Defence companies fail anti-corruption test

New index finds two thirds of companies do not provide enough public evidence that they adequately prevent corruption

Issued by Transparency International UK



Two-thirds of the world’s biggest defence companies do not provide enough public evidence about how they fight corruption, according to a new study from Transparency International UK.

This includes companies from all of the ten 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.

Everyone pays the cost of defence corruption

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.

“Corruption in defence is dangerous, divisive and wasteful.The cost is paid by everyone. Governments and taxpayers do not get value for their money and clean companies lose business to corrupt companies. Money wasted on defence corruption could be better spent” explains Mark Pyman, author of the first study of its kind and Director of Transparency International UK’s Defence and Security Programme.

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 USD 10 trillion, with a combined defence revenue of over USD 500 billion. Transparency International estimates the global cost of corruption in the defence sector to be a minimum of USD 20 billion per year, based on data from the World Bank and SIPRI. This equates to the total sum pledged by the G8 in L’Aquila in 2009 to fight world hunger.

“It is in the interest of companies, governments, and taxpayers that the defence industry raises standards globally. I hope the defence industry responds to the challenge and embeds good practice in preventing corruption, and increases transparency in the sector,” Pyman said.

85 per cent of defence company leaders do not speak up about corruption

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.

Ten per cent of companies have good disclosure of their anti-corruption systems

The study finds that ten per cent of companies have good disclosure of their anti-corruption systems. “This is much more than it would have been ten years ago: the industry is changing” explains Pyman. 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.

Commenting on the Index, Lord Robertson, former Secretary General to NATO said: “Companies must have a reputation for zero tolerance to corruption. By doing so, they could enjoy a distinctive advantage and mitigate reputational and financial risk. A corruption scandal can wipe away the decades spent building a reputation. By having the right anti-corruption systems in place, companies can avoid a drop in stock prices, blacklists, and even prison. It is in their interest to take action, and this index provides the guidance to do so.” -ends-


For any press enquiries please contact

For further information, analyses, and recommendations, please visit www.defenceindex.org/companies

Maria Gili, +44 (0)20 7922 7975; .(JavaScript must be enabled to view this email address)
Rachel Davies, +44(0)20 7922 7967; .(JavaScript must be enabled to view this email address)

Supplementary downloads

Latest

Support Transparency International

Stopping Dirty Money: the Global Effective-O-Meter

As of December 2017, global effectiveness at stopping money laundering stands at 32% effectiveness.

Corruption in the USA: The difference a year makes

A new survey by Transparency International shows that the US government has a long way to go to win back citizens’ trust.

Anti-Corruption Day 2017: Empowering citizens’ fight against corruption

The 9 December, is Anti-corruption Day. A key part of Transparency International’s work is to help people hold their governments to account. Have a look at what we've been doing around the world!

Digital Award for Transparency: Honouring digital initiatives to fight corruption

The Digital Award for Transparency awards individuals and civil society organisations who have developed digital technology tools used to fight corruption. The award aims at strengthening and promoting existing initiatives that promote good governance through three categories: Open Data, Citizen Engagement and Anti-Corruption Tools.

Unearthing corruption risks in mining approvals

From resource-rich West Africans nations, to the mining giants of the Pacific and North America, every time a government signs a deal to allow mining of its natural resources there are corruption risks – no matter where that country is.

TI launches Clean Contracting Manifesto, calls for G20 adoption

Governments spend huge sums of money via public procurement every year yet the concentration of money, government discretion and corporate influence in providing these vital good and services makes it particularly vulnerable to corruption. Transparency International has launched a Clean Contracting Manifesto to ensure that the whole lifecycle of public procurement is transparent, accountable, efficient and in the public interest.

Preventing corruption in state-owned enterprises

In many countries public services such as energy, water, transportation and health care are provided by enterprises either controlled or partly-owned by the government. These state-owned enterprises (SOEs) can be vulnerable to corruption. Transparency International researched ways SOEs can combat corruption - check it out here!

Social Media

Follow us on Social Media

Would you like to know more?

Sign up to stay informed about corruption news and our work around the world