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Theme: Finance

March 6, 2024 – Following the acquittal of two men charged with paying bribes to secure and maintain a major multi-billion-pound defence contract with Saudi Arabia, a full independent inquiry is now vital in order to examine the evidence presented in court of the British government’s direct involvement in these corrupt arms deals.  

Despite it being accepted that millions of pounds of bribes were paid to senior Saudi officials in exchange for lucrative deals to supply military communications equipment between 2007 and 2012, the two former executives of GPT Special Project Management were today found not guilty of corruption after being prosecuted for overseeing these payments. 

The two men had argued that British officials, politicians and diplomats knew about and consented to nearly £60 million worth of bribes to the Gulf state since 1978.  

It is reasonable to assume that, in deciding to acquit these men, the jury gave serious weight to the significance of the evidence that was presented in court of the UK government’s involvement in the alleged bribes. 

 

Josie Stewart, Director of Transparency International Defence & Security, said: 

“This case involves Europe’s largest defence manufacturer, senior members of the Saudi Royal Family, and allegations of high-level involvement by successive UK governments about systemic corruption that went on for decades. The details that emerged in court wouldn’t look out of place in a Hollywood screenplay but sadly the reality surpasses fiction.  

“Ian Foxley, the whistleblower who lifted the original lid, had no idea at the time how far the rot would go. Thanks to the court monitoring work of our partners at Spotlight on Corruption, we now have a good idea: it went far, and it went high. We now need to know how far, and how high.”  

 

The case raises serious questions over whether any of the Ministry of Defence’s (MoD) procurement staff queried the corrupt payments. If not, then why not? If so, then to what level and who authorised their continuity? And, who within the MoD authorised the decision to continue opaque payments that may have benefitted Saudi government officials after the case was under investigation? 

Transparency International Defence & Security joins Spotlight on Corruption’s urgent call for a transparent, independent judge-led inquiry into the full nature and extent of the UK government’s knowledge of and involvement in these defence contract payments made to Saudi Arabia.  

This inquiry must consider whether ongoing contractual arrangements are still at risk of corruption, what measures the MoD is putting in place to prevent this, and the adequacy of the MoD’s measures to protect and enable whistleblowers to uncover corruption. A temporary halt should also be placed on any arms transfer licenses approved by the same officials during the period in question until evidence of responsible and corruption-free arms control systems can be provided. 

But this inquiry will not be enough, because this case is not an isolated incident. Enormous budgets, close political ties, and high levels of secrecy make the defence and security sectors fertile ground for hidden payments, undue influence, bribery, and corruption.  

It’s imperative that we restore integrity to the arms trade in order to rebuild trust in our institutions, safeguard the public interest, and strengthen global security. 

As this case shows, the UK, and governments in all arms-supplier countries, must take action to integrate heightened anti-corruption standards into arms transfers. The current controls are clearly not up to the task. They need strengthening with:  

  • Increased investment in proactive measures to detect corruption risks in arms transfers, including during the arms deal and licensing processes.  
  • Development of arms transfer policies that recognise corruption as a significant risk and establish procedures for investigation and mitigation;  
  • Comprehensive disclosure of all intermediaries, subcontractors, and service providers involved, and independent monitoring of all defence sector contracts in which official support is sought or given;  
  • Verification of recipient countries’ anti-corruption systems and inclusion of this verification as criteria in arms transfer/license decision-making; and 
  • Commitment to share information on corrupt recipient(s) to other arms supplier states.

February 16, 2024 – Transparency International is to shed light on a critical yet overlooked threat at this year’s Munich Security Conference: the use of ‘strategic corruption’ as a covert geopolitical weapon. 

Our panel, on February 16 at 3.30-4.15pm CET, jointly hosted with the Basel Institute on Governance, will explore how ‘strategic corruption’ is a weapon wielded by states to further geopolitical aims and poses a grave threat to international peace and security. This insidious form of corruption goes beyond traditional corrupt practices like bribery and embezzlement and involves sophisticated schemes designed to destabilise and manipulate states from within. 

Transparency International Defence & Security welcome the focus on corruption high on the agenda at Munich.Corruption is an existential threat to states and societies and a critical barrier to the protection of individuals. It is behind every pressing security issue facing the world today. 

The implications of corruption within defence and security sectors are especially profound. These sectors involve huge amounts of money and high levels of secrecy are particularly susceptible to corruption.  

We are calling for governments to: 

  • Recognise the role of corruption as a consistent threat behind all of the security risks assessed in the Munich Security Index and the Munich Security Report. Acknowledge that corruption deepens all inequalities within and between states, which drive current conflicts and geopolitical tensions. 
  • Address corruption as a security threat by integrating anti-corruption measures as a priority in all defence and security policies and practices. Recognise long-term insecurity and inequalities, driven by corruption, as the consequence of short-term payoffs in defence and security decision-making.  
  • Introduce robust anti-corruption controls for arms transfers, including corruption risk assessment and mitigation,and making sure recipient countries have strong anti-corruption governance. Governments should also actively work on finding and addressing the risks of corruption leading to arms being diverted. 

Make transparency the norm in defence and security, granting access to information as the rule and restricting it on national security grounds as the exception. 

 

 

Notes to editors:  

The Corruption panel will take place on February 16, at 3.30-4.15pm CET (GMT +1) 

It will feature President Arévalo from Guatemala, Prime Minister Denkov from Bulgaria, Transparency International Global Vice Chair Ketakandriana (Ke) Rafitoson and US Senator Sheldon Whitehouse. 

It will be live streamed on the MSC website.

February 15, 2024 – As African leaders gather in Addis Ababa for the 2024 African Union (AU) Summit, the urgent agenda of addressing peace and security takes centre stage.

While ensuring the safety of citizens remains the primary obligation of governments, many African countries grapple with persistent conflicts and an alarming recurrence of coups. Internal conflicts, often fuelled by the illicit arms trade and the unlawful exploitation of natural resources, has threatened the stability of several countries on the continent.

Corruption has served as a catalyst for conflicts in Burkina Faso, Sudan, Mali, Nigeria and the Central African Republic, which has poured fuel on the flames of grievances against political leaders and incited violent upheavals.

By eroding public trust and undermining the effectiveness of defence and security institutions, corruption has eroded the rule of law and perpetuated instability. This has led to diminished access to essential services for many and fostered environments conducive to human rights abuses. There is a pressing need to recognise corruption as a security threat in itself and prioritise anti-corruption efforts within security sector reform and governance (SSR/G).

It is imperative that AU members unite in addressing corruption within defence and security sectors as a crucial step toward achieving conflict resolution, peace, stability, and security goals.

Transparency International Defence & Security calls on states to:

  • Recognise corruption in defence as a security threat: Governments must acknowledge the threat of corruption to national security and allocate resources accordingly.
  • Empower civilian oversight: Governments should encourage active citizen participation in oversight to enhance transparency and accountability.
  • Integrate anti-corruption in peace efforts and SSR: Embed anti-corruption measures into conflict resolution, peacebuilding and security sector reform agendas for more resilient societies.

Peace and stability in Africa and around the world cannot be safeguarded without making the efforts to address the insidious threat of corruption proportionate to the threat which it represents.

Josie Stewart, head of Transparency International Defence & Security, reflects on a busy week at the Tenth session of the Conference of the States Parties to the United Nations Convention against Corruption in Atlanta.

 

The 10th session of the Conference of the States Parties (CoSP) to the United Nations Convention against Corruption (UNCAC) showed two things very clearly: the fight against corruption is receiving more attention than ever – but that attention has not yet translated into enough action, especially in defence and security.

Let’s start with the good news. The past week, I and more than 1,000 others spent six days running around a bustling conference centre in Atlanta, USA. Countries sent large delegations, and negotiations continued late into the nights. Unlike previous CoSPs, the 10th session saw significant attendance from global civil society, ensuring transparency and meaningful engagement.

And there is more good news. Thanks in part to the host country’s leadership, we saw corruption recognised as the security threat that it is. During the two days of opening remarks from participants, speaker after speaker acknowledged the impact that corruption has on stability, peace, and security, and I also had the pleasure of taking part in a panel discussion on this topic. We hope to see this sentiment reflected in the flagship resolution of the CoSP, the Atlanta Declaration, once it is published.

But here come the caveats. We all spent a lot of time admiring the problem, rehashing time and again the fact that corruption is bad, and there was a lot of preaching to the choir. Even in the many policy discussions and panel events that took place alongside the formal negotiations, where there was markedly little challenge, new thinking that could really push the anti-corruption agenda forward, or focus on concrete actions that could and should be advanced.

Without concrete actions, acknowledgement of corruption as a security threat remains just the first step to addressing it. And at CoSP10, the international anti-corruption community was a long way short of real action when it comes to addressing corruption in defence and security.

I’ve seen the effects of this first hand – and they are devastating.

During my time leading the UK Government’s anti-corruption agenda in Afghanistan, I witnessed the devastating effects of neglecting corruption. The failure to prioritize combating corruption led to the disintegration of the Afghan national defence forces as the Taliban advanced. In South Sudan, while working on defence governance reform, I saw how accountability and transparency were sidelined, allowing corruption in the military to fester.

Corruption is about money and power, and there’s an abundance of both in defence and security. Yet anti-corruption policy communities rarely have meaningful engagement with national security and defence policy communities. Until this week, there was no discussion about defence and security at the UNCAC CoSP

So now the words are there at least, what needs to be done?

We’re challenging states to examine how well their anti-corruption efforts are identifying and taking on the tough political choices that are needed in order to address corruption as a security threat, and we’re challenging states to focus on addressing corruption within their defence and security sectors as a critical aspect of their wider anti-corruption agendas. We want an agreed resolution on this in two years’ time, when the next UNCAC CoSP takes place.

We need to call corruption in defence and security by its name: a threat to human, national and international security. These words are now being spoken by many, but getting from words to actions, from acknowledgements to clear commitments, is the next challenge, and it is a challenge that we are committed to meet head on.

December 5, 2023 – Four of the world’s 10 biggest arms producers listed in new research from the Stockholm International Peace Research Institute (SIPRI) show a concerning lack of commitment to anti-corruption, Transparency International Defence & Security said today.

SIPRI’s 2022 Arms Industry Database lists the top 100 arms-producing and military services companies.  Four of the top 10 score either an E or F Transparency International’s Defence Companies Index (DCI), which assesses and ranks major global defence companies based on their commitment to anti-corruption and transparency.

In the top four, SIPRI’s data shows General Dynamics (US), NORINCO and AVIC (China), and Rostec (Russia), collectively responsible for $876 billion in global arms trade last year. All scored poorly in the DCI, indicating a minimal or extremely poor commitment to anti-corruption.

The problem extends beyond these firms, with dozens of other companies in the top 100 assessed by the DCI to show poor or non-existent commitment to anti-corruption.

This is alarming given SIPRI’s data on the increasing demand for arms and military services globally. Corruption in the arms trade can have devastating impacts on people’s lives, leading to heightened conflict and violence, undermining governance and the rule of law, diverting resources from essential public services, and eroding trust in institutions.

 

Josie Stewart, Programme Director at Transparency International Defence & Security, said:

“The latest SIPRI report, when combined with our previous research on arms producers’ commitment to anti-corruption, paints a troubling picture. Far too many of the world’s biggest arms producers are falling short in addressing corruption risks.

“This should urgently motivate governments and the international community to prioritise addressing these issues in the defence and security sectors.

“As demand for arms and military services grows, it’s crucial to ensure that anti-corruption standards remain a forefront consideration, not secondary to trade, foreign, and defence policy objectives. The cost of neglecting integrity and transparency in these sectors is too great to ignore.”

 

 

Notes to editors:

Transparency International is a global movement that combats corruption and promotes transparency, accountability, and integrity in government, politics, and business worldwide.

Transparency International – Defence & Security is one of Transparency International’s global programmes and is committed to tackling corruption in the global defence and security sector.

The Defence Companies Index on Anti-Corruption and Corporate Transparency (DCI) assesses the levels of public commitment to anti-corruption and transparency in the corporate policies and procedures of 134 of the world’s largest defence companies. By analysing what companies are publicly committing to in terms of their openness, policies and procedures, the DCI seeks to inspire reform in the defence sector, thereby reducing corruption and its impact.

Responding to fresh data from the Stockholm International Peace Research Institute (SIPRI) demonstrating record global military spending, Transparency International Defence and Security Director, Josie Stewart, said:

New SIPRI data has revealed that the total global military expenditure increased by 3.7 per cent in real terms in 2022, reaching a new high of $2240 billion.

This increase in spending – coupled with our Government Defence Integrity index’s finding that nearly two-thirds of countries face a high to critical risk of corruption in their defence and security sectors – should be cause for concern for governments around the world.

To ensure that military expenditure is contributing to security rather than corruption and abuse, governments should strengthen transparency, accountability, and oversight in the defence sector, providing for adequate scrutiny from lawmakers, auditors, and civil society.

Transparency is the best way for states to ensure that military spending is used effectively to enhance security.

press@transparency.org.uk
+ 44 (0)20 3096 7695
Out of hours – Weekends; Weekdays (UK 17.30-21.30): +44 (0)79 6456 0340

As the Munich Security Conference begins today, Josie Stewart, Director of Transparency International Defence and Security, said:

“If Russia’s war in Ukraine has taught us anything, it should be that raising the stakes in the fight against corruption should be high on the agenda at the Munich Security Conference (MSC).

“Energy supply disruptions, Russia, and an economic or financial crisis have been flagged as the top three security risks for leading democracies in 2023. But almost a year after Russia’s invasion of Ukraine, we can expect the MSC, beginning today, to shift its focus back to traditional concepts of security and defence.

“In this context, it has never been more important for leading democracies to take on the fight against corruption as a global security imperative. If the enemy of democracy is corruption, the Western military industry needs to cleanse itself at home before fighting it abroad.

“We look forward to hearing the outcomes of a panel discussion at the MSC organised by Transparency International and the Basel Institute on Governance.”

Responding to reports of new security aid for Ukraine, Josie Stewart, Director of Transparency International Defence and Security, said:

Fresh security assistance for Ukraine is welcome, but history has taught us that aid packages of the size being pledged in recent weeks carry significant risk.

So far there is limited information about the defence companies delivering assistance to Ukraine, what influence they carry, and what measures they are taking to reduce corruption.

There is also always a risk that arms will end up in the wrong hands as the war continues.

Civilian oversight of military assistance is integral to robust defence governance and the strengthening of institutional resilience that is necessary to manage these risks.

This should be a shared responsibility between donor countries and Ukraine.

In response to the review of the UK’s aid investment in Afghanistan published this week by the UK Independent Commission on Aid Impact (ICAI), Josie Stewart, Director of Transparency International Defence and Security, said:

“This review adds to the now sky-high pile of evidence that corruption was central to the tragic downfall of the country. Corruption within the security services was particularly damaging, undermining the cohesion and operational capacity of the army and police. Arms and equipment were stolen, and sold to the Taliban.

“Following the downfall of Kabul last year, Khalid Payenda, Afghanistan’s former finance minister, said that most Afghan troops on the payroll had in fact been ‘ghost’ soldiers, made up by corrupt officials who exploited the system for money. The operational capability of soldiers who did not actually exist had proven to be, unsurprisingly, limited.

“ICAI’s new report highlights that the UK provided over £400 million in aid over just six years to fund the Afghan security services, including paying the salaries of the Afghan National Police who acted primarily as a paramilitary force engaged in counter-insurgency operations against the Taliban. We will never know how much of this £400 million was stolen, how much indirectly funded the Taliban, or how much it contributed to the overestimation of the Afghan security forces’ operational capability which led to such devastating consequences for the Afghan government, its NATO partners, and the Afghan people. But anyone who cares about global peace and security must learn the lessons from Afghanistan.”

press@transparency.org.uk
+ 44 (0)20 3096 7695
Out of hours – Weekends; Weekdays (UK 17.30-21.30): +44 (0)79 6456 0340

Our latest research catalogues conflict and corruption around the word – harm caused by leaving the privatisation of national security to grow and operate without proper regulation.

Post-Afghanistan, exploitation of global conflicts is big business. Most private military and security firms are registered in the US, so we are calling on Congress to take a leading role in pushing through meaningful reforms under its jurisdiction. The time has also come for accreditation standards to be enforced rather than only encouraged, at both a national and international level.

Michael Ofori-Mensah, Head of Research at Transparency International Defence and Security, describes some of the dangers documented in our latest research paper.

Unaccountable private military and security companies continue to pursue partnerships that in recent years have led indirectly to the assassination of presidents and journalists, land grabs in conflict zones, and even suspected war crimes.

From Haiti to Saudi Arabia to Nigeria, US-based organisations – the firms that dominate the market – have found themselves associated with a string of tragedies, all while their sector has grown ever-more lucrative.

Transparency International Defence and Security’s latest research – Hidden Costs: US private military and security companies and the risks of corruption and conflict – catalogues the harm playing out internationally as countries increasingly seek to outsource national security concerns to soldiers of fortune.

Hidden costs from the trade in national security

While the US and other governments have left the national security industry to grow and operate without proper regulation, the risks of conflict being exploited for monetary gain are growing all the time.

Hidden Costs documents how the former CEO of one major US private military and security company was convicted – following a guilty plea – of bribing Nigerian officials for a US$6bn land grab in the long-plundered Niger Delta.

Our research also highlights that the Saudi operatives responsible for Jamal Khashoggi’s savage murder received combat training from the US security company Tier One Group.

Arguably most damning are the accounts from Haiti, where the country’s president was killed last year by a squad of mercenaries thought to have been trained in the US and Colombia.

Pressing priority

Many governments around the world argue that critical security capability gaps are being filled quickly and with relatively minimal costs through the growing practise of outsourcing.

Spurred on by the US government’s normalisation of the trade, US firms are growing both their services and the number of fragile countries in which they operate.

The private military and security sector has swelled to be worth US$224 billion. That figure is expected to double by 2030.

The value of US services exported is predicted to grow to more than $80 billion in the near future, but the industry and the challenge faced is global.

The risks of corruption and conflict in the pursuit of profits are plain.

These risks are as old as time. But their modern manifestations in warzones must not be left to spill over. The 20-year war in Afghanistan cultivated dynamics that threaten further damage, more than a decade after governments first expressed their concerns.

Required response

International rules and robust regulation are urgently needed. We need measures that ensure mandatory reporting of private military and security company activities. The Montreux Document lacks teeth, operating as it does as guidance that is not legally binding. Code of conduct standards must also become mandatory for accreditation, rather than purely voluntary.

Most private military and security firms are registered in the US. So Transparency International Defence and Security is also calling on Congress to take a leading role in pushing through meaningful reforms under its jurisdiction. There is an opportunity arriving in September, when draft legislation faces review.

Policymakers have long been aware of the corruption risks and the related threats to peace and prosperity posed by this sector. The time for action is well overdue. No more Hidden Costs.

Work is underway to shape policies necessary for the prevention of further coups in Mali, following two recent military takeovers of the west African nation.

Mali has been operating under what leaders have described as a period of “transitional” military governance since August 2020, with elections repeatedly delayed.

Transparency International is embarking on a new project aimed at establishing policies that would prevent future coups being carried out and see corruption threats mitigated in the nation’s defence and security sector, assessed as “high risk” through our Government Defence Integrity Index.

The initiative supported by the United Nations Democracy Fund aims to empower ordinary Malians and their civil society organisations to “exercise oversight” and engage with government representatives and defence institutions in reforming defence governance.

Legislative foundations will be laid in preparation for the resumption of parliamentary work following a two year hiatus that has seen female representation in positions of political influence shrink to zero.

‘Power to convene’

The project will be delivered through a partnership between Transparency International’s national chapter — CRI 2002 — and TI-UK.

Working together we combine national level civil society legitimacy, contextual understanding and power to convene with global expertise in corruption in the defence sector.

We will partner with local journalists and with a civil society network — the CSO Forum created under the previous UNDEF project — while expanding the project’s reach to all 10 of the country’s regions.

We will present policy recommendations to the National Transition Council (NTC), with whom we are already engaged, to integrate into legislation once the National Assembly resumes.

Three-pronged approach

Our approach is underpinned by three activities:

  • In-depth research into the role that corruption can play in facilitating military coups. The paper we produce will identify policy recommendations to anticipate and prevent future coups in Mali. It will also signpost risks to other countries facing similar challenges.
  • Analysis of the defence sector’s performance during the COVID-19 emergency. Our briefing will focus on the impact of corruption during emergencies and how it undermines the country’s capacity to respond to disasters. The analysis will include policy recommendations that can inform disaster risk reduction (DRR) interventions.
  • An advocacy program for CSOs to facilitate engagement with the National Transition Council and defence institutions. This will encourage integration of policy recommendations into legislation.