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Do defence companies do enough to prevent corruption?


By Tiffany Clarke on 3 October 2012 in Business, Conflict, Defence and Security

On 4 October 2012, for the first time the public, governments, and industry will be able to assess what defence companies do—and fail to do—to prevent corruption.

At a time when governments and citizens are increasingly scrutinizing public expenditure, it is strongly in defence companies’ interest to prevent corruption, but what systems do they have in place? Our upcoming Defence Companies Anti-Corruption Index answers this question by examining 129 of the largest defence companies across 31 countries. Combined these companies are worth $10 trillion and have defence revenues of over $500 billion.

The cost of defence corruption

Corruption in the defence and security sectors comes at a high price. Secretive arms deals, rigged procurement, and the long, often unaccountable, chain of subcontractors, means that corruption often goes undiscovered and unreported. It is only when scandals are uncovered that the true cost becomes evident.

We estimate defence corruption to cost at least USD 20 billion per year. To put this into context, that is the total sum pledged by the G8 to fight world hunger in L’Aquila in 2009. In our effort to supply both governments and companies with good practice examples to help mitigate the risk of corruption, Transparency International Defence and Security Programme (TI-DSP) is working on two indices: one focusing on defence companies and the other on Ministries of Defence. Bribery, after all, has both a supply side and a demand side.

The information used to assess these companies is largely drawn from the public domain. However, as the primary purpose of this index was to understand and assess the actual processes that companies have in place and help raise standards across the industry, TI-DSP invited companies to provide internal and confidential information on the systems they adopt to tackle corruption. 34 companied did and the information they provide gives a valuable insight into how companies from different countries approach the subject.

When and who can use this report?

On October 4th, we launch our report, which provides a summary of our findings and highlights the results for the 129 companies. On our website, you can find interactive analysis on the results, such as how they differ by region or ownership structure. We also provide a detailed good practice document that highlights some examples of what we believe constitutes good practice on anti-corruption systems so as other companies can use this to put substantive improvement plans in place.

The index should be of use to company CEOs: it will allow them to compare the strength of their anti-corruption programmes with those of their peers.

Ministries of defence can also benefit from the study as it pinpoints how and where defence contractors may be able to improve individually and in driving industry-wide improvement.

Civil society too can use the results to campaign for change and insist that companies adopt robust anti-corruption programmes.

Finally, the results should also be of interest to citizens as it provides a glimpse into the practices of what is often considered one of the most secretive industries.

The results will be available at at 00.01 on 4 October

This article first appeared on the TrustLaw blog

About Tiffany Clarke

Tiffany works with the global defence industry to raise standards, promote integrity and reduce corruption risk in arms sales. She is responsible for TI's campaign to reduce corruption in defence offsets programmes. She also leads on the development of the TI's Companies 'Defence Integrity Index'