The group, Transparency International, had given poor grades in recent months to many military contractors and governments for failing to create better safeguards, and its new report released Monday details how they could improve.
Major contractors in the United States and Europe tend to have stronger anticorruption systems than companies in other parts of the world. But as Western governments cut their weapons budgets, many contractors are looking to raise sales in the Middle East and Asia, where corruption has been rampant.
Transparency International’s criticisms have stung some of those governments and helped to stimulate efforts by contractors and officials to do better in countries like India and Saudi Arabia.
But Mark Pyman, the director of the group’s defense and security countercorruption program, said much still needed to be done. In trying to clean up the immense global arms trade, “I’d say we’re only about one-quarter of the way along,” he said in an interview.
The latest report calls on top executives of military contractors to speak out against corruption and follow up tips from whistle-blowers more forcefully.
Bribery scandals have long plagued the business, given its high stakes and the relative secrecy in which many of the decisions are made. The Congressional Research Service estimated last year that global arms exports had swelled to $85 billion. And several prominent criminal investigations have added to the pressure for change.
BAE Systems, Europe’s largest military contractor, agreed in 2010 to plead guilty to criminal charges in the United States and Britain related to billions of dollars in questionable payments in Saudi Arabia, the Czech Republic and Hungary. The Justice Department said that BAE, based in Britain, made the payments through middlemen and offshore bank accounts to win contracts for fighter planes and other equipment that American military companies were also seeking.
India’s military suspended a $750 million deal in February to buy helicopters from an Italian company. Public outrage over accusations — still under investigation — that the Italian company Finmeccanica paid kickbacks to Indian officials to win the contract prompted India to unveil a new military acquisition policy on June 1 aimed at easing corruption.
Transparency International, which has chapters in more than 100 countries, has tracked various types of corruption since 1993. It has helped governments and other industries create tools to minimize it.
The group’s latest push on arms sales began in October, when it released an index indicating that 85 of 129 top contractors had not made enough information public to tell if they had serious anticorruption systems.
The Fluor Corporation, an engineering and construction company in Irving, Tex., was the only contractor to receive an A grade based on the data on its Web site. After some companies provided internal ethics data, 15 additional companies, including Lockheed Martin, Boeing and Raytheon, were given A’s.
BAE, which has strengthened its ethics programs since its scandal, was one of 12 companies to receive a B.
Mr. Pyman said some of the worst-ranked exporters in terms of transparency were in China, Russia and Ukraine.
His group released an index in January rating 58 of 82 countries as having poor controls for military corruption. Egypt and Yemen were in the worst group.
Countries that are among the biggest buyers of American and European arms, including Saudi Arabia, Iraq and Qatar, were also judged as having a “very high risk” of corruption.
Mr. Pyman said the rankings stirred enough controversy that Saudi Arabia, South Korea, Turkey and the Republic of Georgia expressed interest in having questions to use in screening bidders before arms competitions.
Besides disclosing ethics plans and a guide to speaking out against corruption, the report released Monday provides examples of companies that have made more thorough assessments of corruption risks and have trained their officials to be more careful in working through middlemen.
“Once everybody got over the shock of being ranked,” Mr. Pyman said, “they’re saying, ‘Now we’ve got a metric we can use.’ ” He said the group would update the rankings next year.
Article source: http://www.nytimes.com/2013/06/11/business/report-aims-to-help-military-industry-fight-corruption.html?partner=rss&emc=rss
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