Tue 19 Jun 18 // Uncategorised

19th June 2018, Kiev – The Independent Defence Anti-Corruption Committee (NAKO) announced on June 19th that it is in favour of the revised tender for an independent audit and strategic analysis of Ukroboronprom. It has reestablished dialogue with Ukroboronprom and intends to monitor the tendering process.

NAKO said that the process is the opportunity to bring light to inefficiencies, corruption risks and structural deficits at Ukroboronprom and will be a first step towards resolving these issues and building a state-owned defence establishment that meets the needs of the public and armed forces. The NAKO committee stated that the creation of the independent Supervisory Board, which was appointed by President Petro Poroshenko this January, was a key step towards having effective governance and will be the main customer in the upcoming tender.

Volodymyr Ohryzko, NAKO Co-Chair, stated:

The Supervisory Board of Ukroboronprom is responsible for reforming the institution so that it meets the interests of the public and the Ukrainian state. This audit, in line with international standards, will aid the Supervisory Board in carrying out their responsibility and raising the company to meet international standards of governance.

The call for tender includes three parts: 1) an assessment of the corporate governance of Ukroboronprom and its members, 2) a legal review, diagnosis and consultation of Ukroboronprom and its member companies, 3) an independent financial audit of Ukroboronprom and its member companies.

The original tender did not include some of these components, including the independent financial audit. The NAKO provided recommendations to Ukroboronprom’s Supervisory Board about what should be included in the tender, and the Supervisory Board revised it in line with these recommendations. Following those amendments, the tender process is currently underway. The deadline has been extended from June 18th to September 28th in order to give a broader range of companies the opportunity to bid.

Drago Kos, NAKO Co-Chair said:

We hope to see a strong pool of auditing firms bidding for this. It is undoubtedly complex – but if it can be reformed, the impact on Ukraine and its future will be historic.

Olena Tregub, NAKO Secretary General confirmed that:

The NAKO continues to monitor this tender; our aim is to ensure that the reform of Ukroboronprom is provided with clear advice on the corporate structure and management, and that a full financial audit will identify financial black holes in the company – and will facilitate an evidence-based reform programme.

More details on the tender can be found here.

***ENDS***

Notes:

The Independent Defence AntiCorruption Committee (NAKO) is a joint initiative to fight corruption in the Ukrainian defence sector run by Transparency International Defence and Security Program Great Britain (TI-DSP) and Transparency International Україна (ТІ Ukraine).

The Committee consists of six members: Editor in Chief of online mediaUkrayinska PravdaSevgil MusaievaBorovyk, Former Minister of Foreign Affairs of Ukraine, Former First Deputy Secretary Defence and Security Council of Ukraine Volodymyr Ogryzko, Chairman of Centre UA, coinitiator of Chesno Campaign Oleh Rybachuk, LieutenantGeneral of the British Army and Former Commander of the NATO Allied Rapid Reaction Corps Timothy Evans, Former AntiCorruption Commissioner in Slovenia Drago Kos and Former Head of Oversight of Public Utilities at the UN Mission in Kosovo James Wasserstrom.

The goal for the NAKO is to reduce corruption risks in defence and security sector of Ukraine by means of monitoring, evaluation and analysis of anti-corruption reforms and providing the corresponding recommendations.

Contact:

Dominic Kavakeb
+44 20 3096 7695
+44 79 6456 0340
Dominic.kavakeb@transparency.org.uk

 

TI Defence & Security

Mon 11 Jun 18 // Uncategorised

11th June 2018, London – Today, NGOs in France, Indonesia, Sri Lanka, Tunisia, the UK and the US are calling upon the agencies investigating Airbus to ensure that the company and its senior executives are properly held to account.

Airbus is under investigation in several jurisdictions for allegedly paying bribes in order to win billions of dollars of contracts. The allegations are egregious and widespread, covering multiple countries and involving several divisions within Airbus including commercial aircraft, helicopters and aerospace and defence.

In February 2018, Airbus reached a €81.25million settlement in Germany to end a corruption investigation into the 2003 Eurofighter deal with Austria. Over the coming months, prosecutors will be weighing up their options, with more settlements as one possible outcome, allowing the company to continue winning government contracts without prosecution.

Today the NGOs in a letter to the heads of the Serious Fraud Office, Parque National Financier and Department of Justice urged the authorities to ensure that:

  • National economic interest, relations with foreign states or the importance of Airbus as a national industry must not affect the investigation or prosecution of alleged bribery by the company;
  • Individuals responsible for the wrongdoing must face prosecution including those at senior levels;
  • No immunity deals should be included in any action taken against Airbus;
  • A settlement should only be given if prosecutors have high confidence that Airbus has fully cooperated and revealed the full extent of wrongdoing, and if it has fully signed up to genuine corporate change including through disciplining of employees responsible for wrongdoing;
  • Countries where it is proven that Airbus has paid bribes must be fully compensated for harm caused; and
  • Any enforcement action must be fully transparent with details of the wrongdoing made publicly available.

Susan Hawley, Director of Policy at Corruption Watch, said:

The Airbus case is a test of the resolve and independence of the prosecuting bodies and their ability to bring widespread and egregious wrongdoing to justice. Airbus and individuals implicated must not be let off lightly if these global allegations are confirmed by law enforcement investigations.”

Andrew Watson, Head of Industry Integrity at Transparency International Defence and Security said:

“If proven, these extensive cases of corruption will have had a significant impact on the public, state institutions and the industry. With such wide-ranging and complex allegations, it will be will be vital for prosecutors to co-ordinate closely if they are to account for the full scale of alleged offending; because individual cases, serious as they may be, won’t tell the whole story.”

“For the punishment to be proportionate to the crime, prosecutors should consider the full range of offending across all jurisdictions when reaching their decisions.”

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TI Defence & Security

Nigeria: More spent on security votes per year than Army budget
Civil society groups call for scrapping of secretive security vote spending

28th May 2018, London/ Abuja – Ahead of the 2019 Presidential elections in Nigeria, Transparency International and the Civil Society Legislative Advocacy Center (CISLAC) are calling on candidates to commit to scrapping the unaccountable and secretive “security vote” spending – one of the most durable forms of corruption in Nigeria—saying that they fail to provide real security for citizens.

“Camouflaged Cash”, a new report launched today by the groups, estimates that security votes in Nigeria total around $670 million annually – more than the annual budget of the Nigerian Army. This amount dwarfs the US security assistance to Nigeria since 2012 and UK counter terrorism support promised from 2016-2020.

Security votes, used by successive governments since 1999, are opaque funds that are disbursed at the discretion of public officials, very often transacted in cash, without being subject to oversight or independent audit. In theory they are designed to cover unforeseen security needs but in reality many have become slush funds for corrupt officials.

As well as undermining Nigeria’s fight against corruption, the misuse of these funds is fuelling instability. By prioritising security vote spending, less funding is available for Nigerian forces to pay salaries or procure needed supplies, leaving them underequipped to fight Boko Haram. They also offer major potential sources of funding to tilt political campaigns, stoking tensions at a critical time.

Katherine Dixon, Director of Transparency International Defence & Security said:

“The security vote is one of the most durable forms of corruption operating in Nigeria today. Yet instead of addressing its many urgent threats, the ever-increasing use of security votes is providing corrupt officials with an easy-to-use and entirely hidden slush fund.”

“Corruption in the crucial sector of defence and security plays right into the hands of those who seek to sow the seeds of instability and terror. It leaves armed forces under-resourced in the fight against Boko Haram and feeds groups who may destabilize the elections.”

Auwal Musa Rafsanjani, Executive Director Civil Society Legislative Advocacy Center, said:

“We are calling on all candidates for the coming election to agree to phase out this secretive and dated form of spending. Growing insecurity at a time when security vote spending has increased shows that it serves no positive purpose in keeping Nigerian citizens safe. Any candidates serious about fighting corruption in Nigeria will recognise the need to urgently address the problem of security votes.”

“Ahead of our National Democracy Day a strong commitment from public officials against security votes would help the growing understanding that combatting corruption is a vital element of any serious democratic society.”

Transparency International Defence & Security and CISLAC recommends the Nigerian government:

  • Pass federal legislation outlawing security votes at all levels, to be accompanied by legislation specifying budgeting procedures and criteria for security expenditure.
  • Establish effective oversight structures to ensure existing spending is appropriate.
  • Educate its officials, security leaders and the general public about the risks of using security votes.
  • Support state governments to set up Security Trust Funds as a constructive first step to phasing out security votes.

Key stats and findings from Camouflaged Cash include:

  • $670 million spent on security votes per year
    • More than the annual budget of the Nigerian Army
    • More than the annual budget of the Nigerian Air Force and Navy combined
    • More than 70% of the annual budget of the Nigerian Police Force
    • More than nine times the US security assistance since 2012
    • More than 12 times the UK counterterrorism support for 2016 – 2020
  • 29 Nigerian states receive an average total of $580 million through security votes each year
  • $5 million – increase in security vote spending between 2016 and 2018
  • $15 billion – estimated amount stolen from Nigeria’s defence sector of by former military chiefs

 

***ENDS***

View the full report here.

Contact:
Dominic Kavakeb
+44 20 3096 7695
+44 79 6456 0340
Dominic.kavakeb@transparency.org.uk
Transparency International Defence and Security (TI-DS) works to reduce corruption in defence and security worldwide.

Civil Society Legislative Advocacy Centre (CISLAC) is a non-governmental, non-profit, advocacy, information sharing, research, and capacity building organisation. Its purpose is to strengthen the link between civil society and the legislature through advocacy and capacity building for civil society groups and policy makers on legislative processes and governance issues.

TI Defence & Security

On Saturday, 12 May, the state-owned defence company Ukroboronprom posted an updated tender for a consultant on the e-procurement platform Prozorro. Ukroboronprom is now bound to an independent financial audit in line with international standards. The move follows the re-establishing of the functioning Supervisory Board of Ukroboronprom and extensive input from the Independent Defence Anti-Corruption Committee (NAKO) together with international partners.

The previous version of the Statement of Work excluded a fully independent financial audit. The new edition of the tender includes three components: (1) assessment of corporate governance and strategic consulting of Ukroboronprom and its members in accordance with OECD standards; (2) legal due diligence and legal consulting of Ukroboronprom and its members; and (3) an independent financial audit of Ukroboronprom and its members in accordance with international standards.

NAKO provided recommendations relating to this independent financial audit as well as assessment of corporate governance and they were duly implemented by the Tendering Committee in the final version of the call for tender. NAKO will provide external monitoring of this procurement process.

Volodymyr Ohryzko, NAKO Co-Chair said:

A full and independent financial audit, conducted in accordance with international standards by a recognized auditing firm, will gain trust not only from the Ukrainian people, but also among Western partners and investors’.

The success of the audit depends on multiple factors including: a strict adherence to International Auditing Standards by the auditor; the auditor’s ability to access all necessary information, taking relevant laws on state secrecy into account; the auditor’s independence, impartiality, and; the implementation of audit recommendations.

Olena Tregub, NAKO Secretary General said:

“Ukroboronprom’s willingness to amend the Statement of Work though including the services of independent audit is a positive step which will open the company up to greater scrutiny. It is the first step towards transforming the company. NAKO is expecting to see reputable international auditing firms among the bidders,”

***ENDS***

The deadline for companies to bid is 18 June 2018.

More details can be found at: https://prozorro.gov.ua/tender/UA-2017-12-20-003453-c

TI Defence & Security

 20th March 2018, London – The re-opening of corruption charges against former South African President  Jacob Zuma, relating to a 1999 arms deal, are a welcome step and should mark the beginning of justice finally being served, according to Transparency International Defence & Security.

Research from Corruption Watch UK into the scandal known as the ‘Arms Deal’ suggests billions of taxpayers money was squandered – at a time when the South African government claimed that there were insufficient funds to treat thousands of citizens for AIDS.

Andrew Watson, Head of Industry Integrity at Transparency International Defence & Security, said:

“We warmly welcome the news that Jacob Zuma may now finally face justice for his crimes. It’s a shame that these charges took him to leave office for a prosecution to take place – but it is encouraging that his crimes may now finally be catching up with him.”

“Jacob Zuma and the companies alleged to have paid bribes to him have escaped justice for many years. These charges must now finally shed some light on one of the largest defence corruption scandals ever seen and result in robust prison sentences for those found to have been involved.”

***ENDS***

Contact:

Dominic Kavakeb
020 3096 7695
079 6456 0340
dominic.kavakeb@transparency.org.uk

TI Defence & Security

The illegal trade between government-controlled Ukraine and the occupied territories in Donbas is conducted systematically, facilitated by Ukrainian defense and security institutions, according to new research. The illegal trade undermines defence capacity, and damages Ukraine’s economy and reputation. And it is so lucrative that those involved have an interest in sustaining the conflict, potentially prolonging the war.

The research, Crossing the line: how the illegal trade with occupied Donbas has undermined defence integritywas completed by the Independent Defence Anti-Corruption Committee (NAKO), and is based on 40 interviews with ATO participants, security force representatives, civil society, judges, and residents of Donbas.

The government has taken steps to address the problem of illegal trade; in March 2017, the government banned the transport of all goods through the contact line except personal belongings and humanitarian aid. The government has also created “joint mobile groups” made up of servicemen and volunteers, and “fiscal groups,” of State Border Guard Service and State Fiscal Service officers. But these actions have not been effective in reducing the trade.

Olena Tregub, Secretary General of NAKO, said Tuesday:

“The illegal trade incentivizes conflict, and means that some profit as others suffer. When some servicemen collude with militants to facilitate trade, it has a huge impact on coordination between units and security institutions, the accuracy of our intelligence, the reputation of our forces, and has even caused the death of troops.”

The report describes 5 ways that goods are moved illegally across the contact line: 1) by car, through checkpoints 2)  through humanitarian logistics centers, initially organised to enable retail trade 3) through railway corridors, by using the double bottom of the wagons or in undeclared additional wagons 4) by paying defence and security forces to enable movement outside of formal checkpoints, in the “gray zone,” in 2015 the payment for crossing all the checkpoints could vary from 25,000- 120,000 UAH (US $930-4,450); 5) through a process known as “terminated transit,” in which goods headed for the occupied territories are falsely registered as destined for Russia; once in Russia, they enter the occupied territories through the uncontrolled parts of the Ukraine-Russia border.

According to the analysis, this lucrative trade will not be completely halted as long as the occupation continues. It finds that current efforts, including the blockade, have been ineffective in stopping the movement of goods. The report makes a series of recommendations, including immediate steps to mitigate the problem short-term, and long-term solutions.

Download the Report

TI Defence & Security

5th September, 2017, London – Corruption is perpetuating violent conflicts around the world. New research from Transparency International – Defence and Security found that fighting corruption is rarely a foreign policy priority, despite mounting evidence it’s a major 21st-century contributor to global insecurity.

“The Fifth Column”, published today, found that states most affected by corruption are very often victims of deep conflict. Seven of the ten lowest-scoring countries in Transparency International’s Corruption Perceptions Index were also amongst the ten least peaceful countries in the most recent Global Peace Index.

Corruption was found to be contributing to violent conflict in a number of ways, including:

  • Undermining public trust, which can lead to violent movements for regime change;
  • Driving the recruitment of extremists, who use corrupt governments as a rallying cry;
  • Enabling terrorist groups, who can exploit corrupt structures for their operations;
  • Facilitating proliferation of WMDs;
  • Undermining state sovereignty, when foreign governments use opaque networks of shell companies to hold whole political classes hostage;
  • Eroding state’s capabilities to respond to instability and violence when it occurs.

By failing to address these risks, governments are ignoring a major cause of conflict. Transparency International recommends corruption is treated as a serious foreign policy concern and that states should:

  • Address kleptocracy, or state capture, as a development, diplomatic and security issue, exerting political pressure on corrupt elites, supporting oversight institutions and focusing on improving governance in partner states.
  • Focus on defence governance and avoid treating it as a “special case” that can circumvent normal oversight processes.
  • Stop viewing corrupt autocrats as an alternative to instability and instead limit their influence through options such as financial sanctions, visa bans, and the withholding of international recognition.

Katherine Dixon, Director Transparency International Defence and Security, said:

“Its high time that states made corruption a top-tier foreign policy priority, as important as non-proliferation and counter terrorism efforts. Until they do that, efforts to end conflict, promote global peace and stability, will be falling short of the mark.”

“Corrupt regimes are unstable and dangerous, and supporting them is rarely the right choice for building stability either nationally or regionally. From Syria to Ukraine, corruption has fuelled conflicts, undermining the long-term future of those states and contributing to the loss of many lives.”

 

TI Defence & Security

On Thursday, Transparency International Senior Advisor Sir Ian Andrews, and Defence and Security Director Katherine Dixon facilitated a day of high level discussions with the leadership of the Nigerian Air Force. The aim was to identify the corruption risks which face the Nigerian armed forces, discuss the initiatives already taken, and to begin to develop mechanisms to address them.

Sessions included a full discussion of the challenges facing the Air Force including issues surrounding defence budget processes, personnel integrity, and procurement systems. TI facilitators presented lessons from international best practice, including the vital role of political leadership, a commitment to transparency, and external independent oversight mechanisms which had been crucial factors underpinning successful defence transformations in other context, such as Colombia.

The entire leadership of the Air Force was present or represented, including the Chief of Air Staff, Air Officers Commanding and Branch Chiefs.

Katherine Dixon, Director Transparency International Defence and Security, said:

“We welcome the positive participation of the Air Force. The purpose of the event was to create a forum for the leadership to discuss openly the corruption risks as they see them. The Nigerian Air Force outlined the steps they had taken to address these challenges and we strongly encouraged them to end the presumption towards secrecy and open these measures up to public scrutiny.”

Transparency International has outlined a number of recommendations for systemic reform of the Nigerian Defence sector including the development of unified anti-corruption strategy, extending public access defence and security information, and strengthening external oversight particularly over confidential procurements.

Contact:

Gavin Raymond
graymond@transparency.org
0044 7738 621 115

TI Defence & Security

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Fri 4 Aug 17 // Uncategorised

4th August 2017. The Ukrainian MoD’s Medical Department invited NGOs and volunteer organizations to help develop new technical requirements for individual first-aid kits used at the frontline of military operations. Experts from the Independent Anti-Corruption Committee on Defense (NAKO), a joint initiative of TI Ukraine and TI Defence & Security, took part in their development, providing input on how to reduce corruption risk. The MOD granted final approval for the technical requirements last week, and Ukrainian servicemen should receive their new first-aid kits this autumn.

The need to develop new technical requirements arose as military and volunteers repeatedly complained about the poor quality of individual first-aid kits (IFAKs) used at the front. Previous IFAK components had been approved in February 2015. However, the list of components for the first-aid kit was less comprehensive, and the standards lower, than those used in NATO countries. In addition, the IFAK technical requirements were often developed by the IFAK manufacturers themselves, meaning that they could shape the MOD’s procurement requirements to suit what they could provide. The new specifications allow the MoD to require manufacturers to ensure each component of the kit is of the highest standard of quality.

The MoD began work on creating new technical requirements for IFAKs in September 2016. Initially, the key stakeholders in the process were representatives of the Ministry of Defense and Ukrainian manufacturing companies, but this approach created significant corruption risks.

But in April 2017, the MOD changed its approach, creating a separate working group in order to minimise the influence of pharmaceutical companies and to avoid corruption risks. This new working group created by the Ministry of Defence included leading medical experts, NGO representatives and volunteer organisations, as well as NAKO experts. This group of experts have worked together alongside the MOD to improve the technical requirements of the first-aid kits to match the NATO standards.

We insisted on minimising corruption risks. Previously, there was a risk that the specifications would match the preferences of a particular manufacturer, rather than respond to real frontline needs,” said Taras Yemchura, a NAKO researcher. “This could also lead to discrimination against particular participants in the procurement process. For example, we pushed for the abolition of unlawful requirements for special markings on the product packaging, which does not actually affect the quality of the goods, but significantly reduces the range of potential suppliers.”

In the future, NAKO intends to continue monitoring the process of IFAK purchasing, scrutinising the formation of lots, bidding, contracting, and quality control.

The committee is convinced that the active participation of independent experts and high-quality public monitoring of each procurement stage will help counteract corruption risks in the procurement of first-aid kits, decrease the risk of poor-quality goods being supplied, and will help save the lives of soldiers who fight in the Donbass.

**ENDS**

Media contact:

Sevgil Musaeva

+38-050-217-1817

sevamusaeva@gmail.com

The Independent Defense AntiCorruption Committee (NAKO) is a joint initiative established by Ukrainian public activists, journalists and international experts to fight corruption in Ukraine’s security and defense sector. NAKO is a joint international project of Transparency International Defense & Security and Transparency International Ukraine, supported by the Ministry of Foreign Affairs of the Netherlands.

TI Defence & Security

May 24 2017 | Kyiv

International security assistance to Ukraine is not always used effectively, according to new research on corruption risks in security assistance by the Independent Defence Anti-Corruption Committee. The report identifies improvements in how assistance is monitored, but calls for improved regulation and oversight of security assistance, and greater transparency of key strategic planning documents like the State Defense Order and defence budget. The report also called on donor countries to use international aid as a leverage  to push for systemic anti-corruption reform in the Ukrainian defense sector.

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TI Defence & Security

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