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Q31.

Do national defence and security institutions have beneficial ownership of commercial businesses? If so, how transparent are details of the operations and finances of such businesses?

31a. Extent of commercial ventures

Score

SCORE: 75/100

Assessor Explanation

Assessor Sources

31b. Transparency

Score

SCORE: 100/100

Assessor Explanation

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Relevant comparisons

The MoD and the military own several business activities including, military industry, shipbuilding and repairing, import-export of military materiel, recreational services, and cultural, media and publishing services. The military industry includes the mechanical plants of Poliçan and Gramsh that produce ammunition and weapons, and an explosive materials plant in Mjekës that specializes in the production of explosives and propellants [1, 2].
The import-export company MEICO, established in 1991, has dealt mainly with the exporting of excess weapons and ammunitions inherited from the communist period. The shipbuilding and repair plant was established more recently in 2015 to produce and maintain both military and civilian vessels [3]. Other relevant enterprises are the Military Hospital and the Center for Culture, Media and Publications of Defence [4, 5]. While these entities are funded by the state budget, they also generate their funds through provision of services to third parties and as such, they operate as business-like entities.
The incomes generated have varied in different years. Until the mid-2000 the incomes from the MoD businesses were higher in terms of percentage, as the budget of the MoD was smaller, and the amounts of funds generated by the selling of excess ammunition, small weapons and metal scrap were substantial. Over the last decade, as the budget of the MoD has increased while the amount of excess ammunition and weapons has declined, the incomes from economic activity have been around 3-5% of the MoD budget [6].

The activities of MoD owned businesses are subject to regulation and control by the MoD itself. The Directorate of Internal Audit and the Office of the Management of the Enterprises in the Directorate of the Management of the Properties and Material respectively are responsible for the financial control and the management of the economic and financial activity [1]. The businesses owned by the MoD are publically declared, but their financial operations and performance are not made public. The incomes generated by the MoD owned businesses are managed following a government decision which states that only 30% of the income may be used by the MoD [2].

The Algerian armed forces are economically active in various sectors. According to the Director of Military Industries at the Defence Ministry, the military industry includes armament, energy, electronics, textile processing, and mechanical engineering. He also said that the military has 40 companies throughout the country (1). The Algerian military also manufactures trucks (2).

The Deputy Defence Minister has underlined that the military industry is important in the process of developing and modernizing the capabilities of the Algerian armed forces (3) but no information on the exact size of the military industry could be found. According to a military official, the foreign direct investments in projects in the military industry amount to nearly one billion US dollars (4). No further information on this figure, for example, a time period, was found. It is therefore not possible to draw any conclusions about the extent of the military’s commercial businesses.

Army officials have publicly spoken about the military industry and its activities (1), (2).

Reports on industry operated by the military give some information on its operation but do not fully disclose the nature of its operations and finances, no information was found. There are reports on the scope of the military’s businesses activities, which ranges from armaments to electronics. Its textile production industry is explicitly utilized for both the military and the civil market (3). According to another source, nearly 30,000 civil workers are employed in the military-economic sector (4).

There is no available data to measure the extent of commercial ventures of defence institutions. According to its latest organic statute, since 2006 the public military procurement company Simportex has been run by the Ministry of Defence, which may acquire ownership in national or foreign companies (presidential decree 110/18, Art. 4, 4) (1), (2). Its staff is bound by confidentiality clauses, and there is little publicly available information on the company’s operations and finances, apart from opinions issued by the Audit Court on contract submissions (3), (4).

Although approved contracts by the company are commonly published in the official state gazette and sometimes publicized in the media, details are often not disclosed or publicly available (1), (2), (3). The company Simportex has a history of non‐transparent commercial transactions. This may be due to its long‐time unofficial control by senior officials of the presidency. The then director of Simportex, General Joao Pedro Cavunga has been heard to say “We are a military company, and as such we are not allowed to disclose information of military nature” (4). This year, the state-owned news agency, Angop disclosed in March that President Lourenço approved a 160 million Euro contract for the acquisition of two patrol boats from Airbus through Simportex (1), (2), (3).

Defence institutions do not own commercial companies whose value exceeds 10% of the annual defence budget. Within the sources of financing of the defence jurisdiction it notes that there are “own resources,” composed of social services (including social security) and economic services (industry and transport). When obtaining these resources (taking 2018 as an example), 92.5% comes from social security based on the Financial Assistance Institute for the payment of Military Withdrawals and Pensions (IAF), while the remaining comes from income produced by the General Directorate of Military Manufactures (5.3%) and the rest from the National Meteorological Service. [1] For its part, the Argentine Aircraft Factory “Brig. San Martín” S.A. (FADEA), nationalised in 2009, although it has a direct relationship to the defence jurisdiction, its commercial results do not appear as own resources within the defence budget, since it is a provider for example of the Argentine Air Force. [2] Most of its contracts are with the State, so the defence institution cannot be considered as its final owner. Likewise, the IAF is not considered to be a commercial enterprise, but rather as a decentralised agency in the field of defence. Current regulations provide that this agency can carry out credit, real estate, and financial operations that are intended to capitalise on available resources. Accordingly, it acts as a financial source for military personnel, for example by granting mortgages and personal loans. [3] [4] [5] In the case of Military Manufactures, at the beginning of 2019 and through a presidential decree, it became a state company, but within the scope of the Ministry of Defence. Its aims include research and development of technologies, manufacturing, industrialisation, exploitation, and transport, as well as the commercialisation of goods and services in the areas of security, defence, mining, the chemical industry, and the metalworking industry. [6] [7] This implies that it acts as a state entity of commercial and industrial activity, with its own legal regime.

These companies are declared public, but the details of their operations and finances are not transparent or easily recognisable. The data mentioned above are accessible to the public through the official page of the Open Budget, which allows quantitative data to be obtained by year, jurisdiction, source of financing, object of expenditure, agency, etc. In turn, both the IAF and the General Directorate of Military Manufactures have been audited by SIGEN and AGN in 2017. [1] [2]

According to the Law on Joint Stock Companies, authorized state bodies may manage state-owned joint-stock companies [1]. The Ministry of Defence’s (MoD) website, states it has shares in seven state military-industrial companies: “Charentsavani Hastotsashinakan Gorcaran” CJSC, “Garni Ler GAM”, “65 Military Factory”, “Laser techniques” CJSC, “Patnesh” CJSC, “Yerevan Mathematical Machines Plant” CJSC and “Special Design Centre of Institute of Radiophysics and Electronics” CJSC. The MoD has ownership with a 50% or more state share [2].
In addition to those seven enterprises, three more were mentioned in the annual financial report of enterprises with State Participation under the auspice of the MoD: “Geocosmos”, “Henaket”, and “LT Pirkal” CJSC [3]. According to media outlets, two companies from this list, “Garni Ler GAM” and “65 Military Factory” are owned, with 98.4% and 100% state share respectively, and governed by the MoD, are going to merge together [4]. According to Government Decree N 373-N, “Arm Aero”, a closed joint-stock company under the auspice of the MoD, is to be reorganized and a new “Her-Her” hydroelectric power plant, as a closed joint-stock company, will be established. The newly established HPP is under the auspices of the MoD [5]. According to the Law on Budget System and the Law on Treasury System, the profits of the state-owned military-industrial organizations are not part of the military budget as they are transferred to the state budget and then distributed according to needs [6].
According to the RA Government Decree N1476-A of October 24, 2019, [7] the state share management of “Charentsavan Machine Tool Factory” and “Garni-Ler GAM” OJSC, as well as “Lazerayin Technika”, “Patnesh”, “Yerevan Mathematical Machine Factory”, and “Specialized Design Bureau of Radio-physics and Electronics Institute” CJSCs has been entrusted to the RA Ministry of High Technology Industry.
Joint-stock companies managed by the MoD mainly carry out their tasks, such as upgrading, repairing, and manufacturing some parts of the MoD’s armaments and military equipment. The revenues of the military-industrial organizations with the state participation of MoD are not part of the military budget since they are entered into a company’s budget and then distributed as needed. [8].

According to the RA Law on Joint Stock Companies (Article 94), joint-stock companies should publish their annual report, annual balance sheet, and the profit and loss statement of the company, which are then submitted to the Annual Meeting for approval, they are confirmed by the Controls Commission (the Controller) of the company. Before publication, these documents are audited and their relevance approved by an auditor that has no property interests in common with the company or its shareholders. No financial report is available on companies with state shares either from the MoD website or from the official websites of the CJSCs. No reports from the Controls Commission are publicly available. [1] However, the State Property Management Department provides annual financial reports on enterprises with 50% state participation, and there were 14 enterprises under the auspice of the MoD in the 2017 financial report. The State Property Management Department implemented monitoring on the financial situation of 12 of 14 enterprises of the MoD regarding profits and losses [2].

There are three main types of entities and companies that the Commonwealth government controls: Non-corporate Commonwealth entities, Corporate Commonwealth entities, and Commonwealth companies [1]. The Defence portfolio contains 9 entities and 3 companies [2]. The companies are not-for-profit community-building and holiday accommodation funds (Army Amenities Fund Company [3] and RAAF Welfare Recreational Company [4]), and a think tank (Australian Strategic Policy Institute Ltd [5]), and cannot be described as commercial ventures. The other defence-related companies fall under the Finance portfolio (ASC Pty Ltd and Australian Naval Infrastructure Pty Ltd [2]). Defence Housing Australia (DHA), which is a Corporate Commonwealth entity, is prescribed as a Government Business Enterprise by the Public Governance, Performance and Accountability Rule, which makes it a commercial venture [6]. However, while DHA is administered by Defence, it is owned by the Commonwealth under the Defence Housing Australia Act 1987 [7, 8]. Therefore, there are no commercial ventures where defence and security institutions have beneficial ownership.

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

There is no official information that the defence and security institutes in Azerbaijan are involved in commercial businesses. The Ministry of Defence Industry, established in 2005, has more than 20 factories and enterprises. But these factories are not commercial they are part of this institution and this is known to the public and government. In Januar 2019 president Ilham Aliyev signed a decree to establish the Azersilah Open Joint Stock Company (1). The company is being established based on the Azerbaijani Ministry of Defence Industry; then the decree was cancelled (2).
Various types of military equipment and machinery are produced in these factories and enterprises of the Ministry of Defence. At the Ministry’s facilities, civilian products are also produced. Minister Yavar Jamalov said in 2013 that compared to 2007, the volume of civilian production increased by 1.9 times in 2013. The number of varieties exceeded 450. Interestingly, there are various types of control and management systems operating in the oil and gas industry (3).
Azerbaijani president İlham Aliyev said (June 26, 2018) that there are 1200 types of military products produced, at the same time, Azerbaijan has already started exporting military products (4). Defence Industry Minister Yaver Jamalov said in 2017 that the export of Azerbaijani military products is being carried out to the relevant agencies of more than 10 countries. “At present the cost of concluded contracts is 101 million US dollars. $57 million of this amount is in force, and the remaining $44 million will come into effect after end-user certificates are issued” (5).
Additionally, auxiliary farms were established in the military units to strengthen the supply of personnel of military units in Azerbaijan with food, fresh vegetables and other agricultural products. This is stated in the report of the Cabinet of Ministers for 2016. But there is no information on the activities of these farms, how much MoD spend on them (6).
There is no information on the total volume of these funds in the defence budget.

This indicator has been marked Not Applicable, as there is no official information that the defence and security institutes in Azerbaijan are involved in commercial businesses. The products produced by the Ministry of Defence Industry are published in the press (1). At the same time, this information is regularly updated on the ministry’s website (2). In general, the ministry does not provide any detailed information about the revenues gained from these products (3). The factories of the Ministry of Defence are not commercial, they are part of the institution and this is known to the public and government. Any ownership of commercial businesses, if there is ownership, is not known to the public.

Bahrain is a small country, and its primary income source is oil [1]. Revenues go to the treasury with an unknown amount to the king office. The army and the Ministry of Defence (MoD) have no commercial activities and rely solely on the king’s office for their budget [2, 3, 4].

Given that neither the army nor the MoD have any commericial businesses, this indicator has been marked ‘Not Applicable’.

There is not enough information to score this indicator. Sena Kalyan Sangstha (Army Welfare Trust, AWT) is devoted to the welfare of released, retired and discharged Armed Forces personnel and their dependants. It has some 21 companies: industrial, commercial and real estates. The total turnover of these companies is not publicly available [1]. Therefore, the assessor is unable to estimate what percentage of the defence budget their gross/net earnings equate to, nor is there any publicly available research on such an estimation.

Of the 21 companies of the AWT, only one provides some scanty information on its website about its sale figures from the last 5 years and names of key persons in the company [1]. In the absence of any verifiable public information, it can be said that these financial operations are non-transparent.

Belgium’s national security and defence institutions do not have beneficial ownership of commercial businesses [1, 2].

There is no ownership of commercial businesses by Belgium’s national security and defence institutions [1, 2]. This indicator is therefore marked ‘Not Applicable’.

Following the Law on Defence and the Law on Ministries and Other Administration Bodies of Bosnia and Herzegovina, the Ministry of Defence (MoD) and the Ministry of Security (MoS) do not own any commercial business[1, 2, 3, 4]. Additionally, the control of the defence industry in Bosnia and Herzegovina is strictly under the jurisdiction of two entities [5, 6].

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

There is no evidence that the Botswana Defence Forces and the Directorate of Intelligence Services own any commercial benefits [1,2].

As noted above, both the Botswana Defence Forces and the Directorate of Intelligence Services do not own any shares in companies [1,2]. Given this, the indicator is scored ‘Not Applicable’.

The armed forces only own four companies, as stated in question 32. They are the company Amazul [1], IMBEL [2], Emgepron [3] and NAV Brasil [4]. Their budget constitutes less than 1% of the Defence Budget [5].

On Amazul’s website [1], citizens can have basic information that is mandatorily disclosed due to the Brazilian FOIA, and so does IMBEL [2] and EMGEPRON [3]. NAV Brasil was recently created, so it is not operational yet [4]. The most transparent military-owned company is IMBEL, with an extensive list of information on their website’s transparency section [2]. On Amazul’s website, there is less information, but there is sufficient information about operations and organisation in order for citizens to ask for additional information through FOIA requests [1].

The Law N° 037-2008 (2008) prohibits any commercial activity for active-duty members of the armed forces (1). Burkina Faso’s armed forces do not own any business; however, it was reported across the country on many occasions that the military personnel and individuals, particularly those among the high ranking officers, own businesses and participate in commercial enterprises. The military has been ruling the country for more than 50 years (2), (3), (4), (5).

The Law N° 037-2008 (2008) prohibits any commercial activity for active-duty members of the armed forces (1). Burkina Faso’s armed forces do not own any business; however, it was reported across the country on many occasions that the military personnel and individuals, particularly those among the high ranking officers, own businesses and participate in commercial enterprises. The military has been ruling the country for more than 50 years (2), (3), (4), (5).

Genie Militaire, one of the specialist units of the Cameroon military, is highly involved in construction works. It has constructed schools, roads and other structures in the cities of Yaounde and Douala for the state [1] [2] [3]. Over the years, this unit has gained the hearts and minds of Cameroonians through services it provides to the public [1].

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” [4]. Therefore, it is difficult to ascertain the involvement of military and security institutions in commercial activities as this is not declared publicly.

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.

The National Defence Act (Sections 2 and 38 – 41) vests Non-Public Property (NPP) with the Chief of the Defence Staff (CDS), Base / Wing Commanders and Unit Commanding Officers to be used for the benefit of serving and former Canadian Armed Forces personnel and their families. [1] [2] The Canadian Forces Morale and Welfare Services (CFMWS), operates as a ‘social enterprise’, which is by its definition “an organization that is directly involved with the production and/or selling of goods and services for the blended purpose of generating income and achieving social, cultural, and/or environmental aims.” [3] Given that for 2019-2020 DND’s budget is $21.9 billion [4], and that the CFMWS’s “total gross revenue earned in fiscal year 2019-2020 was $505 million”[5], it’s budget amounts to over 1% of the defence budget.

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). [1]

The armed forces are linked to a commercial business in the military industry, but there is almost no information on the insertion of these businesses in the overall defence system and the model of management that these companies use [1]. The most important, but not unique, enterprises in the defence industry are the army’s factory, FAMAE; the navy’s factory, ASMAR, and the aeronautics company ENAER [2]. Because these state-owned enterprises are autonomous, with their own patrimony, their financial statements are not included in the annual budget law of the Ministry of Defence. Only FAMAE receives direct transferences from the army, which in 2018 accounted for 2,032 million Chilean pesos, equivalent to 44 per cent of the army’s regular transferences (or 0.4 per cent of the army’s total expenditures). At the same time, the facilities of these companies are considered military buildings and their CEOs and managers are confirmed by military authorities. In some cases, there are prescriptions for the use of revenues and their reinvestment [3, 4]. The air force has the General Directorate of Civil Aeronautics (DGAC) for the management and administration of public aerodromes [5, 6]. The DGAC collects and receives fees and charges for the use of public aerodromes. In 2018, the air force reported an income of $71 million of Chilean pesos from the DGAC, equivalent to 0.03 per cent of their budget.

While the ownership of commercial businesses and the sale of services are publicly declared, the details of transfers that these businesses could make to the branches of the armed forces and the reinvestment of revenues from fees and services are not clearly stated. The public annual budget proposals indicate the aggregate amounts of income perceive from institutions, but the items are generic (“income from the sale of services”) rather than specific [1]. Standards of governance vary according to the institutions as well. There have been several initiatives to modernise the corporative governance of businesses related to the military industry so that they can incorporate to their boards of directors senior executives who do not depend on the armed forces, but the bill is still under discussion [2, 3, 4].

Due to a complete lack of transparency, it is not possible to evaluate the extent of commercial ownership as a percentage of the defence budget. Therefore, this is scored ‘Not Enough Information’.

The military has undergone two rounds of divestiture: in 1998 and 2016 to 2019. [1,2,3,4,5] All commercial activities had officially ceased by the end of 2019. [6] In particular, these include: nursery education, press and publications, culture and sports, communications, personnel training, barracks projects, storage and transportation, militia armament repair, repair technology, driver instruction, real estate rentals, agricultural products, accommodation services, medical care and scientific research. [6] According to an interviewee, [7] under Xi Jinping there has been a real effort to crack down on commercial businesses, which begun by weakening the previously powerful CMC Logistics Department. But this process is ongoing and was expected to be completed in the end of 2019. Futhermore, the 1998 divestiture was incompletely implemented and there is an absence of transparency and verifiable information on the process of the current one.

Due to a complete lack of transparency, it is not possible to evaluate the extent of commercial ownership as a percentage of the defence budget. There is no public information on the PLA’s ownership over commercial businesses and no aggregated official data. Due to decentralisation, the ownership of commercial businesses is devolved to local-level military units, as a result it is very likely that the CMC and the MoD do not have a complete picture either. [1]

The defence sector is made up of 18 companies: 8 Public Establishments, 3 Mixed Economy Societies, 2 State Industrial and Commercial Entities, 2 Indirect Decentralized Entities, 1 Superintendency with legal status, 1 Private Entity without Profit, and 1 Entity Dependent on the Ministry of National Defence, which are concentrated in the Business and Social Group of Defence (GSED). [1] These companies include: New Granada Military University; Retirement Fund of the Military Forces; Military Club; Logistics Agency of the Military Forces; Retirement Salaries Fund of the National Police; Colombian Civil Defence; Retirement Fund of the National Police; Central Military Hospital; Institute of Fiscal Houses; Police and Military Housing Promotion Fund; Military Industry (INDUMIL); Air Service to National Territories (SATENA); Industry Corporation – Colombian Aeronautics (CIAC); Matamoros Corporation; Hotel San Diego Hotel Tequendama; NCO Circle; Science and Technology Corporation for the Development of the Naval, Maritime and River Industry (Cotecmar); and the Superintendency of Surveillance and Private Security. [2] In 2018, the GSED budget was 8.4 trillion pesos, and had assets of 12.7 trillion pesos, and an aggregate net worth of 4.1 trillion pesos. [3, 4] The allocation of budget to the entities that make up the GSED in the annual National Budget Law takes into account the missions of these entities as a criterion to avoid duplication of allocations. For example, the budget assigned to the Universidad Nueva Granada is considered within the budget for Education. Similarly, there are 3 companies that do not receive an allocation in the General Budget of the Nation, but are supported by private resources, which are: Cotecmar, the NCO Circle of the Military Forces, and the Matamoros Corporation. [5] As for the definition of the budget of some GSED entities, although some are included in the national budget, in the case of State Industrial and Commercial Companies their budget is defined by the Superior Council of Fiscal Policy (CONFIS), an entity attached to the Ministry of Defence. [6] For 2018, the budget assigned to these companies was 1.25 trillion pesos, through Resolution 0004 of 2017, [7] which represented only 3.85% of the budget assigned to the defence sector this year. Reviewing the financial statements of the Ministry of Defence as of December 2018, and comparing it with the total value of the defence budget for the same period, which is equivalent to 32.4 trillion, the account is identified: controlled investments accounted for by the equity participation method by a value of 71.4 mm. This account refers to the investment subordinated or controlled by the equity method. This comparison allows us to identify that the total value of the investments made by the Ministry of Defence is equivalent to 0.22% of the total participation of the Ministry of Defence in industrial and commercial companies, such as CAPROVIMPO, mixed economy share companies such as SATENA, and companies from mixed economy companies such as CIAC and Sociedad Hotelera Tequendama S.A. Crown Plaza. This does not exceed 10% of the defence budget. [8, 9]

The commercial and industrial companies in the defence sector comply with the publication requirements of information stipulated in Law 1712 of 2014 (Transparency Act) and Resolution 3564 of 2015 of the ICT Ministry. [1, 2] The overall budget, historical budget execution, and financial statements for CAPROVIMPO, [3] SATENA, [4] and CIAC [5] are published. The Matamoros Corporation, whose mission is on corporate social responsibility, also reports its tax responsibilities as required by Law 1819 of 2016. [6, 7] The Military Logistics Agency also has its financial statements and reports of budget execution up to 2019. [8] In the case of COTECMAR, a section dedicated to the publication and monitoring of Anti-Corruption Plans, audits of the Comptroller General of the Republic, and internal control documents are available on its website. [9] Unlike these companies, the Tequendama S.A Crown Plaza Hotel Company does not present this complete information, [10] but this may be due to the nature of the entity. However, the Comptroller General of the Republic has carried out financial audits on the Tequendama Hotel Society, [11] and information about those can be found online. Reports related to operation planning are published online, including expenditure plans, annual execution reports, internal control reports, policies, and guidelines. Thus, these entities are in accordance with the applicable standards for public commercial enterprises.

As an institution, neither the MoD or the defence forces own significant commercial ventures. According to an interview with a former Licorne senior official, the fact – obvious – that local commanders are involved in businesses, legal or not, does not mean that the Institution itself runs income-generating activities at a large scale. The involvement of former rebel leaders of the Forces Nouvelles (FN) and the participation of high-ranking regional military cadres (known as COMZONES) in illicit trafficking in commodities and natural resources in their respective bastions has been widely substantiated in research and media coverage. According to a March 2016 IFRI report by Aline Leboeuf, citing a UN Security Council report by a group of experts, several COMZONES are known to profit from a parallel local economy, including the trafficking in gold, diamonds and cocoa:

“The latest report, submitted on April 13, 2015, to the UN Security Council, underlines that “the influence that some former zone commanders have on the state security apparatus remains problematic”. The report again reveals Wattao’s involvement in gold and diamond trafficking, as well as in the illegal taxation of transportation networks, while Losseni Fofana’s BSO is accused of the illicit taxation of illegal cocoa farmers within the national park next to Duékoué” (1).

Leboeuf maintains there has been a tacit tolerance of such informal sources of income by the administration of President Ouattara because of the threat that COMZONES continue to pose to domestic political stability in the aftermath of the 2010-2011 crisis. Leboeuf states, “the problem with Comzones also stems from the control they continue to exert over their fighters, who may be reintegrated or may not be, but who are still armed and available to fight as auxiliaries or simply to serve as guardians to protect the mines or other illegal activities of Comzones” (1).

There is no evidence that the MoD structures are involved or that they have beneficial ownership (propriété effective) in the trafficking rings operated by the COMZONES. The informal economies controlled by the former rebels are fully non-transparent and illegal. International media, research by multilateral institutions and NGOs have all widely exposed the commercial interests and beneficial ownership of the COMZONES in their areas of influence. So, it has lifted some of the opacity and political sensibility surrounding this problem in Côte d’Ivoire.

For example, the March 2016 IFRI report by Aline Leboeuf addresses the trafficking practices of Issiaka Ouattara (known as Wattao) in the region of Séguéla (1). Jeune Afrique has also carried regular updates of regional military warlords and their commercial businesses in the local parallel economy (2). An OFPRA report from September 2017 listed the names of the COMZONES and the areas in which they can supplement their income by trafficking in commodities and natural resources (3).
They include Morou Ouattra (known as Atchengué), Hervé Toure (known as Vetchio), Ousmane Cherif, Tuo Fozie, Messamba Kone, Zoumana Ouattara, Issiaka Ouattara (known as Wattao), Losséni Fofana, Daouda Doumbia, Ousmane Coulibaly, Gaoussou Kone, Martin Fofie and Zakaria Kone.

Though not prohibited by law [1], research indicates that the Danish Defence does not own any commercial businesses at the moment [2]. The last commercial business was sold off in 2008 [3, 4].

This indicator has been marked Not Applicable, as national defence and security institutions do not have any beneficial ownership of commercial businesses.

Egyptian Defence institutions have extensive commercial activities (1), (2), (3), (4). The estimates vary widely due to its opaque nature between 2% and 40% of GDP (5), (6). Al-Sisi himself estimates it is 2% of GDP and that is likely to be conservative. If this estimate is accurate, it is about EGP 100 billion. If the activities yield a conservative 15% return, it is more than EGP 15 billion, which is higher than the 10% of the last available EGP 43 billion figure of the 15/16 budget. Given high inflation, the defence budget is likely to have doubled in absolute figures since 15/16, but even if this is the case, the figure is still more than 10%. This estimate is far from scientific, but if anything it is conservative, and also shows a low return by private-sector standards. Note that the military gets a massive competitive advantage over the private sector regarding access to land, the cost of labour, taxation, etc (7), (8).

In general, financial and economic revenues and operations are not transparent (1), (2), (3), (4). The businesses are known, but their profits, operations, finances are secret (5), (6).

For the performance of its tasks the Defence League has the right to enter into contracts; build training area and sports facilities; provide accommodation and catering service; publish printed material; organise events; establish a legal person governed by private law or become a member in support of the performance of its duties; invite persons from outside the Defence League, including a foreign state, to participate; provide for charge services related to the principal activity. [1] However, the task of the Defence League is not to make profit for its members. [2] The Defence League only handles its land and real estate, and does not own companies or shares in companies. The rest of the defence sector is not allowed to engage in direct business activities either. [3]

This indicator has been marked Not Applicable. National defence and security institutions do not have beneficial ownership of commercial businesses

Defence and security institutions do not own commercial businesses; the Ministry of Defence does not govern any of the businesses of which the state has full or partial ownership. Partially or completely state-owned businesses operating in the field of defence and security or being corporatised from that field are governed by the Prime Minister’s Office or Solidium (a fully state owned investment company). For example, Patria (defence industry) is owned by the state by 50.1 % shares and governed by the Prime Minister’s Office, and Erillisverkot Oy (communications technology) is fully state owned and governed by the Prime Minister’s Office. [1,2]

This indicator is marked ‘Not Applicable’ as defence and security institutions do not own commercial businesses; the Ministry of Defence does not govern any of the businesses of which the state has full or partial ownership.

The Ministry of the Armed Forces (MOAF) does own some commercial entities. They are providers of the logistical needs of the armies. The main one is “Economat des armées”, a public entity with an industrial and commercial purpose, a central procurement and service provider to the armies. It has a special commercial status and is not required to abide by the code of public procurements, according to decree n°2005-1742 of December 30, 2005. [1] It operates under the supervision of the “Etat-Major des armées”, within the MOAF, and the French army is its main client. It can, however, provide logistical services to other French administrations, or to allies (the UN, EU, African Union, NATO). The profits made from such transactions do not represent large enough amounts to be considered as a commercial activity pouring revenues into the MOAF’s budget.
Other providers such as “Service des Essences des Armées” [Armed Forces Oil Service], are allowed to have other customers than the French army (allied forces), but these transactions are overseen by strict rules. [2] And, as with the “Economat des armées”, the profits made from such transactions do not represent large enough amounts to be considered as a commercial activity bringing revenue into the MOAF’s budget.
International Defence Counsulting (DCI) was created by the MOAF to accompany and enhance French arms exports. It is a consulting company, providing training, expertise and assistance to customers of French exports. [3]
An interview with an expert of the economy of the army [4] revealed that these entities owned by the MOAF represent marginal assets, equivalent to 1% of the defence budget or less.

In France, it is the French State that holds market shares in military/security companies: Thales 26,6%, Safran 15,4%, Areva 88,7%, Nexter 100%, Airbus 11,1%, DCI 49,9%, Naval Group 63,5%, KNDS 50%. [5]

This indicator is marked ‘Not Applicable’. The ministry doesn’t literally “own” companies. It can have the usufruct of the non-fiscal benefits, but this does not equate to “ownership”.
The books, summary of accounts and business expenses of (fully or partially) state-owned companies are shared with the accounting services of the French State (APE), [1] with standards of governance equivalent to publicly-owned commercial enterprises, though the details of these books aren’t available to the public in a disaggregated form.
Open-access information is rather general and vague: we know that in 2017, the French State earned 3.9 billion Euros in dividends, but this figure is for all revenues of State shares in these companies. Figures for defence-related companies could not be found. Even harder to find is the figure for State dividends from defence activities in defence-related companies. [2]

The annual ‘Beteiligungsbericht’ (‘Equity Holdings Report’) discloses the German government’s financial participation in commercial business, including the commercial activity and beneficial ownership of the Ministry of Defence (Article 65 of the ‘Bundeshaushaltsordnung’ (BHO) provides guidance for the beneficial ownership of commercial businesses) [1].

The report is generated by the Treasury and comprised of the findings of external audit companies. These reports are subject to the scrutiny of the Federal Audit Office and are available to the public. The companies, however, do not appear to publish annual reports on their respective websites [2].

The company shares listed below (five fully consolidated companies with 100% share ownership, two majority stakes, and two minority shares) are non-commercial companies within the meaning of Question 31. All of the companies listed below are for-profit. However, the strategic objective always focuses on the provision of services for the Federal Republic of Germany, which is usually the only customer and partner. There are several companies in third-party business with private customers, but the profit they generate is slight [2].

The BMVg represents the Federal Republic of Germany as a shareholder in the following companies (share ratio in brackets):

BWI GmbH (100%)
HIL Heeresinstandsaltungslogistik GmbH (100%)
Bw Bekleidungsmanagement GmbH (100%)
Bw Consulting GmbH (100%)
GEKA Gesellschaft zur Entsorgung von chemischen Kampfstoffen und Rüstungsaltlasten (100%)
BwFuhrparkService GmbH (75.1%)
Fernleitungs-Betriebsgesellschaft mbH (51%)
Agentur für Innovation in der Cybersicherheit GmbH (50% BMI)

For the sake of completeness, a recently acquired indirect participation in Hensoldt AG (25.1%), held by the state-owned Kreditanstalt für Wiederaufbau, could also be added. Furthermore, the Federal Government holds several direct minimal participations in the Hensoldt Group [5].

The following essential, publicly available reporting systems exist, which provide comprehensive insight into the operation and finances of companies:
The Federal ‘Beteiligungsbericht’ (Equity Holdings Report) published annually by the Federal Ministry of Finance [3]
The annual Federal financial statement published by the Federal Ministry of Finance [4]
The annual reports of the companies, available at bundesanzeiger.de [5]
Information on the relevant titles in the Federal Budget [6]

All or most ownership of commercial businesses is publicly declared. 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 [1]. However, the audit details seem to be only available in this abbreviated form in the ‘Beteiligungsbericht’, as the companies do not seem to publish annual reports on their websites [2].

Ownership of the companies listed is publicly disclosed, including full details of the companies’ operations and finances (see Q31A).

The above-mentioned companies are obliged to apply the parts of the Federal Public Corporate Governance Code (PCGK) that are aimed at these companies [3]. In terms of content, this code is comparable to the German Corporate Governance Code (DCGK), which is aimed at private companies [4,5].

Ghana had explicitly announced the established of the Defence Industries Holding Company. The Ghanaian Armed Forces are actively involved in for-profit businesses, ranging from construction to other services that use military labour and resources (1).

The Kumasi Boot and Textiles business is a case in point of limited transparency in GAF-related business. The financial details and transparency on DIHOC related businesses are sporadic despite being serviced by a board of members.

Defence and security institutions do not own commercial businesses [1, 2]. There are two reasons for this: one, a lack of such a tradition and, two, officers’ reluctance to engage in such activities. However, there are a few state-owned companies supplying the armed forces: the Hellenic Defence Systems (EAS), which is a group of companies founded in 2004 with the merger of PYRKAL (active in the manufacture of small, medium and large caliber ammunition compatible with NATO-type weapons systems), and EBO (active in the manufacture of small arms, mortars, weapon systems, propellant guns and ammunition, as well as medium and large caliber ammunition). Another crucial state-owned company is the Hellenic Aerospace Industry SA, the leading aerospace and defence industry of Greece. These companies are owned by the central government, not the armed forces.

This indicator is scored ‘Not Applicable’, as defence and security institutions do not own commercial businesses.

The commercial businesses of the MoD (executing disposal, modernisation and providing several logistical services) constitute more than one per cent of the defence budget as it is visible in their annual turnover [1, 2, 3]. However, we have to highlight the trend is that their annual turnover is shrinking while defence budget is growing and in the upcoming years they will constitute less than one per cent of the defence budget [4, 5].

The operation of the companies owned by the ministry is audited by the ministry [1] and the Supreme Audit Office [2, 3]. Results of these audits are publicly available on the website of the Supreme Audit Office [2]. Details of the operation and detailed financial operation of the companies is not available on their website [4].

The Ministry of Defence’s (MoD) Department of Defence Production administers 9 Defence Public Sector Undertakings (DPSUs). They are Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Bharat Dynamics Limited (BDL), BEML Limited (BEML), Mishra Dhatu Nigam Limited (MIDHANI), Mazagon Dock Shipbuilders Limited (MDL), Garden Reach Shipbuilders and Engineers Ltd. (GRSE), Goa Shipyard Limited (GSL) and Hindustan Shipyard Limited (HSL) [1][2]. These are PSUs where the government has a 51% or more stake. In addition there is the Ordnance Factory Board (OFB) which has 41 factories and several repair depots. The combined production share could amount to more than 10% of the defence budget according to one expert [3]. In 2019, India’s total defence spending was $71.1 billion [4]. From this, it is estimated $9 billion was for DSPUs and OFs [5].

Details of the operations and finances of DSPUs are transparent and information is publicly available [1][2][3][4]. The overall operations and finances of the OFB can be found but little information is available on its repair/maintenance institutions [5]. CAG reports upto 2017 on Ordnance Factories are available [6][7].

In the past, TNI business activities have been carried out without any government control or supervision. Military business was claimed to have contributed to soldiers’ welfare and defence budgets when the state was only able to meet 30% of the military’s needs [1]. This myth was debunked when the Audit Board’s examination revealed that the contribution made by TNI business was insignificant due to fraud and corruption [2]. In 2007, military foundations and cooperatives were suspected of having gross assets worth 3.2 trillion and a profit of 286 billion [3]. Since the Reformation, the TNI has been banned from engaging in business activities, either in an institutional or private capacity, by Law No. 34/2004 concerning the Indonesian National Defence Forces (TNI). The same law also ordered the TNI to hand over all military business to the state. Article 4 of Presidential Regulation No. 43/2009 concerning the Takeover of TNI Business Activities states that takeovers are carried out by (a) taking over business activities that are owned and managed directly by the TNI, (b) structuring cooperatives and foundations within the TNI and (c) structuring the utilisation of state property within the TNI [4]. The takeover was carried out by the TNI Business Activity Control Team, which was directly responsible to the Minister of Defence. After the takeover, military business ownership was positioned under a new company structure that is run legally by cooperatives under the TNI. In 2011, there were 1,301 cooperatives and more than 13 foundations [3]. Cooperative business management is governed by Law No. 25/1992 concerning Cooperatives. Efforts to ascertain the current state of military business have hit a wall because there are not any academics or CSO observers following this issue [4]. One interviewee said that efforts to request information regarding military business have been neglected by both the Ministry of Defence and the Information Commission (KIP) [5].

A search of open sources only found some news related to the annual meeting of a cooperative centre and a parent cooperative in the forces. News on the annual members’ meeting (Rapat Anggota Tahunan/RAT) revealed that the Air Force Cooperative Centre (Pusat Koperasi AU/Puskopau) has three main activities: the institutional, financial and business sectors, as well as management of 24 primary cooperatives (Primer Koperasi AU/primkopau) [6]. There are four business sectors, namely Trans Halim services, general commercial services, special commercial services and housing services, as well as the taxi unit and the apron bus business operating at Halim airport. The Puskopau has conducted a RAT 38 times, with the most recent held in March 2019 in Jakarta. The Air Force Parent Cooperative (Induk Koperasi AU/Inkopau) also holds RATs and evaluates aspects of organisation, management, finance and business activities [7]. Equivalent information could not be found on cooperatives run by the army, which manages 25 primary cooperatives [8], or the navy. There is no information confirming whether the cooperatives are profiting from their business activities. In terms of university research, there is a thesis examining the health level of cooperatives in naval primary cooperatives, which provides a glimpse into how the cooperatives have been run [9]. This thesis shows that the primary cooperatives have not conducted any analysis of their level of cooperative health, which implies that the cooperatives are not really aware of their own financial health.

Law No. 25/1992 concerning Cooperatives stipulates that financial statements must be submitted to the management of the cooperative through the annual members’ meeting (Rapat Anggota Tahunan, RAT) [1]. The report is prepared no later than one month before the annual members’ meeting, which takes place after the cooperative’s financial year is over. The report must contain the calculation of the final balance sheet and the calculation of the results of operations and their explanations, as well as the conditions and efforts of the cooperative and the results of operations achieved. The cooperative’s internal oversight is carried out by an elected supervisor, who also delivers reports at the members’ meeting. Supervisors can request the services of public accountants to audit financial statements in accordance with Article 40 of the law on Cooperatives. There was a claim that the Puskopau audit was conducted by a public accountant [2], but it was not possible to trace who the auditor was or whether the report was publicly accessible. There are websites of cooperatives that public can access, for example Yayasan Adi Upaya (Yasau) that belongs to the Air Force [3]. While the information on its business activity is not disclosed, there is important news to confirm that oversight is carried out by inspectorate general of Air Force (Irjen AU) on annual basis

Defence institutions have ownership of commercial businesses that are major enterprises across all sectors of the economy [1], including banks [2]. It is unknown how much of the defence budget these enterprises constitute. According to one figure, “the military establishment controls a fifth of the market value of companies listed on the Tehran Stock Exchange and owns thousands of other companies, all of which generate revenue for the armed forces” [3].

Businesses are known publicly [1], though details of their operations and finances are not transparent.

Iraq’s former military-industrial complex was dismantled alongside all state security agencies and forces after the US invasion in 2003 (1) [980]. Today, the MoD controls only a handful of SOEs (2), they are largely factories where metal scraps are recycled and weapons are stored (2). Beyond the defence realm, Iraq is identified as having 176 SOEs nationwide (3). Out of the six the MoD owns, only the factory that manufactures lights arms and pistols is said to be operational (3). Furthermore, in Clause 22, defunct SOEs with “no potential for growth” can be liquidated and reclassified (2). Parliamentary committees have urged Baghdad to restore former armaments manufacturing facilities (4). A military expert shed greater light on this. “The restoration/repair facility in Taji and the facility is shared between the army and militias”. He divulged the existence of another adding it is “for militias only; where they store and repair some weaponry” (5). As far as beneficial ownership is concerned, management is shared, but it is unclear whether businesses of this nature is dictated by a contract signed by both entities. MP and member of the Committee for Reconstruction Services, Awatif Nima said the effort to resuscitate military owned-SOEs has been further impeded by corruption linked to internal and external actors (4). A verbal commitment of this was displayed at the International Defence Fair in Baghdad (2019) and matched by the display of Iraqi-made unmanned Aerial Vehicles (UAV), missiles and ground support equipment [SNA]. “We have begun to restore our military manufacturing capabilities and manpower according to new measures and plans” Iraqi Army Chief of Staff Othman al-Ghanimi stated at the time.
Local reports identify enormous sums of wealth lost due to port corruption, particularly in Umm Qasr, that control of which has fallen into the hands of port authorities aligned to powerful militias — which operate with full knowledge of state authorities (6). These security actors are thereby, associated with these commercial activities that transcend their role as fighters.

No publicly available evidence provides insight into mutual ownership of defence business activities. Evidence of contractual agreements between the army and militias could not be found. A military expert (1) [982] expressed doubt over official contracts arguing that “should they exist, there are few mechanisms that empower the judiciary to act independently to uphold these agreements. Commenting on the nature of corruption, the source described it as “entrenched”. TI’s preceding Iraq Country file assessment identifies the existence of shell companies which the military expert corroborated. “It enables contracting parties to evade formal procedures and price-fix” (2).

The Israel Defence Forces and Ministry of Defence do not have beneficial ownership of any commercial businesses. However several businesses are state-owned enterprises, including Raefael Advanced Defence Systems. (1). The company operates under the ownership of the government since the 1980’s when the company encountered financial difficulties but because of the importance of the company to the military, the government became the owner (2). However, though the MOD and IDF do not directly own any commercial ventures, the MOD receives a gold share in any defence industry that is privatised (3).

This indicator is marked Not Applicable as there are no military-owned businesses in Israel.

Like any other private company, in particular in the defence sector, these businesses hardly share information that relate to business strategy, markets and technology edge. A lot of information is not transparent because some of the companies have classified projects. However, in many cases they are very transparent about their financial situations (1). For example Rafael is providing the information about the costs of Iron dome and the cost of every single missle of the system (2). Additionally, the Government Companies Authority (GCA), which regulates governmental companies, obligates the companies to publish their annual financial reports on the GCA’s website. Moreover, the GCA accompanies the companies in structural changes, ongoing activities, and assist with compliance with the recommendations of the State Comptroller (3).

The Ministry of Defence is the sole shareholder of “Difesa Servizi SPA”. The company is an in-house company of the Ministry of Defence and has been created by law 23 December 2009, n. 191 [1]. The attributions of the company concern the management of the real estate properties of the Ministry, the management and exploitation of Armed Forces brands, the economic management of activities, and services provided to third parties not related to the institutional activities of the Ministry of Defence [2]. The share capital of the company is of 1 million euros, which is less than 1% of the defence budget. The 2018 annual revenues of the company transferred to the Ministry of Defence amounted to 23.552.734 euros [3].

On the website of Difesa servizi SPA is possible to find a section entitled “Transparent Administration”, where all relevant information on the management of the company is made available. Indeed, according to law 259/1958, the Court of Auditors exercises control over all companies controlled by the State, in order to ensure parliamentary scrutiny [1]. According to art. 26 of its statute, a magistrate of the Court of Auditors, nominated by the Court itself, participates to the company meetings [2]. In its 2019 report to the Parliament, the Court of Auditors highlighted some missing information on the 2017 management. In particular, section 5.3.1 (profit and loss account) explicitly stated that, although requested by the Court of Auditors several times, Difesa Servizi SPA did not issue a scheme of the operative costs covered by the Ministry of Defence, thus not allowing a clear definition of the economic and financial situation [3].

Maintaining a domestic defence production base has been a goal for Japan since the 1950s. Japanese defence manufacturing has been embedded within civilian companies that receive most of their income from civilian production. [1] In Fiscal Year 2017, 72.9% of central procurement, i.e. procurement ordered from the Ministry of Defence, and 85.5% of procurement by the regional offices of the service branches of the Self-Defence Force (SDF), was domestic procurement. Domestic procurement includes equipment developed and produced domestically, equipment developed and produced jointly with foreign countries and equipment produced on license from a foreign country or company. [2] The company that provided the largest share of central procurement in Fiscal Year 2018 was Mitsubishi Heavy Industries at 13.5%, [3] but military sales make up only about 10% of the company’s net consolidated sales. [4] Through the practice known as amakudari (“descent from heaven”), retired defence bureaucrats and SDF officers (with a retirement age of 56 for a Colonel) find employment in private businesses, including defence manufacturers. [5] The media has focused on the danger of collusion created by this practice. [6] No cases of Japanese national defence and security institutions having beneficial ownership in commercial businesses were identified.

This indicator has been marked ‘Not Applicable’ because national defence and security institutions do not have beneficial ownership of commercial businesses in Japan (see Q31A).

Defence and security institutions have beneficial ownership of commercial businesses in Jordan. The armed forces website lists a number of these business and they include KADBB and real estate development, which allows the armed forces to sell and purchase lands and to allegedly provide ‘decent housing’. The KADDB owns several other companies, which are also associated with the country’s natural resources such as JLVM, JORDANAMCO, JMSS, JADARA, JORAMMO, and ARM [1]. In addition to that, the U.S has consistently encouraged Jordan to commercialise its military services in order to strengthen its economy [2]. There are no details about defence budgets generally, even those coming through central Government. Therefore, it is difficult to accurately amount as to whether these businesses generate income that is less or more than 10 percent of the overall defence budget. The secret budget generally comes from these businesses however, they constitute less than 10% of the defence budget [3,4]. Overall, defence institutions have ownership of commercial businesses that are major enterprises, but the percentage of their contribution to defence budget cannot be identified.

Businesses owned by the defence sector are publicly declared, however, details of their operations and finances are not transparent. As previously demonstrated, the armed forces website lists some of these enterprises under its developmental role section [1]. However, the actual details of their operations remain unclear, and information about them can sometimes be found through media scoops [2]. Moreover, none of the declared entities are included in the Audit Bureau’s audited entities section [3]. Research through the Parliament’s news page, desk-based research in Arabic and English, and interviews with experts about these enterprises, show that there is very little information about their finances and operations [4,5]. Their income is undeclared, and their projects are not listed, which demonstrates a little transparency related to their existence but not to any other details.

The Kenya Defence Forces conducts varied commercial businesses. Recently, Kenya Defence forces launched the Kenya Shipyards limited. The company is an incorporated State company under the Ministry of Defence (MOD). The overall intention is to create a maritime industry to build and service ships for the Navy and other private vessels. This appears to be a one-off request from MOD to the government to allow the Navy to establish a separate entity that could also perform core navy functions but also generate revenue. [1] The National Security Council approved the project in September 2020. The revenue generated will be paid to the exchequer. Other commercial ventures include; AFCO shops, which are only open to members of the military and their families; as well as agri-business ventures. [2] The MOD website also provides some information on commercial activities that have been patented such as the DEFKITCH, a mobile field kitchen, that the KDF is set to produce and sell commercially. [3] It is, however, unclear what percentage of the KDF budget that these commercial activities constitute. It should also be noted that there is a trend towards the military being put in charge of civilian agencies, such as the Kenyan Meat Commission, despite this being considered unlawful by the High Court. [4]

The public has some level of awareness of the commercial activities conducted by the KDF, but there is no apparent transparency of the entire operations and finances connected to the businesses. [1] In another example from the recently launched Kenya Shipyards limited, apart from the documentary released by the Kenya Defence Forces, there are no other official sources that provide details about establishment of the corporation. [2]

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

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

The Kuwaiti military, police and KNG do not own any commercial businesses, according to current and former officials, journalists and activists (1, 2, 3, 4, 5, 6, 7, 8 and 9). That being said, these institutions, just like other state bodies, can sometimes resell or lease old equipment and assets like buildings and land, and these activities are legally subject to the scrutiny of the SAB (10), ACA (11) and Parliament (12). (But ACA can only investigate if it received a tip or complaint, or noticed public interest in a certain issue.) Fear of the wrath of the military or the executive branch and the Emir prevents most individuals inside Parliament and the ACA and SAB are too intimidated or involved in corruption themselves to properly review these dealings, officials and activists said. Even though at least 50 percent of the military’s budget and about 15 of the police and KNG budgets are being spent on unknown activities, there is no reason to think that these activities include commercial businesses. (13, 14 and 15).

A monthly aggregate figure for the business dealings of the security agencies is published every month by the Finance Ministry but the Ministry does not provide many details beyond simply saying that this money was made from activities like the “sale of state assets,” so the public does not know what, if any businesses, these agencies own. This problem is also not limited to the security sector of Kuwait. Almost all other ministries have similar activities that are also not transparent (1, 2 and 3).

The State Centre for Defence Military Sites and Procurement of the Republic of Latvia (VAMOIC) is responsible for the management of immovable property owned by the MOD, state military defense objects and the property leased by the state for military defense, and the implementation of environmental protection measures therein, as well as the organisation of the construction of state military defense objects, centralised procurement of MOD and National armed forces needs, and the supply of material and technical resources. [1]

The property of VAMOIC does not fall into the category of commercial enterprises. There is no history of the Latvian military being engaged in commercial activity. [2]

Since VAMOIC is a structure of the MOD, it is scrutinized in the same manner as the ministry, namely, the State Audit and the Internal Audit and Inspection Department of MOD regulary analyse financial and management aspects of its commercial business. [1] The State Audit, in its reports, also focuses on such issue as effectiveness of performance. [2]

The LAF possesses private institutions that are open for civilians to use (1). For example, members of the public can book a room at the Monroe Hotel, which is owned by the LAF (2). However, the revenues of these institutions do not appear in the defence budget (3). Thus, it is unclear what percentage of the budget they constitute (3).

The LAF’s private institutions are publically declared (1), but detals of ther operations and finances are not transparent (2).

The Government made a decision that the Ministry of Defence would operate as the owner of the state owned company “Infostruktūra” on behalf of Lithuania in 2018 [1]. The list of state owned companies is publicly available online [2]. The company is responsible for ensuring appropriate and safe data transfers between State institutions. The annual revenue of “Infostruktūra” revealed the company was worth approx. 6 million Euros in 2017 [3], while the national defence budget in 2017 was 723,8 million Euros [4]. This is less than 1 percent of the defence budget.

The Government made a decision that the Ministry of Defence would operate as the owner of the state owned company “Infostruktūra” on behalf of Lithuania in 2018 [1]. The annual revenue of “Infostruktūra” revealed the company was worth approx. 6 million Euros in 2017 [2], while the national defence budget in 2017 was 723,8 million Euros [3]. This is less than 1 percent of the defence budget. The financial report and financial statements of “Infostruktūra” are available online. The enterprise publishes annually the conclusions of an independent auditor as well.

Defence institutions and the military are involved indirectly in business through Lembaga Tabung Angkatan Tentera (LTAT) or Armed Forces Fund Board. LTAT is established as a Retirement Fund for the ex-military. Under the Act, the entity is allowed to invest “no less than 70% of its fund in trustee investments and no more than 30% in non-trustee investments.” [1] The Board was established in August 1973 by an Act of Parliament which is the Tabung Angkatan Tentera Act (Act 101). The board of directors consists of a retired military General, a representative from the Defence Ministry, the Chief of the Defence Forces, and deputy chiefs of each service – Army, Airforce, and Navy. Each serving member of the military is required to contribute to the board depending on their rank, for instance, “serving members of the other ranks … are required to contribute 10% of their monthly salary to LTAT with the government as employer contributing 15%. For officers, participation is voluntary and the contributions are a minimum of RM25 with a maximum of RM2,000 monthly.” [2] The LTAT owns some publicly listed companies through majority stakes in banking, plantation, heavy industries related to defence, property, pharmaceuticals, and investment. The Affin Bank, for instance, is 35.51% owned by LTAT and 20.73% owned by Boustead Holdings, which LTAT has 59.46% direct share of. LTAT also has investments in education through Boustead Holdings, which holds a share in Nottingham University Malaysia. [3]

These businesses are publicly declared. Some of these military-majority owned companies are traded on the Kuala Lumpur Stock Markets (BSKL). These are subject to rules and regulations of the Securities Commission Malaysia. [1] [2] Like other publicly listed companies, all of LTAT’s subsidiary companies are required to report their operational balance sheets and yearly financial results, which have to be submitted to the Securities Commission of Malaysia. The yearly financial statements are also posted online on the website for public consumption. [3] [4] Nonetheless, several of these LTAT subsidiaries have come under scrutiny for mismanagement and misuse of funds for election campaigns. Boustead is in serious financial trouble. More vigilance and transparency are needed, as this is the personal money and retirement funds of the armed forces. [5]

Inferential evidence shows that the annual income generated by public work, which constitutes a commercial business owned by the military, may exceed 1% of the defence budget. According to a 2006 SIPRI assessment, frequent non-reporting of defence incomes and expenditures was a tolerated phenomenon under ATT’s government despite being technically illegal.¹ A key area where this took place was off-budget income, notably from public works, developmental missions and private enterprise – activities that were not considered to be cost-effective for profit-driven private companies but serve as revenue-generating ventures for the military.¹ Their related incomes did not appear in the national budget.¹
One such activity is military engineering undertaken by the central military repair and assembly workshops that are equipped to build mechanical spare parts for public and private companies. In the three financial years 2000, 2001 and 2002, the armed forces executed public works worth a combined total of 3.8 billion CFA (USD 5.5 million).¹ In those three years, the approved defence budget was USD 61 million, 61 million and 60 million.¹ Thus, even the combined income generated from this commercial stream over three years doesn’t amount to 10% of the defence budget for one year. But the annual income would exceed 1% of the defence budget.
There is clear evidence from 2014³ and 2018² to confirm that the army continues to undertake such public works under IBK’s government. The body responsible for such public works is the Direction du Génie Militaire (DGM), whose motto is ‘Construire – Parfois détruire – Toujours servir’ (Build – Sometimes demolish – Always serve).² As its motto suggests, the DGM is responsible for public construction works – both in the execution and the pre-construction studies.² An article notes that the DGM recently completed works on the roads between:
– Kangaba-Nerana
– Sévaré-Gao
– Tombouctou-Dounetza
These projects not only enable the military to travel and deliver supplies more easily in their ongoing fight against jihadist groups, but have the external benefit of serving traders and people who live in those towns and regions.²

The activities of the DGM are publicly known and the government is keen to publicise how the military’s contribution to public works benefits wider society. Consequently, details of specific projects are reported upon as highlighted in Q31A.
However, the income derived from such activities remains opaque. As the SIPRI report points out “this income does not appear in the national budget. In general, this income is used to cover the costs of the public works; if there is profit, it is invested in maintenance and new infrastructure for the army”.¹
Since defence finances have generally not been subject to audits or publicly detailed in recent years, the amount of income currently generated by the DGM remains unknown. 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.2
Moreover, 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.4,5

SEDENA has commercial companies such as shops, farms, sports centers, restaurants, military funeral services, and hotels dependent on the group, [1] as well as a bank called Banjército. [2] However, it is difficult to determine the value of these businesses due to the lack of information. [3]

Banjército annually formulates its financial programs, general budgets of expenses and investments, as well as its operational programmes according to the guidelines, measures and mechanisms established by the Ministry of Finance and Public Credit. [1] And every three months it publishes the documents of its financial situation on the official portal of the federal government. [2]

In the case of stores, farms and other companies, there is no public information about their financial situation. [3]

The Ministry of Defence owns three companies, two of them dealing with construction and the third used to deal with ship construction. [1] It is not possible to estimate the value of these companies and their relation to the defence budget. One construction company was established in 2003 and did not submit any financial reports in the last four years. [2] The second construction company was established in 2017 and also did not provide financial reports. [3] The third company entered into a liquidation procedure in 2011, but submitted its last report in 2015, [4] when it reported ownership of assets worth 7,3 million euros. The total budget for defence in 2019 is 48 million euros. [5]

According to the MOD, defence and security institutions do not own commercial businesses of any significant scale – Equivalent to 1% of the defence budget or less. This claim could not be verified.

Information about businesses owned by the Ministry of defence are available in the Company Registry. [1] However, basic information about their finances is not available. [2]

No evidence was found to suggest that security institutions have any beneficial ownership of businesses. This might be explained by the attempt of the King to deliberately prevent the armed forces from gaining too much power through income generation outside of their budget allocation from central government, particularly following the 1971 and 1972 coups Also, no evidence the King owning defence-related businesses through the ministry of defence or outside of it was found. (1)(2)(3)(4)(5)(6)(7)(8)(9) (10)(11)(12)(13)(14).

This sub-indicator is scored Not Applicable as Morocco’s national defence and security institutions do not have any beneficial ownership of commercial businesses.

According to the UN’s Independent International Fact-Finding Mission’s report, MEHL and MEC are military-owned business corporations that control a wide range of business activities. The current patron group of these business conglomerates is comprised of the military’s top officials, including Min Aung Hlaing, a senior general [1]. The military’s two conglomerates perform a wide variety of business activities, include banking and insurance, tourism, jade and ruby mining, timber and construction, as well as the production of palm oil, sugar, soap, cement, beverages, drinking water, coal and gas. Many of the companies are set up to supply goods and services to the military, such as food, clothing, insurance and cell phone service [2]. MEHL, along with its subsidiaries Myawaddy Bank and Myawaddy Trading, ranked as three of the top five income taxpayers in the 2015-16 budget year. Myawaddy Trading and MEC’s subsidiary Dagon Beverages are both among the top five sales taxpayers. Critics say that MEHL’s wealth may be much more than what is publicly acknowledged [3]. According to Amnesty International’s report in September, some $18 billion was paid out to the shareholders of MEHL, who are senior officials and retired officials of the military, between 1990 and 2011 [4]. So, these military conglomerates may contribute more than 10% of the defence budget.

The governance structure of MEHL and MEC lacks transparency and the net worth of these military-owned business corporations is very secret and not known by the public [1]. Public scrutiny is not possible because MEHL and MEC do not release information about their financial status [2]. According to the UN’s Independent International Fact-Finding Mission, there may be other businesses that are not registered as being run and owned by the military. The Mission identified a further 27 businesses that it concluded on reasonable grounds were affiliated with MEHL and MEC through their corporate structures [1].

The MoD 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].

This indicator is marked ‘Not Applicable’ as the MoD 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].

Defence maintains limited ownership of commercial businesses in the form of service museums. Service museums are independent Charitable Trust entities established by Trust Deed. Control is established through defence personnel holding key management positions. Some museums charge entry fees and have small retail stores. Revenue generated is minor and does not represent a high risk. Details of controlled interests must be disclosed in financial statements to comply with the Public Benefit Entity International Public Sector Accounting Standard 38 Disclosure of Interests in Other Entities. Details of the service museums are disclosed in the group financial statements and notes to the financial statements in the New Zealand Defence Force Annual Report to Parliament [1, 2, 3, 4, 5].

Details of controlled interests must be disclosed in financial statements to comply with the Public Benefit Entity International Public Sector Accounting Standard 38 Disclosure of Interests in Other Entities. Details of the Service Museums are disclosed in the Group financial statements and notes to the financial statements in the New Zealand Defence Force Annual Report to Parliament [1, 2, 3]. In the course of their annual audit of the MoD and NZDF, the auditors use “national and international standards, knowledge of best practice, and standards and expectations for the public sector in New Zealand” [4]. Financial details of the service museums, and any other beneficial revenue, are provided in the Annual Reports, which are publicly available.

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 for strict regulations around which public officials can be involved in private business. Sanctions range from 100 000 FCFA to 1 million FCFA and, at least, two years of imprisonment (3).
According to some sources, there have been incidents in which members of Niger’s armed forces have been involved with artisanal mining projects in the north of the country. But never on any significant scale, the equivalent of 1% of the defence budget. The assessor did not find evidence of any military involvement in private enterprises.

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

Examples of commercial companies owned by the Ministry of Defence include the Defence Industries Corporation of Nigeria, (DICON), Defence Health Maintenance Limited, NA Welfare Holdings Ltd, and Air Force parastatal AESTL (1). Provisions are made to fund some of these commercial companies from the defence budget. The Nigerian Naval Dockyard is another example of a commercial business owned by the Ministry of Defence (2). All these companies receive allocations from the budget, their financial transactions are not captured in the audit process (1).

The audit processes of these commercial entities are subject to the oversight of the Ministry of Defence and in turn by the National Audit Office. However, detail reports are not available on their websites and not easily accessible by the public (1).

The audit processes of these commercial entities are subject to the oversight of the Ministry of Defence and in turn by the National Audit Office. However, detailed reports are not available on their websites and not easily accessible by the public Omitoogun (2006) (2). Military spending is internally audited and in theory subject to external audit by the auditor-general and the House committees in turn. However, the level of oversight is not transparent and does not meet international best practice (1).

Defence institutions, the Ministry of Defence and the Army of the North Macedonia, are minor commercial enterprises. All their activities account for less than 1% of the defence budget [1]. These institutions posses a few hotels, two camping sites, a lake marina, a major training camp (Krivolak) and a few shooting sites. The Army Rulebook outlines rent prices for ARM sites [2], hotels, and prices for the commercial use of the marina and camping sites [3].

Details regarding the commercial usage, capacities and services offered by the defence institutions as commercial enterprises are publicly available and advertised on the Ministry of Defence website. Hence, their operations and finances are fully transparent. The Ministry if Defence’s balance sheets also disclose incomes from non-budgetary commercial sources. To be more specific, in 2017 the total non-budgetary income from commercial activities stood at 9668759 MKD [1] which amounts to about 0,15% of the overall Ministry of Defence Budget [2].

The Ministry of Defence owns 100% of Rygge 1 AS, a stock-based company established in 2018 [1]. Rygge 1 AS manages infrastructure (test cell) at the Rygge Air Station [2]. The infrastructure tests motor parts from the F135-motor which is used in F-35 fighters. Rygge 1 used to be a subsidiary company of Aerospace Industrial Maintenance Norway AS (AIM Norway), a state-owned enterprise until 2018. In December 2018 the Ministry of Defence sold AIM Norway (now Kongsberg Aviation Maintenance Services AS) to Kongsberg Defence & Aerospace AS [3]. The Norwegian State became the owner of Rygge 1 AS through distribution of the company’s shares before the sale transaction of AIM Norway. Every 2 years the Government publishes detailed information about state-owned enterprises, including financial details, on its operations. AIM Norway’s profit in 2017, when it was still owned by the state, was 315 million NOK, and its operating income was 1 173 million NOK, making it worth less than 1% of the Norwegian defence budget. As stated in the report, the company’s corporate social responsibility documents included an obligation to an annual audit and were in line with other state-owned enterprises [4]. The recent report on state-owned enterprises has not provided financial details on the profit and operating income of Rygge 1 AS [5]. This may be because tit was necessary to recapitalise Rygge 1 AS in order to enable it to finance the test cell.

The Norwegian Government publicly declares all ownership of commercial businesses [1]. Every 2 years the Government publishes detailed information on state-owned enterprises, including financial details on its operations [2]. However, the recent report on state-owned enterprises has not provided details of the profit and operating income of Rygge 1 AS. This may be because it was necessary to recapitalise Rygge 1 AS in order to enable it to finance the test cell. The Ministry of Trade, Industry and Fisheries is responsible for managing a thematic website gathering all reports and white papers on Norway’s state ownership [3]. The Government has declared its commitment to the OECD Corporate Governance of state-owned enterprises [4]. The Government regularly reports to Parliament on the operations and finances of Norway’s state ownerships [5, 6, 7, 8].

According to multiple sources, the army owns businesses indirectly through the sultan’s office, but there is a lack of information on these business and their nature. There is a strong belief that these businesses are related to the export of oil and trade (1). No information was found on the Ministry of Defence’s ownership of businesses. There is information concerning the MoD Pension Fund investments in the petroleum industry (2), (3). The scale of profits is unpublished, it is impossible to discern if profits constitute more than 10% of the defence budget. The lack of information on commercial ventures on either the MoD or Ministry of Finance websites demonstrates a lack of transparency (4), (5). Information found on state-owned enterprises suggests the government has no clear definition of what is considered state-owned, and despite processes of the privatisation board membership by senior state officials ensures access to public funds and lack of transparency in profits (6). No information on state-owned businesses detailed military-owned businesses.

The shares, held by the Ministry of Defence Pension Funds, are the largest in Oman and the MoD is one of the biggest investors in local capital markets including finance and real estate (1). The MoD’s ownership and involvement in businesses are not declared on the ministry’s website and exist only under companies’ websites (2), (3). There is no transparency from the Ministry of Defence; or accountability from the Ministry of Finance or the State Audit Institution in business ownership (4), (5). There is no data available on these businesses; they are not declared to the public. The MoD owns the pension fund, but nothing owned by the sultan office’s is declared (6).

There are no businesses owned by the national forces or the security apparatuses. There is no evidence that this type of practice takes place in Palestine (1). The only entity that owns private companies is the Palestinian Authority, not the security or national forces. The companies owned by the PA are electricity companies and PADECO. Moreover, the Code of Conduct for Security Personnel in Palestine prevents any security members from running a business or participating in bids related to the Palestinian government (2).

This indicator has been marked Not Applicable, because no businesses or companies are owned by security or intelligence forces. However, this does not mean that security chiefs do not have private commercial ventures (1).

The defence and security institutions do not own commercial businesses of any significant scale and the revenue they receive from transient facilities run by the National Defence College of the Philippines is minimal and far less than 1% of the defence budget [1, 2].

This indicator is marked ‘Not Applicable’ as the defence and security institutions do not own commercial businesses of a significant scale [1, 2].

The Ministry of National Defence does not have ownership of commercial businesses. Until December 2019 MoD exercised property rights on behalf of the State Treasury over state defence companies, directly or (since 2015) through the Polish Armament Group [1, 2]. The Polish Armament Group operates under the rules of the market economy and performs commercial endeavours, engaging in weapons exports.
Also on behalf of the Treasury, MoD exercised since 2017 to December 2019 property rights in EXATEL S.A., a telecommunications operator and a provider of cybersecurity services [3].
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. [4] Such move reduces the conflict of interests between two former MoD functions: function of buyer and function of sellers’ supervision.

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]

Until June 2020, the Ministry of Defence (MoD) held beneficial ownership or shareholding positions through Empordef, a holding company specifically tailored to the defence industry [1]. Empordef was wound down amidst alleged corruption at the Viana do Castelo Shipyard [2]. The current [as of March 2021] MoD has officially stated that all ownership positions are to be managed by idD – Indústrias de Defesa e Desmilitarização, currently know as (idD) – Portugal Defence [3], a public enterprise that served until recently as a facilitator of the Defence Industrial and Technological Base. idD is now the holding group for all business ventures related to defence [4]. Total assets amount to €45.9 million and just over 2% of the 2020 defence budget, which amounted to €2,23 billion. The transition from Empordef to idD was controversial [5, 6].

Defence-related enterprises operate according to the same standards of transparency and governance as any State-owned enterprise [1] and are monitored by the Supreme Audit Institution (SAI), the Directorate-General of Treasury and Finance (DGTF) and Monitoring and Oversight Technical Unit on State-owned enterprises [2]. Further, all State-owned enterprises require extensive online disclosure [3]. However, defence-related businesses do not publish detailed accounts of their financial conditions or operations. For example, Extra – Explosivos da Trafaria, Empordef – Engenharia Naval and Empordef – Tecnologias de Informação lack a website. Empordef, the holding company for the defence sector, was recently involved in allegations of corruption [4], and the transfer of ownership positions to idD – Portugal Defence has not resulted in the disclosure of accounts or operations by all twelve existing businesses. In September 2020, Arsenal do Alfeite, a State-owned company involved in naval affairs, was publicly admonished for poor management.

Article 128 of the Constitution states ‘‘when assuming their positions, the Ministers shall aim to serve the interests of the country and shall not, in any way, misuse their official positions for their own interests, or for the interests of their own acquaintances. The law shall determine the acts that are restricted for Ministers and the acts committed during their term of office that entail accountability; and the said law shall specify the manner of accountability.’ [1] Despite this, defence institutions and personnel own major enterprises. The constitutional restriction does not specify the type of personal interests that are disallowed. Barazan Holding, established by the MoD, was created to improve the capabilities of the armed forces. [2] In addition to Barazan Holding, the Qatari armed forces own a major commercial enterprise registered in Luxembourg, under the name ‘Qatar Armed Forces Investment Portfolio’. The investments made by this company are considered major transactions and most of the information is available. One of the investments was the purchase of The Marriot Hotel in Barcelona. [3] According to multiple sources, the commercial ventures of the armed forces are legal both internally in Qatar and externally. [4,5]

There is limited transparency of the defence institutions’ investments in commercial businesses. The names and enterprises are usually declared to the public, but material on the financing and the operations is not available. The information available about such investments is not released by the Government or the defence institutions [1,2].

There is not enough information to score this indicator. There are a number of off-budget companies under MoD administration, including ‘DefenceForest (OboronLes)’ and ‘DefenceLogistics(OboronLogistika)’ [1]. Each of them has a specific area of authority (e.g. forest management for DefenseForest). These off-budget companies are commercial enterprises under the auspices and control of the MoD. Their expenditure is recorded and scrutinised by the MoD itself and the Federal Agency for State Property Management [2]. While it is impossible to estimate the volume of all mentioned business, financial metrics of one company, ‘MillitaryTrade’ (VoenTorg), can be taken as an example. The defense budget for the years 2015, 2016, and 2017 was 3 286 800 000 000, 3 113 240 000 000, and 3 237 820 000 000 rubles.[3] According to the reports, VoenTorg gross financial result for those years were 28 380 000 (0,0009% of the annual defense budget), 221 683 000 (0,0071%), and 43 838 000 rubles respectively [4]. However the financial results of all 13, the number of off-budget companies, is not available to enable calculation of the full scale of defence commercial business ownership by the MoD.

The official MoD website presents a list of 13 subordinate companies [1], but it is not clear whether this list is complete and correct. It includes federal agencies that can do business, such as the Federal Service of Military-Technical Cooperation, but mainly commercial joint stock companies, such as the congress and exhibition center Patriot. Audits are conducted either by the MoD or tax auditing institutions. Although they provide some reporting documentation on their official websites, including in line with their registration on the state defence order system [2], there is some evidence indicating that their businesses are not wholly transparent.

There have been a number of corruption scandals related to these subordinate institutions of the MoD. In 2012, the LLC ‘DefenceService (OboronServis)’, notorious for the case of grand corruption by the former minister of defence, was reformed into the LLC ‘Garnizon’. In 2017, Garnizon’s head was sentenced to six years in prison for embezzling 231.2 million rubles [3]. Recently, the Chief Prosecutor’s Office audited the LLC ‘DefenceForest(OboronLes)’ and initiated a criminal case to investigate illegal business operations. It stated that ‘In 2017-2018, DefenceForest officials exceeded necessary forestry plans and signed 89 contracts for timber realisation for total sum of 623 million rubles’ [4]. At the end of 2018, US federal prosecutors accused the former deputy general director of the MoD subordinate institution Voentorg of embezzling funds from the Russian state [5]. These cases show that the institutional lack of transparency and control, which caused the large-scale corruption by the previous minister of defence, did not receive sufficient attention and continues to cause corruption.

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 (1). The MIC itself has a number of affiliates, such as the Armored Vehicle and Heavy Equipment Factory, a factory that develops armoured vehicles and other military equipment (2).
Saudi Arabian Military Industries (SAMI) is a recently-formed military industry company which is owned by the Public Investment Fund, the Saudi sovereign wealth fund. SAMI will act as both a manufacturer and service provider and plans to establish several local companies including through joint ventures with global equipment manufacturers (3).
Given the dearth of publicly available details relating to the finances or corporate structure of the abovementioned enterprises, it is unclear what portion of the defence budget these commercial businesses may constitute. However, they are unlikely to constitute more than 10% of the budget, which was SAR 210.0 billion in 2018 (4). According to our sources, “although the current trend is to copy the UAE model of having military industries within Saudi Arabia, it is not independent in the core. It belongs and is administered by the royal family. It is a representation of the current political pattern in the kingdom. The whole industry is still in the early stage and does not produce any revenues so far” (5), (6).
According to a Gulf affairs expert, “national defence and security institutions having ownership of commercial businesses would work against the interests of the ruling family. Measures have been put in place since the 1960s to coup-proof the country, and this has meant ensuring that the national defence and security institutions do not have ownership of the commercial business. Having said that, national defence and military institutions operate as microcosms within the country and serve as separate ecosystems, which means that they are – by and large, self-contained and semi-autonomous” (7).

According to our sources, all businesses that have links to the military are declared to the public; however, there is a lack of details on budgets, financial asses, and activities. There is not detailed information concerning the current business operations (1), (2).

Several MoD and SAF units that were initially established to provide certain types of services (testing, overhaul and repair, education, medical care, catering, etc.) just for the military are now utilising some capacities to offer their services on a commercial basis for third parties. From 2013 on, the legislation forbids public entities from directly using the income they generate through commercial services [1]. As of 2014, there has been an exception in legislation for some organisational units of the MoD with specific functions (such as technological development and research) [2]. In its comments to 2015 Government Defence Anti-Corruption Index, the MoD stated it had no separate accounts for revenue collection and instead all subaccounts that recorded income were located within the Ministry of Finance [3]. Therefore, neither individual organisational units nor the MoD itself decides about how they will use income generated through the commercial business. On the contrary, the MoD gets this income reallocated from the central budget. Having said that, SAI’s annual audit of the central budget in 2015 execution found that almost ten million dinars (around EUR 82,000) generated through ʻsecondary sale of goods and servicesʼ were transferred directly to an account for budget execution rather than the account for public revenues, which is foreseen in the regulations on public accounting [4]. This finding did not occur in the audit report for 2016.
In 2015, the MoD and SAF earned nearly EUR 34 million from ʻsecondary sale of goods and servicesʼ (secondary as commercial activities are not their primary function), which equals 7% of the MoD’s budget for that year [4]. In 2016 – the last year for which full data are available – income from commercial activities amounted to nearly EUR 35 million or 6.2% of the MoD’s budget for that year [5].
The MoD also oversees and manages six state-owned companies producing arms and military equipment, but does not directly benefit from their income.

Although there is no unified overview of MoD and SAF units providing commercial services, these units do mention commercial activities on their respective web sites [1, 2]. However, their financial reports do not get separately published and the public can only see the lump sum of revenues generated by the MoD and SAF through ʻsecondary sale of goods and servicesʼ. In this way, standards for financial transparency of government bodies running commercial activities in Serbia are generally lower than those for private entities and public enterprises. The latter are compelled to submit their annual financial reports to Serbian Business Registry Agency (APR), which subsequently publishes them on its website [3, 4]. Data on the income of individual units can be obtained through free access to information of public importance, but they do not get proactively published in any form.
On the other hand, defence industry companies do submit their financial reports to the APR [4]. Having said that, their financial transparency remains limited, as financial reports are quite ʻtechnicalʼ and not easily comprehensible for readers without at least some basic knowledge of accounting.

The Ministry of Defence (MINDEF) and the Singapore Armed Forces (SAF) are entirely dependent on the government for its budget and do not have beneficial ownership of commercial businesses. Created during early government-led efforts to develop an indigenous capability to supply the nascent SAF, Singapore’s defence companies are now fully or partially owned by state-linked commercial entities such as the Temasek Group, which holds the majority share ownership of 51.99% as of 25 February 2019 [1]. As of 2019, there are no known commercial interests held by the MINDEF or the SAF [2, 3].

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 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].

This indicator is scored ‘Not Applicable’ as neither Denel nor Armscor are owned by national defence and security institutions. For additional context, however, both Denel and Armscor are required to comply with the same annual financial reporting requirements as other state-owned companies, to a level approaching that of commercial publicly-traded companies [1, 2].

There is no evidence that national defence institutions have benefited from commercial businesses. The Defence Statistics Annual Reports and Public Finance of Korea 2019 disclose all sources of defence income, including interests from military personnel pension schemes, and there is no indication that these institutions have beneficial ownership of commercial businesses. [1] [2] [3]

This indicator is marked not applicable because South Korean defence and security institutions do not have beneficial ownership of commercial businesses. [1] [2] [3]

The country’s defence institutions, notably the army and the National Security Service, have ownership (or are believed to have ownership) of commercial businesses that are quite large enterprises in minining and security provision. [1] But overall, the exact ownership percentage is unknown. [2]

South Sudan does not have an open business registry that shows who owns what in the country. [1] Therefore transparency is often an issue and some anti-corruption organisations have called for an open registry that shows beneficial ownership. [1]

There are no commercial businesses owned or managed by defence institutions [1]. Nevertheless, there are some minor activities run by defence institutions, such as the summer and rest apartments (23-25 summer residences and 23-25 lodgings) of the armed forces, which cost between two to three million euros per year [2].

This indicator is marked ‘Not Applicable’ as national defence and security institutions do not own any commercial businesses [1].

Defence forces, including the Sudan Armed Forces and the Rapid Support Forces, among others, own defence- and non-defence-sector businesses that supply them with resource streams. There is no conclusive data available as to what percentage of the defence budget the revenues from these enterprises represent, but it is likely more than 10% [1,2,3]. Global Witness reported that ‘The RSF were rich enough for [Commander] Hemedti to pledge over $1bn to help stabilise the Sudanese Central Bank in the aftermath of the economic crisis and protests which led up to the ousting of President Bashir in April 2019’ [2]. This is only slightly less than the national 2020 defence budget announced by the Minister of Finance [4] – 50.578 billion Sudanese Pounds, equivalent to roughly 1.0411 billion U.S. dollars. The Guardian wrote in February 2020 that ‘Sudanese authorities have begun attempts to overhaul the gold trade, dissolving mining companies involved with the former regime’s security services’, but ‘while gold companies associated with other security services were rendered obsolete by the overhaul, [RSF-affiliated] al Gunade remained’ [5].

Only some businesses are publicly declared and the security forces are not obliged to report the details of their operations and finances to government ministries or oversight bodies. 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]. But after a meeting that discussed 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’, ‘[a] source close to the meeting said that these companies will continue to belong to the army and that there was no talk about transferring their ownership to the Ministry of Finance’ [1]. This Sudan Tribune article also notes that ‘besides ammunition and weapons firms, the army owns many commercial and industrial companies that invest in various areas, including meat and bread flour, and electrical and electronic devices’ [1]. Other businesses that are owned by defence and security institutions go undeclared. For example, Global Witness and The Sentry [2,3] have uncovered networks of front companies owned by relatives of, respectively, RSF Commander Hemedti and former President Bashir, which facilitate the buying and selling of commodities for these public figures’ private interests.

The government – not a particular defence or security institution as such – owns a number of small to medium sized commercial businesses that offer their services and products to the defence establishment. Three companies in particular claim to have the Swedish Armed Forces (SAF) and Swedish Defence Materiel Administration Agency (FMV) as major customers, and provide geographical information services, high-level security housing and infrastructure, and conversion of discontinued military facilities into civil use [1] [2].

The state’s ownership of these commercial businesses is publicly declared, with details of their operations and finances being transparent and fully disclosed [1] [2].

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 overall budget assigned to defence in the Federal Department of Defence, Civil Protection and Sport (DDPS) in 2019 was about 5448 million Swiss Francs [3].

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].

The Ministry of National Defence and the National Security Bureau are the two pillars of Taiwan’s defence and security [1, 2]. Both the MND and NSB are restricted from operating commercial businesses [3, 4].

This indicator is marked ‘Not Applicable’, as Taiwan’s defence and security institutions are restricted from having ownership of commercial businesses,

The MND’s asset managements are operated through three funds: the Fund for Production and Services for Military Personnel, Fund for Rebuilding Old Barracks and Military Installations, and Fund for Rebuilding Old Quarters for Military Dependents [1, 2, 3].

None of the these three funds are for commercial purposes and they are all under strict regulation [1, 2, 3]. Financial results of these funds are disclosed in a disaggregated format and are compiled in annual defence budgets for legislative and public reviews [4, 5].

The sector does have some commercial interests. [1] [2] [3] [4] Specifically, the defence sector has a total of three huge commercial ventures that it runs.
The first commercial venture is called SUMAJKT. [2] This venture supports projects that are capable of production so that it can produce more and for profit, and thus support the Government in reducing the use of running JKT activities. The organisation generates products and provides quality services to the community especially in various activities including: agriculture, livestock and fisheries, Construction and Engineering, Protection Service, Rescue and Firemen service, Hygiene Service (Cleaning and Fumigation), Insurance Service (SUMAJKT Insurance and Broker), Service Broker (SUMAJKT Auction Mart), Freight and transportation Services Bandarini (SUMAJKT), Clearing and Forwarding Service, Food services, conference halls and festivals, Sale and distribution of agricultural tools with its jewellery (SUMAJKT Agri-Machinery).

Industries that produce various brands are: Water Factory (Independence Peak), Ushrecovery Factory (NS Garments), Furniture Factory (Changombe Furniture), Shoe Factory (SUMAJKT Leather Products), Grain processing plant (Mlale and Mapinga), and the popular SUMAJKT security company.

Another commercial wing of the defence sector is called TATC-NYUMBU, [4] popularly referred to as the Nyumbu organisation. It was officially established on December 14, 1985 with the aim of being a special facility in the country for researching and developing technology innovations. Since its inception, the organisation has focused on conducting research on vehicles, engineering and building infrastructure. Areas in which the organisation has been successful include research and manufacture of agricultural tools such as the hemp Processing machine sisal fiber processing plant, water-pumping Machine ‘Water Pump’ as well as the ‘Power tillers’ and tractor-like agricultural machines. Other machines include Interlocking brick machines, which are used to make the cheapest bricks. The third and last commercial venture in the defence sector is called Mzinga Agency. [3] The Mzinga agency was organised in collaboration between Tanzania and the People’s Republic of China in 1971 as a project under the military headquarters, MMJ. From September 13, 1974, the project was changed to be a public organisation. It is notable that the proceeds from these ventures are not usually reported publically and thus it cannot be stated with any confidence that they make up more or less than 10% of the total budget in the defence sector.

It is not clear how many military-owned enterprises there are. The website of SUMAJKT, the holding company for these enterprises, shows projects but does not systematically list the entities that are under it. [1] On the other hand, the Controller and Auditor General reports mention entities not mentioned on the website, referring, for example, to the ‘SUMA JKT Agrimachinery Project’, with no reference to which entitiy it is under, as well as separate entities such as the ‘SUMA JKT Construction Company Limited’. [2]

According to Surachart Bamrungsuk, a renowned security scholar, there are at least 15 businesses that the Royal Thai Army (RTA) is involved in. These include two television stations, 126 radio stations, 100 gas stations and over 30 golf courses. In addition, the military indirectly operates horse-racing tracks, shooting ranges, restaurants, road construction ventures, convenience stores, flea markets and boxing stadiums [1]. According to the Treasury Department data, of the 12.5 million rai of state land in the country, 90% is under the supervision of government agencies and 7.5 million of it is used by the armed forces for security purposes and welfare [2]. In 2020, Army Chief General Apirat Kongsompong disclosed that the army’s business activities generated an annual income of nearly one billion baht (32 million US dollars) [3]. When compared with the average annual defence budget (approximately 200 billion baht), this amount made up less than 1% of the total defence budget. However, this figure is doubtful as it is provided by the military itself without confirmation from other sources. It should be noted that, while it is not ‘ownership’, as of 2018, serving military officers have been moved to the position of Director on the Boards of 42 of the 56 State Enterprises owned by the Royal Thai Government [4].

According to Surachart Bamrungsuk, a renowned security scholar, there are at least 15 businesses that the Royal Thai Army (RTA) is involved in, but they are not publicly transparent. The public cannot access any information at all on how the profits are managed and distributed back to the army personnel [1]. Mr Thanathorn, the former leader of the dissolved Future Forward Party, revealed that the army’s income from private business operations is not returned to the state’s coffers, which means that its spending is not scrutinised or regulated [2]. After the Korat mass shooting in February 2020, Thailand’s army agreed to transfer management control of 160,000 hectares of commercial land to the Ministry of Finance as a drive to reform its business practices. Army Chief General Apirat Kongsompong vowed to initiate a major clean-up of the army’s business activities, which generate an annual income of nearly one billion baht (32 million US dollars). These businesses include golf courses, boxing arenas, horse racecourses, sports clubs, hotels and petrol stations. He announced that the army would hand over various projects to the Treasury Department to consider how to proceed, based on its laws and regulations [3].

According to our sources, the MoD and military own no commercial businesses or corporations that generate financial assets on large scale. The only semi-private business would be the beach and sports clubs. Its revenues are used for internal maintenance and running management expenses, and do not go to the budget of the MoF (1,2). Defence and security institutions do not own commercial businesses of any significant size. There is no evidence that the Tunisian army owns commercial businesses. The website of the Ministry of Defence does not mention such ownership (3). The budget of the Ministry of Defence does not mention resources from commercial businesses. The review of the Tunisian and international press did not result in evidence of ownership by the army of any significant commercial businesses (4).

This indicator is marked Not Applicable because national defence institutions do not have any beneficial ownership of commercial businesses.

According to our sources, any institution (private or commercial) that belong to and are owned by the state is listed for the public. This rule also applies to MoD (1,2). The list of all public institutions is available online on the website of the Presidency of Government. (3)

OYAK (Ordu Yardımlaşma Kurumu – Army Solidarity Organization) is Turkey’s largest pension fund, also serving as a credit aid fund, which all officers and non-commissioned officers (NCOs) of the Turkish military are obliged to join. About 10% of the monthly salaries of 250,000 OYAK members are automatically deducted as contributions to the fund, generating a monthly cash flow of around 35 million USD. This has made OYAK one of the biggest domestic investor holdings in Turkey, which has been in the grip of major economic problems since last year. Although junior officers are generally unhappy with the compulsory reduction in their disposable income, they realise how beneficial it could be as their retirement age approaches [1].

While many companies are scrambling to stay afloat amid Turkey’s economic crisis, Turkish military’s pension fund, OYAK, is poised for a major acquisition in the fuel distribution sector, a move that reflects its growing economic might and influence in critical sectors. The fund, which entered into talks to buy the fuel and autogas operations of Demiroren Holding in November, has agreed to pay about 450 million USD for the Turkish branch of Total Oil and M Oil, which are currently part of Demiroren, a financially strained conglomerate close to the government. Under the agreement, which was reported by the daily newspaper Haberturk last week, OYAK would pay some 360 million USD and 90 million USD for Total Oil and M Oil respectively, which are operating about 900 gas stations across the country [2].

As of 2015, OYAK’s total economic worth was estimated at 25 billion USD, with exports reaching 1.7 billion USD in 2018. All these figures show that OYAK is not merely a credit union for Turkish military personnel, but also a bulky, powerful and prospering conglomerate in the Turkish economy [3]. According to Interviewee 6, OYAK’s annual income was less than Turkey’s annual defence budget in 2019 [3]. The handover would place OYAK among the five largest players in the fuel distribution and engine oil sector, with a market share of 8% and some 150,000 employees [4]. Fuel distribution is a very profitable sector in Turkey that directly affects over 30 other main sectors. Demiroren bought the Turkish branch of Total Oil in 2015 for 325 million EUR (358.3 million USD) [1].

Another sector on OYAK’s radar is the defence industry, namely the production of armour steel for mine-resistant vehicles and the Altay tank [4]. Turkey’s foreign reliance in this critical area is as much as about 90%. Finnish and US manufacturers have been the main armour steel suppliers of Turkish companies, but this collaboration has hit trouble amid international reactions over Operation Peace Spring, which Turkey launched in early October in north-eastern Syria. The United States is also said to be considering a steel embargo for Turkish companies. In August, Ataer Holding, an OYAK subsidiary, entered into talks to acquire British Steel, the United Kingdom’s no. 2 steelmaker, but the effort was unsuccessful. Nevertheless, OYAK’s rise and acquisitions in key sectors of the Turkish economy are bound to continue. Intriguingly, this will draw the Turkish military further into the economy.

OYAK is a legal entity, which is subject to the provisions of private law within the framework of Law No. 205 [1] and is autonomous in financial and administrative aspects. OYAK publishes performance reports on a regular basis [2]. However, in terms of decision-making processes regarding investment, business development and partnerships/ventures with other firms, OYAK is known for not sharing information even with its members [3]. Interviewee 6 suggests that OYAK sends annual performance and auditing reports to the Ministry of Defence, but that those reports are not made public [4]. He also underlined that OYAK does not make all its finances public and it is therefore impossible for an ‘outsider’ person/entity to monitor OYAK’s financial activities or balance sheet in a transparent fashion [4]. However, it is possible to access the offical websites of the OYAK Group companies, which provide some information about their financial, operational and business activities [5,6].

The defence and security instituions owns bullet making industries, and armoured vehicle assembling plants. While these busineses are funded by the government under the ministry of defence, their total percentage in relation to the defence budget is not known. Bareebe [1] argues that the Uganda People’s Defence Force’s (UPDF) attempt to establish a military-industrial complex has further exposed the “extractive” nature of corruption involving the army’s top leadership. The government established the National Enterprise Corporation (NEC) to serve as an investment arm of the UPDF, but almost all of the UPDF’s investments under Museveni have failed to take off. He claimed that many companies owned by NEC are either in debt or went bankrupt and closed their operations. NEC has never made any profits despite government support in capitalising it [2]. According to Bareebe, the problem is not simply a lack of investments but corruption coupled with a lack of political will to fight corruption within the UPDF because fighting corruption creates unnecessary tensions between the regime leader and corrupt armed elites. He further argued that what is apparent is the lack of commitment by the regime to making the UPDF’s business ventures succeed. The Annual Report of the Auditor General on the Results of Audits for the year 2017 [3] observed that the National Enterprise Corporation( NEC) headquarters had a dormant investment in subsidiaries to the tune of UGX 2,460,326,737/=; sundry debtors and prepayments; outstanding trade creditors of UGX 174, 852, 301/=; and inactive board of directors. The National Enterprise Corporation (Luwero Industries) made a net loss of UGX 854, 360, 481/=; had outstanding debtors to the tune of UGX 528,565,840/=; outstanding creditors of UGX 174,852, 301/=. The Defence Forces Shop, one of the UPDF’s businesses, took Shs 36bn in 2019/2020 [4], but the total percentage in relation to the defence budget is unknown.

These businesses are publicly known, and some of their key managers are appointed by the president [1]. They are subject to annual audits by the Office of the Auditor General and Parliament [2]. Their budgets are from the Ministry of Defence and Veterans Affairs, which is approved by Parliament. Overall, their operations are known but their finances are not directly transparent; the public gets to know the losses they have incured through the annual audits by the Auditor General.

Defence institutions and the MoD, in particular [1], own enterprises. According to the publicly available list [2], as of April 2018, of the enterprises owned by the state, the MoD runs 118 enterprises (including those in the temporarily occupied Crimea). However, there is no publicly available data on the revenues, operations and expenditures of those enterprises, and thus it is not possible to evaluate their equivalent to the defence budget.
Another big problem in Ukraine is the engagement of the top-officials in defence and security sector in private business. One of the brightest scandals in this sphere is the private enterprises of the first deputy of the Secretary of National Security and Defence, Oleh Gladkovskiy, and the Head of the Parliament’s Committee of National Security and Defence, Sergiy Pashynskiy [3].

The ownership of commercial businesses is publicly declared and the MoD runs 118 enterprises (including those on the temporarily occupied Crimea) as of April 2018 [1]. However, there is no publicly available data on the operations and finances of the enterprises. There is also no evidence of the MoD state-owned enterprises being run according to the governance standards like the OECD Guidelines on Corporate Governance of State-Owned Enterprises. It is worth noting that in 2016 the government made significant progress and liquidated nearly 500 enterprises and developed a new list of enterprises to be corporatized [2]. Later, the Ministry of Economy and UkrOboronProm said they were going to corporatize also some of the defence enterprises [3]. However, there is no evidence that this will happen with MoD enterprises.

The Emirati Armed Forces do not own any business as per our sources. Even EBIC, a defence sector business is not owned by the armed forces or the Ministry of Defence. It is managed independently from the army and the MoD. MBZ owns and manages (indirectly) the company (1), (2), (3).

There is no transparency concerning the defence institutions investments in commercial businesses at all. Although audit reports of companies associated (not owned) with defence institutions are produced by independent auditor companies, information about such investments is not available for the public through official means (1), (2), (3).

The MoD controls two Executive Defence Agencies that are established as trading funds: the Defence Science and Technology Laboratory (DSTL) and the UK Hydrographic Office (UKHO). Each fund publishes its own set of accounts and is fully transparent about its turnover, expenses, assets and profits [1, 2, 3]. Profits before tax for each body in 2017/18 were as follows: UKHO – £35.8 million DSTL – £722 million. The cumulative profit of the two funds (£757.8m) amounts to 1.99% of the defence budget [2, 3].

Ownership of commercial businesses is publicly declared in the MoDs Annual Reports and Accounts [1]. The details of their operations and finances are transparent, fully disclosed and their standards of governance are equivalent to publicly owned commercial enterprises [2, 3].

There is no evidence of the Department of Defense having ownership of commerical businesses [1].

This indicator is scored ‘Not Applicable’ because there is no evidence of beneficial ownership on the part of the Department of Defense.

Twenty companies are affiliated to the Ministry of the People’s Power for Defence (MPPD). Only one of these – the Venezuelan Military Industries Company (CAVIM) – is dedicated to the manufacture of defence materials, while the others focus on activities in the industrial, agricultural, extractive, and service sectors [1]. The creation of military companies has increased, particularly since Nicolás Maduro’s entry to the presidential office in 2013. Despite the recorded existence of companies directly related to the MPPD, it must also be noted that companies have been created and wholly managed by military officials who are not attached to the MPPD, taking budgets from other ministries including the ministries of oil and food, among others [2].

The lack of detailed published information on the defence budget entails there is no official data with which to accurately establish what percentage of budgetary resources has been allocated to these companies in recent years. Press reports indicate that one billion of the nearly 700 billion bolivars allocated to the MPPD in 2017 were allocated to the bulk of these companies [3]. Information available in the 2015 MPPD financial accounts – the latest published – showed that allocations to 12 of these companies exceeded 10% of the budget [4]. According to the defence sector Strategic Plan and the Patria Plan, the sustainability of the armed forces and the civic-military union are some of the principles that have justified the diversification of military companies in industrial, extractive, and agricultural sectors [5]. However, academic analysis indicates that the creation of military companies has led to greater military control of the economic system [6]. This is particularly visible in direct engagement with the country’s most important economic sector through the creation of the Military Company of Mining, Oil, and Gas (CAMIMPEG) and the appointment of military personnel to the boards of the state oil company and extractive companies [7,8].

The allocation of resources to military-controlled companies has also been criticised by sectors of civil society as a method of diverting public money towards maintaining the loyalty of the military in the midst of the economic crisis [910,11].

Military companies are publicly declared and information is published about the percentage of shareholders; each company has a military majority among its shareholders. The majority of these companies are listed among organisations affiliated with the defence sector, and the 2015 annual report account presented achievements in management for the majority of these companies, in summary form [1].

While the creation of these companies is publicly declared, their financial statements are not made publicly available in a comprehensive and consistent manner. Before 2016, the performance of these companies was included in the MPPD report in summary form; however, financial statements have not been made public in recent years, for existing companies or newly created ones. Moreover, the monitoring system for military companies was changed in 2016 – unlike other state companies – allowing greater discretion and limiting access to information for civil entities and organisations [2]. As a result of these reforms in fiscal oversight, companies such as CAMIMPEG have been exempt from presenting management reports and financial statements, and these companies have been placed exclusively under the military management of the Comptroller General of the National Bolivarian Armed Forces (CONGEFANB) [3,4, 5,6,7,8].

The Zimbabwe Defence Forces (ZDF) solely or jointly own several investments, mainly in the mining sector. These ventures translate into billions of dollars, and the investments exceed the total budget of the ZDF as officially appropriated in the national budget. The details of these operations and finances are not transparently shared if they are shared at all [1, 2].

There is no mechanism to publicly declare the Zimbabwe Defence Forces interests and investments. These investments are not guided by an existing legal framework which would have been the reason the investments and interests were declared. However, these interests are made in the commercial sector, with only political elites and securocrats aware of the military’s commercial activities [1, 2].

Country Sort by Country 31a. Extent of commercial ventures Sort By Subindicator 31b. Transparency Sort By Subindicator
Albania 50 / 100 50 / 100
Algeria 0 / 100 25 / 100
Angola 0 / 100 25 / 100
Argentina 50 / 100 50 / 100
Armenia 75 / 100 50 / 100
Australia 100 / 100 NA
Azerbaijan 100 / 100 NA
Bahrain 100 / 100 NA
Bangladesh NEI 25 / 100
Belgium 100 / 100 NA
Bosnia and Herzegovina 100 / 100 NA
Botswana 100 / 100 NA
Brazil 100 / 100 75 / 100
Burkina Faso 0 / 100 0 / 100
Cameroon 0 / 100 0 / 100
Canada 75 / 100 50 / 100
Chile 50 / 100 50 / 100
China NEI 25 / 100
Colombia 50 / 100 100 / 100
Cote d'Ivoire 75 / 100 0 / 100
Denmark 100 / 100 NA
Egypt 0 / 100 25 / 100
Estonia 100 / 100 NA
Finland 100 / 100 NA
France 100 / 100 NA
Germany 100 / 100 75 / 100
Ghana 0 / 100 0 / 100
Greece 100 / 100 NA
Hungary 50 / 100 50 / 100
India 25 / 100 75 / 100
Indonesia 100 / 100 25 / 100
Iran 0 / 100 50 / 100
Iraq 25 / 100 0 / 100
Israel 100 / 100 NA
Italy 100 / 100 75 / 100
Japan 100 / 100 NA
Jordan 0 / 100 50 / 100
Kenya 50 / 100 50 / 100
Kosovo 100 / 100 NA
Kuwait 100 / 100 0 / 100
Latvia 100 / 100 100 / 100
Lebanon 50 / 100 50 / 100
Lithuania 100 / 100 100 / 100
Malaysia 0 / 100 75 / 100
Mali 50 / 100 50 / 100
Mexico 50 / 100 50 / 100
Montenegro 50 / 100 50 / 100
Morocco 100 / 100 NA
Myanmar 0 / 100 0 / 100
Netherlands 100 / 100 NA
New Zealand 100 / 100 100 / 100
Niger 100 / 100 NA
Nigeria 50 / 100 50 / 100
North Macedonia 100 / 100 100 / 100
Norway 100 / 100 100 / 100
Oman 0 / 100 0 / 100
Palestine 100 / 100 NA
Philippines 100 / 100 NA
Poland 100 / 100 NA
Portugal 50 / 100 50 / 100
Qatar 0 / 100 25 / 100
Russia NEI 50 / 100
Saudi Arabia 50 / 100 50 / 100
Serbia 50 / 100 50 / 100
Singapore 100 / 100 NA
South Africa 100 / 100 NA
South Korea 100 / 100 NA
South Sudan 25 / 100 0 / 100
Spain 100 / 100 NA
Sudan 0 / 100 25 / 100
Sweden 100 / 100 100 / 100
Switzerland 0 / 100 100 / 100
Taiwan 100 / 100 NA
Tanzania 0 / 100 25 / 100
Thailand 50 / 100 0 / 100
Tunisia 100 / 100 NA
Turkey 50 / 100 50 / 100
Uganda 50 / 100 75 / 100
Ukraine 0 / 100 50 / 100
United Arab Emirates 100 / 100 0 / 100
United Kingdom 75 / 100 100 / 100
United States 100 / 100 NA
Venezuela 0 / 100 50 / 100
Zimbabwe 0 / 100 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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