI), the military authority established in August 2017, is set to act as an industry regulator, issuing tenders and licenses and approving defence contracts, while SAMI, formed in May 2017, is an industrial manufacturer and service provider that contracts directly with foreign companies. According to a regional consultant who has worked with the Saudi defence sector, the two bodies will be involved in procurement processes across various Saudi military and defence bodies such as the Saudi Arabian National Guard, the Royal Guard, the Presidency of State Security and the Ministry of Interior (1). Industry analysis publication Intelligence Online further stated that both SAMI and GAMI will be steered by inter-ministerial committees led by Mohammed bin Salman (8).

As stated above, there are no financial auditing procedures in place for Saudi military-owned and linked companies; there are no reports which are available publicly. If there financial and budgetary audits exist, their details are not made publically available (1), (2).

Commercial activities of the MoD and the SAF were subject to performance audits carried out by State Audit Institution (SAI) in 2016, whereby the MoD was praised for monitoring its income at daily level (1). SAI applies recognised international auditing standards (International Standards of Supreme Audit Institutions authorised by the International Organisation of Supreme Audit Institutions – INTOSAI) [2]. The MoD’s internal audit scrutinised supplementary work of staff in military hospital centre Military Medical Academy in 2016 [3]. According to a report submitted to parliamentary Defence and Internal Affairs Committee, nine recommendations were issued as a result [3], but there has been no follow up in reports to the committee regarding their implementation.

The full performance audit report of commercial activities of selected budget beneficiaries, where the MoD was one of the case studies, is publicly available at the State Audit Institution’s website [1].

As stated in 31A, defence institutions are entirely removed from having controlling or financial interests in businesses by statutory or constitutional means [1].

This indicator has been marked as Not Applicable because, as stated in 31A, defence institutions are entirely removed from having controlling or financial interests in businesses by statutory or constitutional means [1].

The Department of Defence (DoD) does not own any commercial businesses or interests.

The Armaments Corporation of South Africa (Armscor) is a state-owned company (SOC) established by the Armscor Act, responsible for meeting the defence matériel acquisition/disposal & defence technology research, development, analysis, and test & evaluation needs of the DoD. It is not contained within the DoD but reports to the minister of defence and military veterans and the relevant parliamentary committees as a separate entity. As with other SOCs, it is listed as a schedule 2 public entity in terms of the Public Finance Management Act (Act 1 of 1999) and regulated as per that act’s requirements and those of the Companies Act, 2008 [1]. Denel SOC reports to the Department of Public Enterprises and the associated parliamentary committees, without any reporting lines to the DoD or minister of defence and military veterans [2]. Armscor is regularly audited by the auditor-general (AG). It received an unqualified audit in 2018 [3].

This indicator is scored ‘Not Applicable’, as the Department of Defence (DoD) does not own any commercial businesses or interests.

The Military Mutual Aid Association (MMAA), a public pension agency for military personnel, operates six businesses, including telecommunications and military product supply. It is subject to the parliamentary annual audit. However, details of its operations are missing on the MMAA’s website. [1] [2]

The Military Mutual Aid Association (MMAA) is subject to the parliamentary annual audit, according to Article 7 of The Act on the Inspection and Investigation of State Administration. [1] Although the audit reports are available to the public, details are incomplete or abbreviated. According to the MMAA’s official website, it only includes follow-up reports and actions taken for the MMD’s audit, rather than showing the full audit details. The latest update was done in 2017. [2]

In theory, all military-owned businesses are subject to scrutiny, including audits. The NSS Act, for instance, clearly states that the organ’s business is subject to audit by the Auditor General. [1] But whether that happens in practice is unknown, given the generally opaque nature by which government business is conducted. [2]

Audits are not available to the public. In general, the last time the audits of government business were made available was in 2008. [1] To date, no audits of government business have been made public, in direct violation of the Constitution. [2]

There is no evidence of military-owned businesses in Spain [1]. As stated previously, Organic Law 9/2011, of 27 July, on the Rights and Duties of Members of the Armed Forces prohibits defence organisations, in Article 33.5, from having a lucrative nature [2].

This indicator is marked ‘Not Applicable’ as there are no military-owned businesses [1].

In April 2020, the Sudan Tribune wrote that the head of the transitional Sovereignty Council had decided to form a committee to reform the status of the companies of the Military Industrial Corporation, which, since Bashir’s ouster, was slated to be opened to democratic oversight by Parliament and civilian organisations anyway [1]. The article went on to state that a senior leader meeting was held to discuss how to ‘convert the army’s companies operating in non-military fields into public joint-stock companies under the civil code and observing the rules of transparency and oversight’ [1]. This implies that military-owned businesses are not currently subject to scrutiny by civilian organisations. No evidence could be found that military elements audit their own business operations, but there is plenty of evidence available to suggest that military-owned businesses deliberately hide or obscure the details of their operations so as to facilitate the use of businesses and related resources to serve personal interests or patronage systems. Global Witness and The Sentry are both watchdog organisations that have attempted to independently scrutinise the activities of military-owned and military-affiliated businesses [2,3]. The Sentry writes that ‘Sudan’s powerful business sector is controlled by security forces with a dismal record of war crimes, crimes against humanity, and genocide, as independently documented by the United Nations and leading international human rights organizations… The defense and security agencies – namely the Sudan Armed Forces (SAF), National Intelligence and Security Services (NISS), the National Police, and the Rapid Support Forces (RSF) – developed vast business empires and still enjoy exemptions from government taxes and other dues, undercutting the private sector’ [3].

There is no evidence on Sudan’s National Audit Chamber’s website [1] that military-owned businesses or their connections with military personnel are systematically audited or audited at all, unless discretionarily by the relevant military unit that owns the business. An article published by Dabanga in June 2020 states that Mohamed El Faki, member of the Sovereignty Council and acting Chairman of the Empowerment Elimination, Anti-Corruption and Funds Recovery Committee, explained on his Facebook page ‘that during the rule of the deposed regime, the Auditor General had no access to the financial statements of companies and institutions affiliated with the military and security apparatus’ and that ‘the former regime maintained its corrupt activities by controlling the legal system. Therefore, reports of the Auditor General concerning the abuse of public funds and embezzlements were never investigated or dealt with’. He went on to reveal that in January 2020, ‘the Auditor General handed the transitional government 180 reports about abuse of public funds and embezzlement’ that presumably dated back to before the 2019 political transition [2]. If these reports were not released to Parliament, they must not have been released to the public either.

Since November 1999, when the company Saab purchased the Swedish government’s remaining shares in the Celsius Corporate Group, there have been no state or military ownership of defence companies in Sweden [1] as the arms industry is now internationalised and owned predominantly by Saab and its shareholders [2] [3].

Since November 1999, the Swedish state and military organisation has had no ownership of defence companies [1]. Therefore, this indicator is marked ‘Not Applicable’.

Switzerland is the sole owner of RUAG Holding AG that is a provider of aerospace, security and defence technology [1, 2]. In 2018 the overall worth of its assets was 1996 million Swiss Francs and 1022 million Swiss Francs equity attributable to the RUAG shareholder. The company publishes an annual report and financial statements similar to a publicly listed company [2]. The ownership in RUAG is regulated by the Federal Law on Armament Companies of the Confederation (BGRB) [3]. In 2020 RUAG is reorganized into two legally separate entities, unbundling the company into a national and an international group. The Federal Council plans to privatize the international group once “profitability and a favourable market position have been achieved.” While the Swiss entity will remain under the control of the DDPS, RUAG international will be controlled by the Federal Department of Finance (FDF) [1]. In addition to the regular shareholder audit the Swiss Federal Audit Office also sometimes conducts special audits. For example, media reports in 2018 claimed that RUAG overcharged for its aviation maintenance services (the profit margin for these services was agreed at 8%). The audit was requested by RUAG and concluded that it has indeed overcharged the federation between 2013 and 2017 [4]. In May 2016, the Swiss Federal Audit Office audited RUAG’s compliance management systems. It concluded that RUAG has “made progress over the past three years” but that the Swiss Federal Audit Office “believes that the [reputational] risk resulting from corruption is considerable for RUAG” [5].

Full audit details are available to the public. RUAG is a public shareholder company and subject to the same rules as stock companies. The company publishes an annual report and financial statements according to the law, this includes a statement of the statutory auditors [1]. In additions, there are targeted audits by the Swiss Federal Audit Office. These reports are sometimes publicly accessible as is, for example, the case for a 2016 report on RUAG’s compliance management system [2] or in 2019 on claims that RUAG overcharged the Swiss Confederation for aviation maintenance services [3].

Taiwan’s armed forces are under strict regulations and are prohibited from owning or operating military enterprises [1, 2]. Even though Taiwan’s MND in general does not have ownership or operate any military enterprises, there are still commercial ventures regulated by the MND to provide services to the Military; i.e. the General Welfare Service [3]. The General Welfare Service, which is similar to the Army and Air Force Exchange Service of the US, provides retail services to Taiwan’s armed forces, military families, and veterans. The General Welfare Service is under the command-chain of from the Political Warfare Bureau to the MND and under strict auditing process issued by the MND [4, 5].

This indicator is marked ‘Not Applicable. Taiwan’s Armed Forces are under strict regulations and are prohibited from owning or operating military enterprises [1].

Millitary owned businesses are theoretically subject to scrutiny by the CAG and later by the Parliamentary Accounts Committee. [1] [2] [3] [4] However, the extent of scrutiny is not known as such processes are highly secretive and corresponding reports are given in an aggregated format.

Fragments of information about military owned businesses appear in the consolidated audit reports of the Controller and Auditor General, but they are not significant, while at the same time it is not clear how many military owned businesses there are, as some of those mentioned in the CAG reports are not listed on the SUMA JKT website. [1] [2]

The military has a long tradition of involvement in business and it is openly known that some officers branch out into private business deals. In February 2020, after the mass shooting incident in Korat, General Apirat Kongsompong admitted that the military has long been stained by alleged irregularities in issues relating to military-owned businesses, ranging from welfare housing to loans, sporting facilities, boxing stadiums, golf courses and resorts [1]. These off-the-books enterprises have been rooted in military culture, and they are not subject to auditing and oversight. The mass shooting in Korat also coincided with parliamentary scrutiny of off-budget funds, which are believed to be connected to the military’s shady businesses [2].

According to the State Audit Act B.E. 2542, state-owned enterprises’ (SOE) accounts must be audited by the Office of the Auditor General of Thailand. State-owned enterprises in Thailand are accountable to two line ministries, namely the Ministry of Finance (the shareholder) and the ministry that dictates its policy. For example, Thai Airways International is accountable to both the Ministry of Transport and the Ministry of Finance at the same time [1]. However, the military, which staged its most recent coups in 2006 and 2014, has wielded extraordinary power in Thailand and operated many businesses for decades. Nonetheless, Army Chief Apirat Kongsompong has promised to investigate this and has also acknowledged the wider problem of inappropriate business deals involving army officers and their subordinates after the Korat mass shooting [2]. According to the army chief, these businesses, which were originally introduced as part of a welfare scheme for army personnel and did not need to be externally audited, will be managed by professionals from the private sector in the future [3].

According to our sources, there are no military-owned businesses in Tunisia (1,2).

This indicator is marked Not Applicable because there are no military owned businesses, hence audit reports do not exist. (1,2)

Military-owned businesses are subject to some scrutiny, but these processes are known to lack independence and reliability [1]. According to Article 6 of Law No. 205, which regulates OYAK’s acvitities, OYAK has a very effective oversight board that has members from the General Staff, Ministry of Defence and Ministry of Treasury and Finance, as well as representatives of its members [2]. However, the audit reports of this board are only sent to the Ministry of Defence and the Ministry of Finance. There is no legislative oversight/monitoring or civil society monitoring of OYAK [3].

It should also be noted that, because OYAK is not a state actor, it is outside the judicial oversight of the CoA. Interviewees 3 and 6 both suggested that there is no routine or comprehensive external and independent oversight/auditing of the financial activities and balance sheet of OYAK Holding [4,5]. As for OYAK, there is a special supervisory board that oversees its activities, composed of three individuals, one of whom is a military officer. The Supervisory Board is made up of three members: one member is elected by the General Assembly out of five (military) candidates nominated by the Ministry of National Defence; one member is elected by the head of the Public Oversight Delegation; one member is elected by the President of the Administrative Delegation of the Turkish Union of Banks. In addition, since 2001, a private auditing firm has carried out an additional financial audit of OYAK activities.

Interviewee 3, who worked at the auditing department of the OYAK between 2006 and 2008 as the representative of the Turkish General Staff, suggested that the audit details are not generally made available to the public [1].

Open-source research of the assessor confirms Interview 3’s suggestion. Neither a performance report nor an auditing report has been published annually about the OYAK Group Companies since the foundation of OYAK. Some of the Group’s companies publish annual financial reports, but these reports do not contain any information about financial activities or balance sheets. They look more like commercials, only providing information about the company’s successes and new procurements [2].

The Office of the Auditor General [1, 2] scrutinises the operations of these businesses and undertakes annual audits. These audit reports are then submitted to Parliament for debate [2]. The Public Procurement and Disposal of Assets [3] also scrutinises the military businesses. These scrutinies are independent and reliable, with because they clearly pinpoint where there are gaps and the responsible units for such gaps, and makes recommendations on what should be done to address it. Most of the recommendations made are not followed, so they keep reappearing in annual reports.

The Office of the Auditor General [1, 2] provides full audit reports of the military businesses to Parliament as mandated by law. These audit reports are then submitted to Parliament for debate [3], which then becomes a public record. The Public Procurement and Disposal of Public Assets (PDDA) also undertakes audits of procurements and disposals of these businesses, and it reports their findings to Parliament [4]. These are all public records.

The MoD owns military businesses [1], and they are subject to external audits by both the Accounting Chamber [2] and the State Audit Service of Ukraine [3]. Nevertheless, there are reasons to doubt their independence since the Accounting Chamber can be influenced by the politicians in the VRU, which was proved by one of the current MPs [4]. Moreover, the State Audit Service is subordinate to the CMU. There is also no evidence that both authorities conduct audits based on international auditing standards, like the OECD.

There are some audit reports available online, although most of them are outdated and in an aggregated form [1, 2, 3]. At the same time, the State Audit Service of Ukraine also published a recent audit report (dated September 2017) on financial activities of one of the MoD enterprises [4]. This report contains comprehensive and detailed information on findings, conclusions, and recommendations on 192 pages. The main problem remains with the audit of Ukroboronprom. There were cases when external auditors were not allowed to do their job in auditing this state holding [5, 6].

There are no military owned businesses in the country (1), (2), (3).

This sub-indicator is marked Not Applicable as there are no military owned businesses in the country (1), (2), (3).

The financial statements of the MoD’s two trading funds, Defence Science and Technology Laboratory (DSTL) and the UK Hydrographic Office (UKHO) are audited by the Comptroller and Auditor General [1, 2]. The audits are conducted in accordance with the International Standards on Auditing [3]. The NAO’s independence and auditory powers are enshrined in the National Audit Act (NAA) 1983 (s.6 & 8 particularly) and the Budget Responsibility and National Audit Act (BRANA) 2011′ [4, 5].

Audit reports are available in the Annual Reports and Accounts of both the DSTL and the UKHO [1, 2]. However, the reports are presented in an aggregated form over 2 pages – full audit details are not publicly available [1, 2].

There is no evidence of the armed services owning businesses in the United States [1].

This indicator is scored ‘Not Applicable’ because there is no evidence of the armed services owning businesses in the United States.

As dependencies of the Ministry of the People’s Power for Defence (MPPD), military businesses can be subject to fiscal controls from the Comptroller General of the Republic (CGR) and internal oversight from the Comptroller General of the National Bolivarian Armed Forces (CONGEFANB) [1]. However, since a Supreme Court judgment, oversight of these companies within the defence sector was handed over exclusively to the CONGEFANB. As this is a part of the MPPD and is directed by military officers, the oversight cannot be considered independent [2].

According to analyses by academics and experts, the armed forces’ control of the economic sector has been discretionary. Together with the increase in private military companies over recent years, some view this as a sign of military domination of the economy [3]. The obstruction of scrutiny from state institutions is compounded by the blocking of civil organisations’ participation in the oversight of these companies. Added to the difficulties in access to financial and administrative information, the management of these companies involves a concentration of power in the hands of military and some civil elites, further preventing the possibility of access to information related to the interests of these senior officials. According to available information about assets and directors within the companies, a senior official in government is involved in several different companies, as are other military authorities and board members of the state oil company Petroleum of Venezuela (PDVSA) [4, 5].

While there is some information about audits and technical visits from CONGEFANB to these companies, details of the audits are not made public [1, 2, 3]. Information on the actions of the Comptroller is sporadically presented to the public rather than in a systematic and organised way. Meanwhile, it was impossible to find recent information demonstrating oversight activities by CGR other than cooperation agreements for work with CONGEFANB [4].

Civil organisations seeking to monitor public finances and information available in the press both illustrate the difficulty of accessing information; not only is this information not made public, but access is denied when requested through legal mechanisms [5].

Audits are carried out for purposes of internal use, there is evidence of people in the military who have been arrested for doubling transfer payments for the same transaction [1]. These are unearthed through internal audits [2]. However, these audits are not meant for external scrutiny, nor is the information meant for public consumption. There is no parliamentary scrutiny of defence and security institution audits.

Military owned businesses have never published audited financials of their private enterprise. There is no legal framework providing for their operation and involvement in commercial enterprises; there is no obligation to publish audit reports. Furthermore, there is not a proper framework for the use of funds generated in these enterprises. It rests solely at the discretion of military leaders to conduct and publish audits, and to decide on what to do with the results of these audits when they are completed [1, 2, 3, 4].