| Defence Anti-Corruption Digest Edition 17, June 2007 |
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Including... Asia Pacific: Swiss returns funds to Taiwan in frigate scandal Europe: Czech Defence Ministry prepares anti-corruption programme Americas: U.S. Launches Corruption Probe into Britain’s BAE Middle East: Military leader worries about corruption Africa: South Africa joins bribery crackdown 
Transparency International UK's Defence Anti-Corruption Digest
Edition 17 / Jun 07
Defence Against Corruption
This e-mail address is being protected from spambots. You need JavaScript enabled to view it Interview - Frank Boland, NATO 
Below is a selection of news headlines from around the world from the past month. Please see our disclaimer immediately below the news section. Indo-Russian defence deals yet to be sorted out
Copyright Financial Express ( 20 June 2007
Indian defence procurement laws require an integrity pact (no-bribery pledge) to accompany deals exceeding Rs100-crore – a requirement the Russian government has been thus far unwilling to fulfill citing ‘collisions’ with its domestic laws.
India to ensure transparency in defence deals
Copyright The Times of 25 June 2007
Responding to concerns over BAE Systems’ dealings with
Swiss returns funds to Taiwan in frigate scandal Copyright Swiss Information Service 13 June 2007
Related articles: Taiwan Wants $520M in Frozen Frigate Corruption Funds Returned Copyright Defense Industry Daily 18 June 2007 SFO probe into BAE could be reopened Copyright FT 27 June 2007
If national security concerns surrounding the Serious Fraud Office’s (SFO) investigation of BAE’s al-Yamamah arms deal with
Related article BAE contract on hold until Saudis forge closer ties with Brown Copyright The Times 24 June 2007
BAE to cut advisors on foreign deals Copyright FT 19 June 2007
BAE Systems’ chief executive Mike Turner plans to reduce the number of agents employed by the company by more than half, a gesture intended to shore up BAE Systems’ reputation as various investigations into its dealings continue.
Related article BAE stops selling to a fifth of the world Copyright The Times 21 June 2007
BAE hires Lord Woolf for one-off ethics check Copyright The Times 15 June 2007
BAE Systems has hired former Lord Chief Justice Woolf to review its anti-corruption policies. His panel’s review will be constrained to current policies and compliance with anti-corruption laws.
Related article: Mission Impossible for legal top gun? Copyright The Independent 12 June 2007
Copyright FT 17 June 2007
The
Related article: Arms industry fears export cash cuts Copyright FT 25 June 2007
Hungary To Probe Gripen Fighter Contracts From BAE-Saab Copyright Agence France-Presse 18 June 2007
Czech Defence Ministry prepares anti-corruption programme Copyright Prague Daily Monitor 13 June 2007
The Czech Ministry of Defence is completing a draft revision of its anti-corruption programme in line with recommendations from Transparency International.
Austria, Eurofighter agree to cut in jet purchase Copyright Reuters 26 June 2007-06-29
Austria has re-negotiated a deal with EADS to purchase 15 Eurofighter jets – three less than were purchased by the government in 2002 in a deal revealed by a parliamentary investigation to have involved suspicious payments. U.S. Launches Corruption Probe into Britain’s BAE Copyright Reuters 26 June 2007
The U.S. Department of Justice launched an investigation into BAE Systems’ compliance with anti-bribery laws, including its dealings with
Related articles: U.S. investigating BAE payoff allegations Copyright Los Angeles Times 15 June 2007 Taking on foreign bribe suspects Copyright The Guardian 27 June 2007 US Corruption Probe Hits BAE Shares Copyright The Independent 27 June 2007 US probe, senator's concern put BAE under spotlight Copyright AFP 27 June 2007
Former Officer Sentenced for Kickbacks
25 June 2007
A former U.S. Army Reserve Officer received a two year sentence for corrupting the bidding process for
Copyright Washington Post 28 June 2007
A report issued by the U.S. House Committee on Oversight and Government Reform found that about half of the money spent on all federal contracts was awarded with ‘little or no competition’. Military spending in
Audit of KBR Iraq Contract Faults Records For Fuel, Food Copyright Washington Post 25 June 2007
The
Argentina rejects Indian extradition of Bofors suspect Copyright Agence France-Presse 8 June 2007
An Argentine court rejected
German-Canadian arms dealer loses bid to halt extradition Copyright Agence France-Presse 11 June 2007
A Canadian federal judge rejected the appeal of Karlheinz Schreiber to avoid extradition to
Military spending hits Shs3.7 trillion
Copyright Daily Monitor ( 27 June 2007
Copyright BBC 12 June 2007
Trial 'blow' for South Africa's Zuma Copyright BBC 5 June 2007 A judge has authorised prosecutors in the corruption trial of ANC presidential candidate Zuma to use documents held in Mauritius that allegedly document covert payments by French company Thint.
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.
Frank Boland From his vantage point in the coordination mechanisms of NATO, Mr. Boland connects transparency in the defence sector to wider issues of domestic governance and international cooperation. Defence sector corruption vulnerabilities
“Defence Ministries are complex organisations. They perform multiple tasks, through a variety of military systems, including in pensions, justice, health and procurement. They face additional complications of ministerial and military hierarchy. In the defence sector, there exist mechanisms that can be used to bypass the normal transparency criteria which are used in normal public contracts. All this doesn’t mean the sector is predisposed to corruption, but it can result in the removal of some of the restraints.”
One such complication in defence is the practice of seeking offsets. Offsets are investments made by the exporter in the importing country’s economy as part of an arms deal. Boland elaborates, “Offsets have become popular, because at first glance they appear to be a good deal for governments. If they are spending money on imports, then offsets allow governments to try to recoup foreign exchange – so one can see the attraction.” However, “it has been the case that many offsets simply do not materialise. The real problem is that offsets distort decision-making. Militaries may want equipment for particular needs; offsets allow for procurements to be overridden by extraneous considerations.”
“Offsets allow for procurements to be overridden by extraneous considerations” NATO and defence sector reform
“We wish to help countries develop more effective armed forces. NATO wants to work with partners who have military units that meet standards that allies already subscribe to. To this end, we encourage partners to participate in allied operations to promote stability in various parts of the world.”
“We provide assistance and targets that help to promote good governance in the defence sector. For instance at the Istanbul Summit of 2004, we launched PAP-DIBs (Partnership Action Plan Defence Institution Building), which focus on capacity building in defence sector. A PAP-DIB is an important process within the Partnership for Peace that sets out ten areas in which nations are encouraged to develop good practice in the defence area. The PAP-DIB document is available on the NATO website. Through PAP-DIBs and other means, NATO seeks to promote transparency in the defence sector. This isn’t because of some philosophical attachment to transparency – it’s simply because transparency produces the best results.” “Most defence information is available through sources like Jane’s anyway. It is much more preferable therefore to be open about the activities of the defence sector, as it builds public confidence, and counteracts suspicions that the defence sector is hiding something from the public.” “Although NATO’s focus is on the defence sector, we are conscious that one can’t look at the defence sector in isolation: improvements in the defence sector also ought to have positive knock-on effects elsewhere in the government.” In this way, defence ministries and reformist defence leaders can act as a beacon of good practice across government. An overview of our project within the defence sector can be accessed here .
Transparency International UK Defence Against Corruption project
defence [at] transparency.org.uk
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