Defence corruption

Saturday, 6 October 2012 00:00 - - {{hitsCtrl.values.hits}}

AS a country that has emerged from a three-decade war, corruption in defence companies around the world makes for some interesting reading. A study released on Thursday estimates that the global cost of corruption in defence is around US$ 20 billion.

Two-thirds of the world’s biggest defence companies do not provide enough public evidence about how they fight corruption, the study from Transparency International UK has revealed. This includes companies from all of the 10 largest arms exporting nations like USA, Russia, Germany, France, the UK and China — who between them are responsible for over 90 per cent of the arms sales around the world, the Defence Companies Anti-Corruption Index (CI) shows.

Defence corruption threatens everyone — taxpayers, soldiers, governments, and companies. With huge contracts and high secrecy in the defence sector, there are numerous opportunities to hide corruption away from public scrutiny. A company website is the best place for a company to tell the world exactly how it fights corruption, but few actually do.

The index provides an analysis of what the 129 biggest defence companies around the world do and fail to do to prevent corruption. The study, which grades companies from A to F, measures defence companies worth more than US$ 10 trillion, with a combined defence revenue of over US$ 500 billion. Transparency International estimates the global cost of corruption in the defence sector to be a minimum of US$ 20 billion per year, based on data from the World Bank and the Stockholm International Peace Research Institute (SIPRI). This equates to the total sum pledged by the G8 in L’Aquila in 2009 to fight world hunger.

The study also finds that 85% of defence company leaders do not publicly speak up enough on the importance of preventing corruption. Despite the importance of a consistently strong ‘tone from the top’, very few senior leaders actively engage both in public and within the company on corruption.

In order to ensure that corrupt opportunity does not lead to corrupt actions, Transparency International UK recommends that CEOs actively promote a values culture, through speaking out against corruption both within the company and publicly across the industry. It also calls on chief executives, government defence procurement chiefs, and investors to demand that better systems be put in place.

The study finds that only 10 per cent of companies have good disclosure of their anti-corruption systems. To get a clearer picture of the actual anti-corruption practices in the defence industry, TI-UK also invited companies to provide further internal evidence of their systems. One quarter of them did, and many demonstrated additional good practice methods of how to tackle corruption but the war is far from being won.

This provides many millions of reasons for Sri Lanka to keep its hard won peace. Even three years after the war the defence budget for 2013 will be a whopping Rs. 290 billion encompassing over nine per cent of the country’s Gross Domestic Product (GDP). While most of this is for urban development there is still a large chunk being paid to defence companies.

Future acquisitions by the Sri Lankan Government will only embroil itself more deeply in this morass and it can only be hoped that purchase of fighter jets and other paraphernalia will be kept to an absolute minimum.