The Defence Companies Anti-Corruption Index 2015

Transparency International UK showed that 33% of companies studied in their Defence Companies Anti-Corruption Index 2015 have improved their ethics and anti-corruption programmes since 2012, but the industry as a whole still has a long way to go.

The Defence Companies Anti-Corruption Index 2015 measures the transparency and quality of ethics and anti-corruption programmes of 163 defence companies from 47 countries. Each company is ranked from band A (highest) to F (lowest) using publicly available information. Forty-two companies improved by one or more bands since 2012. A further third also showed some improvement.

“Corruption in defence affects us all. It is not just about commissions on sales—corruption can also directly threaten the lives of citizens and soldiers,” said Mark Pyman, Director of the Transparency International UK Defence and Security Programme. “Companies that have improved are taking the lead in bringing transparency to this often-secretive sector.”

Companies from Brazil, Finland, France, Germany, Israel, Italy, Japan, the Netherlands, Norway, South Korea, South Africa, Spain, Turkey, the UK and the US improved by one band or more.

Nearly a quarter of companies show no evidence of anti-corruption programmes at all

Katie Fish, author of the report, said that “there’s still a long way to go. Two-thirds of the defence contractors in this study, which includes 36 more companies than the 2012 analysis, show little evidence of having ethics and anti-corruption programmes in place. This includes companies from most of the major arms producing countries”.

Based on public information,

Only eight companies have evidence of whistleblowing mechanisms that encourage reporting
Just 13 companies conduct regular due diligence on agents Only three companies have evidence that they have detailed procedures to avoid corruption in offset contracts (also known as counter-trade), a high-risk area.

Governments should require anti-corruption programmes from bidding companies

Transparency International UK called for procurement chiefs in importing governments worldwide to demand robust anti-corruption standards of defence companies. “If government contracts are contingent on companies having an appropriate ethics and anti-corruption programme in place, it will create a step change towards greater accountability in the defence industry, and further the positive work being done by many defence companies today,” said Pyman.

Transparency International UK also called on governments to require that bidding companies publish their detailed offset obligations and performance assessments.

Investors too are part of the solution

“Corruption can mean major reputational and financial damage,” said Fish. “Investors should use this report to ask: do the companies we invest in have high-quality anti-corruption programmes in place?”

 

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