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Including...
Interview : Steve Shaw
Asia Pacific: Arms Acquisition Office Launched (South Korea)
Europe: French Judges search Thales Headquarters (France)
Americas: Pentagon’s ‘black’ budget ripe for corruption (USA)
Middle East: Sharon hit by another corruption scandal (Israel)
Africa: Government to cancel contract with Denel for procurement of rifles (South Africa)
Transparency International UK's
Defence Anti-Corruption Digest
Edition 1 / Jan 06
Defence Against Corruption
Chairman's introduction - Laurence Cockcroft
It gives me great pleasure to introduce this first edition of the Defence Anti-Corruption Digest, having been involved in Transparency International UK’s initiative in preventing corruption in the official arms trade since 2000. Transparency International’s broad purpose is to address corruption in its many forms throughout the world, and particularly because of its negative impact on many low-income countries. Although the defence industry is often regarded as significant source of this corruption, evidence (suggestive or otherwise) justifying this proposition can be difficult to come by. There is a clear need for an objective record of both alleged and proven cases of corruption in the sector with a view to shedding light on the issue and facilitating discussion of approaches to eliminating the problem. This facilitation process is central to Transparency International’s work in this area.
The current phase of Transparency International UK’s preventing corruption in the official arms trade project began two years ago, with funding from the UK government’s Department for International Development and the Swedish government’s Ministry for Foreign Affairs. The team has spent this time working with industry to harness its appetite for change to create a consortium of international defence companies against corruption and with governments to apply no-bribery pledges with independent monitors on specific procurements. The large number of governments and companies who support a common improvement agenda is greatly encouraging.
Our experience to date confirms that both amongst purchasing governments and leading industry executives there is a concern and willingness to address the problem. However there is also some uncertainty and disagreement about how this can be done. Defence Anti-Corruption Digest will seek to throw light both on the nature of the problem, and on approaches to addressing it.
We hope that you find this useful. Please feel free to contribute both news and comments. We welcome your participation.
In the News
Below is a selection of news headlines from around the world from the past month. Please see our disclaimer immediately below the news section.
Asia & Pacific
Arms Acquisition Office Launched (South Korea) Source and copyright: Korea Times 4 January 2006 This is a reduced version of the original article A “unified and open” procurement process will ensure greater transparency and efficiency in the country’s weapons purchases in the future, the head of the Defense Acquisition Program Administration said Wednesday. In a speech at the opening ceremony of the agency at its headquarters in Yongsan, Seoul, Retired Army Maj. Gen. Kim Jung-il, director of the agency, stressed that his agency’s strengthened watchdog system will help prevent irregularities in arms dealings, which has been labeled a “hotbed of corruption.” The government plans to provide $8 billion per year to the agency, some 10 percent of the budget. To help eliminate irregularities, the agency has put various watchdog systems in place. It has adopted a “civilian ombudsman system,” under which up to five civilian experts participate in the agency’s decision-making process for audit and inspection. The civilian experts are supposed to be entrusted by the head of the agency at the recommendation of civic groups. A real-name system for procurement businesses will be introduced as part of measures to prevent individual corruption and to call workers concerned to account. Officials of the agency and contractors are obliged to submit written oaths pledging transparent business contracts and vowing to accept any punishment in accordance with the regulations. Questions over Navy's shady weapons deal (Sri Lanka) Source and copyright: Siber News Media 9 January 2006 This is a reduced version of the original article The Sri Lanka Navy is to negotiate and spend an estimated US$ 12.3 million to purchase 15 units of cannons from Israel when America has offered the same cannon of also 15 numbers at US$ 7 million less than the Israeli price.
Yet, Navy Commander Daya Sandagiri is determined to make the purchase from Israel, insisting the navy has traditionally purchased its weapons from Israel and that the Israelis are thus that much quicker in providing the weapons. Also that the Israeli weapon will conform to existing mounts on naval boats.
The cannon in question, the Bushmaster 30mm single barrel cannon was recommended for the navy's Fast Attack Crafts (FACs) by a specially appointed needs assessment team from the United States last year. A convoluted sequence of events has finally resulted in the navy's requirement for 30 units of this weapon being divided between Israel and America.
The Israelis have offered the navy 15 units of the single barrel cannon, which is known as the MK 44 Bushmaster cannon system for a total price of US$ 12.3 million, which includes US$ 33,000 for installation. The American firm ATK Ordnance and Ground Systems which manufactures the Bushmaster cannon system has offered the navy the same unit for a total of only US$ 4.4 million. The difference in price is US$ 7 million.
Indonesian military admits to accepting cash from U.S. mining company Source and copyright: Associated Press Worldstream 29 December 2005 This is a reduced version of the original article Indonesian generals acknowledged for the first time Thursday that U.S. gold-mining giant Freeport-McMoRan Co. has been providing direct "support" to military units in West Papua, who have been accused of committing human rights abuses for decades in the province. "We have heard that Freeport provides support such as vehicles, fuel and meals directly to the units in the field," military spokesman Maj. Gen. Kohirin Suganda said. "That's the company's policy. It was not done because we requested it."
Suganda was responding to a two-part article in The New York Times that detailed New Orleans-based Freeport-McMoRan's payments of US$20 million to military commanders in the area in the last seven years. A company spokesman dismissed the allegations as "old news."
Critics of the military, which together with former dictator Suharto wielded absolute control over Indonesia for 32 years until his ouster in 1998, have frequently appealed to foreign mining and energy companies to cease any direct payments to the military, saying they were detrimental to attempts by the democratically elected government to finally bring the politically powerful generals under civilian command.
Since the government contributes only 30 percent of the military operating budget, the services regularly resort to "protection payments" and other illegal methods to make up the shortfall. This allows the military brass to operate largely independently of government supervision.
Integrity pact for defense procurements (Indonesia) Source and copyright: The Jakarta Post 12 December 2005. This is a reduced version of the original article An Indonesian Ministry of Defense decree has regulated an integrity pact, defined as a "letter of statement signed by the user of goods/services, procurement committee and interdepartmental team and provider of goods/services declaring resolution to prevent and not to commit collusion, corruption and nepotism in the procurement of military goods/services". The integrity pact is the rationalization of the anticorruption movement in Indonesia. Its objectives are, among others, to prevent officials, commission members and secretariat employees from receiving bribes, to assist in increasing public trust in the procurement of services and goods, and to ensure the quality implementation of programs with appropriate logistical support in aspects of quality, timing and cost.
At least three parties must sign an integrity pact for the utilization of defense export credit facilities. The first is the user of the goods/services, in this case the Ministry of Defense. The second is the supplier of the goods/services, who may have be the manufacturer of the military goods/services, the foreign distributor, the regional vendor officially appointed by the manufacturer or those capable of providing military goods/services. The third is the procurement committee and the inter-ministerial team, which is directly chaired by the minister of defense. It is responsible for all processes in the acquisition of armaments using export credit facilities. This shows the minister of defense has succeeded in creating a mechanism integrating procurement processes in the Ministry of Defense and TNI Headquarters.
The antibribery instruments could also be strengthened by requiring the government to provide transparency of procurement of armaments systems. This transparency could be achieved in two ways. First, the Ministry of Defense could create an e-procurement system allowing providers of goods/services to easily find out how procurement programs are planned by the ministry based on Defense Strategic Plans. Second, the ministry should be required to publish reports of international arms transfers from and to Indonesia. An international arms transfer report -- an important part of the international regime -- is an important step in improving supervision of defense procurement system.
Palace: New corruption exposé in military won’t spark coup (Philippines) Source and copyright: INQ7 Interactive, 4 January 2006 See original article here MALACAÑANG is confident that the recent disclosure of an air force colonel about continued corruption within the military will not spark a new unrest in the Armed Forces of the Philippines (AFP). "We have undiminished faith in the professional loyalty of the AFP [Armed Forces of the Philippines] and the full capacity of the command to deal with these controversies," Press Secretary Ignacio Bunye said on Wednesday. Bunye issued the statement after Colonel Efren Daquil revealed on Tuesday that generals and wing commanders in the Philippine Air Force (PAF) were each "illegally" receiving monthly allowances of 45,000 pesos on top of their salaries. Daquil also confirmed grumbling in the military, saying he had been approached thrice by so-called "rebels" within the ranks who invited him to join a coup that was supposed to have taken place in September. He said he told his peers however that while he had grievances, he still wanted a peaceful venue to air his complaints.
Bunye said coup rumors should now be set aside, adding, "The discipline and morale of the soldiery are firm and high and the chain of command, solid." Bunye said the President expected Air Force officials to look into the allegations of Daquil, and at the same time study the sanctions that could be imposed on him under the military code of conduct.
Daquil said he had direct knowledge that Air Force generals were being given 45,000 pesos a month on top of their salaries and other allowances. He said he would like to find out if this allowance, called the Direct Support Fund, was authorized by the military. Air Force spokesman Lieutenant Colonel Restituto Padilla said Daquil would be restricted to quarters, investigated and possibly charged with violating two provisions in the Articles of War, including conduct unbecoming an officer.
Delays and anti-corruption red tape dog Indian procurement (India) Source and copyright: Janes Defence Weekly 21 December 2005 See Jane’s website India’s parliamentary watchdog committee on defence has urged the government to reduce delays for purchasing new weapon systems and not to depend on a sole vendor except in “exceptional circumstances” or “exclusive” buys. In its report, submitted to Parliament on 12 December, the committee told the military to speed up pre-purchase field trials of equipment and also asked the Ministry of Defence (MoD) to establish a panel to monitor every defence purchase. The panel would reduce corruption and bring about greater transparency. The Central Bureau of Investigation (CBI) is presently enquiring into 47 cases involving arms purchases, Defence minister Pranab Mukherjee told Parliament recently. MoD sources said the continuing CBI inquiries are “inordinately” delaying procurement as the officials involved remain loath to finalise several pending agreements, fearing later investigation. “Political one-upmanship and bureaucratic wrangling are impeding the entire capital acquisition process. These delays not only impact negatively on operational efficiency, but eventually end up costing the country much more”, said Brigadier Arun Sahgal, head of research at the United Service Institution in New Delhi. The parliamentary committee has demanded that the recently promulgated “integrity pact” for all weapon imports worth over INR3 billion (USD66 million) be extended to include acquisitions of INR1 billion. Rahul Bedi, New Delhi
Europe
New Commission initiatives on more open and efficient defence procurement (Europe)
Source and copyright: European Commission 7 December 2005 This is a reduced version of the original article
The European Commission has outlined its proposals for future initiatives to improve cross-border competition in defence procurement. In 2006, the Commission will adopt an 'Interpretative Communication' clarifying when Member States can derogate from EU law requiring competitive procurement with regard to supplies, works and services intended for specifically military purposes and crucial to essential security interests. In parallel, preliminary work will begin towards a possible Directive that would coordinate procedures for defence procurement in cases where the derogation under Article 296 EC is not applicable or a Member State chooses not to take advantage of it. These initiatives are based on the results of the consultation launched in September 2004 by the Green Paper on how to open defence public procurement to greater transparency and efficiency, compatible with the specific features of this sector.
French Judges search Thales Headquarters (France)
Source and copyright: Yahoo! Asia 22 December Copyright Yahoo! Asia See original article here.
French judges searched the headquarters of Thales SA as part of a probe into charges of corruption at the French defense electronics firm, accused by a former employee of paying out millions of dollars in bribes, judicial officials said on Wednesday. They also searched the headquarters of the French government's arms procurement agency, the DGA, which is a client of Thales, said the officials who asked not to be named because the investigation is ongoing.
Investigators requisitioned numerous documents and computer equipment, they said. French prosecutors earlier this month launched two formal investigations into Thales over several suspect deals in France and abroad following a preliminary inquiry into allegations of wrongdoing by fired executive Michel Josserand. Judge Renaud Van Ruymbeke on Tuesday spent more than 10 hours at the Thales headquarters in Neuilly-sur-Seine, the sources said. Thales confirmed the search took place but reiterated its denial of any wrongdoing. It has filed its own lawsuit against Josserand and against Le Monde, the daily newspaper that first published his allegations in September. "Thales ... has categorically denied the accusations of corruption," spokesman Christophe Robin said, adding, "We have always cooperated and we continue to cooperate with the justice system." Judge Xaviere Simeoni visited the home of businessman Gerard Bertinetti, who according to Josserand played a role in a contract between Thales and the DGA for the destruction of aging chemical weapons stocks. That contract is the focus of the first of two probes. It cites possible charges including corruption, embezzlement and receiving stolen funds. The second investigation relates to Thales deals or bids involving a Cambodian education project; work on the subway system in Cairo, Egypt; the Moroccan Atomic Energy Commission and a Casablanca hospital; bids to equip speed boats for the Greek navy and supply security equipment for last year's Athens Olympics; and an unspecified deal with the city of Douala, Cameroon. Prosecutors are weighing possible charges of embezzlement, receiving stolen funds and corrupting foreign officials in relation to the foreign deals. Josserand, a former CEO of Thales Engineering and Consulting, or THEC, himself faces prosecution after irregularities surfaced in the division's bid to build part of a tram system in the southern French city of Nice. Further Thales articles: Police raid Thales in corruption probe AFP21 December 2005 Mbeki Arms Deal Answer Unsatisfactory: DA Sapa 19 December 2005 There Seems to be no end to Thales’s Woes Business Report 15 December 2005 SFO quizzes former BAE chairman (UK) Source and copyright: The Daily Telegraph 23 December 2005 This is a reduced version of the original article Sir Richard Evans, the former chairman of British defence giant BAE Systems, has been interviewed by the Serious Fraud Office (SFO) about its long-running investigation into allegations of fraud linked to Saudi Arabian defence contracts. Sir Richard, who stood down last year after 40 years at BAE, including 14 years as chief executive and chairman, was interviewed by SFO officials. He was not charged. The former chairman is still paid by BAE to work as a consultant. He is by far the most senior BAE executive to be interviewed by the SFO in its inquiry, so far reckoned to have cost £1m, into a £60m "slush fund" which allegedly entertained Saudi Arabian military officials. Separately, it emerged yesterday that Damian Turner, BAE's managing director for the Middle East, was arrested in Manchester two months ago and taken to a local police station for questioning. After returning the next day for more questioning, he was released without charge. A BAE spokesman said: "The company and its employees have at all times co-operated with the Serious Fraud Office and the investigation, and will continue to do so. The company must refer you to the Serious Fraud Office for any further comment." The SFO declined to comment on whether Sir Richard had been questioned or Mr Turner arrested. However, a spokesman said: "I can confirm that a 54-year-old man was arrested on October 27 in the Manchester area on suspicion of corruption. He was interviewed and returned the following day to the police station to continue the interview. On October 28, he was released without charge." Yesterday BAE Systems' shares rose 15 at 385p as investors digested Saudi Arabia's decision to buy up to 72 Eurofighter Typhoons from the UK. The £70 billion deal is worth £10 billion to BAE. However, anti-arms campaigners said the deal could breach the UK's own weapons trade rules. The Campaign Against Arms Trade said the deal should be vetoed because rules restrict arms deals with countries that disrespect human rights, or engage in excessive military spending. However, an MoD spokesman said: "We accept that Saudi Arabia has legitimate defence needs. The Government does not allow arms to be exported indiscriminately.'
Church Calls for Transparency in Arms Exports (Europe) Source and copyright Deutsche Welle German radio, December 13, 2005. This is a reduced version of the original article In the Joint Conference Church and Development's annual report on arms exports, the GKKE criticized both Germany's continued sales of weapons to developing countries and trouble spots -- and its lack of transparency. In 1998, the Foreign Ministers of the 15 European Union Member States adopted an EU Code of Conduct on arms exports, aimed to set common standards for the management of and restraint in arms exports from the EU, which is a politically binding agreement under which Member States agree to abide by certain criteria when granting arms export licenses. "At a European level we have attained a satisfactory level of transparency, which the German government falls far short of," said Bernhard Moltmann from the Hesse Foundation for Peace and Conflict Research, pointing out that decisions relating to arms exports are taken behind closed doors by the German security council. "Parliament needs to play a more active role when it comes to export licenses," he said. And protestant church representative Stephan Reimers added that the fact that a report on arms export in 2004 has yet to be published by the government "is in clear contempt of both the parliament and the public."
Americas
Pentagon’s ‘black’ budget ripe for corruption (USA) Source and copyright San Diego Tribune 2 December 2005 This is a reduced version of the original article Could a defense company stuff a Pentagon contract with enough overhead to hide bribes to a congressman? Easy enough, say veteran Washington insiders. The Pentagon has tens of thousands of contracts to monitor and a shrinking force of auditors, making oversight difficult. What's more, the super-secret part of the defense budget – the classified, or "black" budget – hides some $28 billion in spending. Government auditors and even senators have to get special clearance to see the details. That is how Rep. Randy "Duke" Cunningham gained at least $2.4 million in favors from companies that held contracts with the Defense Department. The companies were not identified by name in the plea agreement reached with the Rancho Santa Fe Republican and filed Monday in U.S. District Court in San Diego. Cunningham, decorated for service as a Navy pilot during the Vietnam War, sat on the defense subcommittee of the House Appropriations Committee, where he shaped billions of dollars in defense spending. He resigned his seat Monday after acknowledging, "I broke the law, concealed my conduct and disgraced my office." It wasn't defense auditors who caught Cunningham; it was investigators looking into his ownership of a luxury home, a yacht and other perks. According to the plea agreement, Cunningham received the bribes in return for steering congressional appropriations "to the benefit" of the defense contractors in ways that were not "in the best interests of the country."
Further Cunningham articles:
Corrupt Intentions Slate 2 December 2005
Judge probing death of army colonel questions former Chilean dictator Source and copyright Associated Press, December 6, 2005. This is a reduced version of the original article Former dictator Gen. Augusto Pinochet was questioned Tuesday by a federal judge investigating the killing of an army colonel linked to an illegal arms sale. Pinochet, 90, was indicted and placed under house arrest Nov. 24 in the Operation Colombo case, which involves the slayings of 119 dissidents whose bodies were found in neighboring Argentina in 1975. At the time the bodies were discovered, Pinochet's regime said they had died in clashes among rival armed opposition groups. The former dictator also faces charges of tax evasion and corruption stemming from secret multimillion-dollar overseas bank accounts. Pavez is investigating the death of Col. Gerardo Hube, who was involved in a 1992 arms sale to Croatia, according to the official investigation. Hube, who worked for the army's arms factory, disappeared in early 1992; his body was found in a river near Santiago a month later. Pavez determined that he was killed, and has questioned many army officers in the case. Nobody has been charged.
Middle East
Sharon hit by another corruption scandal (Israel) Source and copyright: Middle East online 4 January 2006 This is a reduced version of the original article Police to examine laptop data which they believe will show Israeli PM’s received three million dollar bribe. Jerusalem - Israeli police are to access computer data which they believe will show Prime Minister Ariel Sharon's family received an alleged three million dollar bribe, public radio reported Wednesday. Police officials confirmed late Tuesday that several laptop computers and mobile phones belonging to the family of Austrian financier Martin Schlaff had been seized during a raid in December. Investigators believe the data contains fresh evidence which will enable them to move forward with a long-running investigation into a corruption scandal surrounding the Sharon family that concerns illegal campaign contributions during the 1999 elections. Until now, police have been unable to examine the equipment following a legal appeal by Schlaff's brother, James, that saw a court order temporarily prevent them from accessing the data, police said. However, Schlaff has since gone back on his complaint, meaning police will have access to the data "within the coming days", public radio said. Police believe some of the money was used by the Sharon family to pay back campaign contributions which were subsequently deemed illegal. The story emerged late Tuesday after Israel's private Channel 10 television obtained a police document outlining their suspicions that was submitted earlier this week to a magistrates court near Tel Aviv. Lior Horev, Sharon's strategic adviser, dismissed the report out of hand, suggesting it was an attempt to muckrake by elements with a political agenda.
Africa
Government to cancel contract with Denel for procurement of rifles (South Africa) ![[]](file:///C:/DOCUME%7E1/Jan/LOCALS%7E1/Temp/msohtml1/01/clip_image001.jpg) SQ-Denel, New Delhi, 15 December 2005. Copyright PTI See original article here (The Indian) Government has decided to cancel the contract signed with South African company Denel for procurement of 400 Anti-Missile Rifles and initiate action to cancel all other contracts, the Lok Sabha was informed today. The decision was based on information received from the South African government which revealed that the company had prima facie violated the clauses on Agents/Agency Commission contained in the contracts on Anti-Material Rifles signed in March 2002, Defence Minister Pranab Mukherjee said in a written reply. The contract for purchase of the rifles was signed on March three, this year. Taking cognizance of the media reports, the matter had been promptly referred to the CBI for investigation, he said. The CBI has since filed an FIR in the matter against, inter alia, unknown public servants, the minister said.
Further Denel / India articles:
South Africa for early resolution of Denel controversy, Outlook India, 14 December 2005
Disclaimer
Transparency International UK takes no position on the views presented by reporters, commentators, organisations and companies in the materials listed in this email or linked to in our website. As with any such resource, our purpose is to provide access to a wide selection of materials representing diverse viewpoints on a matter of obvious public interest. We do not exercise any editorial control over the materials and cannot guarantee their accuracy. The Digest is a free publication of Transparency International UK.
Interview
Steven A Shaw*
U.S. Department of the Air Force
Deputy General Counsel for Contractor Responsibility
Air Force Debarment and Suspending Official
* Mr. Shaw agreed to be interviewed with the understanding that the views he expresses here are his own, and not necessarily those of the U.S. Department of the Air Force, or the Department of Defense.
Steve Shaw was appointed U.S. Air Force Deputy General Counsel for Contractor Responsibility in 1996. His mission is to ensure that the U.S. Air Force deals only with honest and responsible contractors. Shaw notes “contractors who are less than honest and competent compromise flight safety, erode public confidence in the procurement process and cause losses to the taxpayer. The U.S. Air Force takes the issue of contractor responsibility very seriously.”
His two main areas of responsibility are as U.S. Air Force Suspension and Debarment Official (SDO) and manager of its Coordination of Fraud Remedies Program. As SDO, Shaw uses both a ‘carrot and stick’. The stick is his power to suspend and debar contractors who do not operate in good faith. “When there is no way to rehabilitate these firms we take them out of the pool of contractors with which the Air Force does business. This has a tremendous deterrent effect. The carrot element involves working with contractors who are trying to operate in good faith but need help in resolving problems they run into. ”
The suspension and debarment process is set out in the government-wide Federal Acquisition Regulation. “If the evidence establishes that the contractor committed one of the types of misconduct set out in the regulation, and if I determine that there is sufficient evidence showing that the contractor committed the misconduct then the contractor is notified that they are being considered for possible suspension or debarment from government contracting. This information is immediately posted on a publicly accessible internet site. Every government contracting officer in the United States is required to check this website to confirm that the contractor is not listed before issuing an award. The effect of initiating the debarment or suspension process is to immediately make contractors ineligible for new contracts throughout the federal government.”
How can contractors mitigate sanctions? In the case of a contractor who does not dispute the facts Shaw first examines whether the company took any steps to prevent the misconduct. Shaw notes “firms should do everything they can beforehand to prevent misconduct from happening, as well as being completely candid after the misconduct is discovered.” For example, according to Shaw, in order to demonstrate a commitment to conducting business ethically a company can establish an ethics programme, and top management can communicate their commitment to employees. Shaw’s second step is to consider what the company has done since discovering the misconduct. In particular, Shaw considers “whether they admit to the act, recognise there is a problem, accept responsibility for their actions, create or improve their ethics programme, discipline the employee who committed the wrong-doing, and change their systems and business practices.” These factors largely determine whether or not they will avoid the severe sanction of suspension or debarment.
“An international organisation of defence contractors would be most useful and significant”
Most cases of suspension or debarment in the last ten years have involved smaller defence firms. However, in 2003, Shaw suspended three Boeing divisions for 22 months (seven contractual awards worth $1 billion were terminated and Boeing was unable to compete for other awards). He received “full support from [Defense Department] leadership.” The debarment of large and strategically important companies has never been an empty threat during Shaw’s tenure. He notes that “you don’t have to debar or suspend the whole company. Indeed, the larger the company, the more narrow your focus can and should be.”
However, if the misconduct is widespread throughout the company, “the entire entity may be debarred as necessary”. But this doesn’t mean that the government is completely prohibited from doing business with the company: “if what the company is making is necessary for national security, there is a provision in the law in the U.S. which allows for continuing to do business with that firm. If the head of a U.S. government agency determines there is a compelling need to deal with a debarred company, the agency may continue to deal with them. Although some people criticise this, I think this provision is terrific – it enables me to do what is right.” Shaw’s interest in the behaviour of non-U.S. companies outside the U.S. is growing. He notes that “more non-U.S. companies are involved in Department of Defense (DoD) contracting than in the past.” Firms seeking access to the U.S. market “must recognise where the bar is set in terms of ethical conduct and practices, and must comply with these standards”. Areas of concern include sole-source contracting, which is “intuitively more vulnerable to corruption,” as well as offsets, which Shaw senses “could create problems.” Shaw notes a statute that was recently passed that requires the DoD to report to Congress on sole-source contracting for reconstruction in Iraq, implying “some concern or belief by Congress that single-source contracting may be more vulnerable to if not corruption, at least to waste or fraud.” Regarding offsets, he states “when transparency is compromised… this adds to the risk of corruption.” Shaw notes “we are engaged in a dialogue with one large contractor relating to their handling of offsets”.
On the proposed creation of a Consortium of International Defence Companies against Corruption, Shaw states that “having seen in the U.S. how effective the Defence Industry Initiative has been, and in light of the increased consolidation and globalisation of the defence industry, as well as the increased importance of non-U.S. defence contractors to the U.S. DoD, it is intuitive to me that an international organisation of defence contractors would be most useful and significant, in particular for sharing best practises and agreeing on certain standards of conduct. I am very supportive of that and of the leading role being taken by Transparency International UK in this initiative.”
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