December 7, 2024

Report Aims to Help Military Industry Fight Corruption

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

Japan Joins the Jet Age by Making Its Own Plane

Japan’s golden era of aviation, which culminated with the feared and respected Mitsubishi Zero fighter planes, had ended a decade earlier along with World War II. Banned from making planes by American occupiers after the war, then allowed only to make parts for American military jets, Japan’s aircraft industry was a shadow of its former self.

If all goes well this year, Mr. Kawai, now 65 and president of the Mitsubishi Aircraft Corporation, will preside over Japan’s biggest aviation comeback since the war. In late 2013, the company plans the first flight of its Mitsubishi Regional Jet, a sleek, 90-seat commercial plane that is Japan’s bid to break into the industry’s big leagues after almost 70 years.

“For decades, we were confined to supplying parts for other passenger jets. But we’re finally heading into new territory,” Mr. Kawai said in a recent interview at Mitsubishi Aircraft’s Tokyo office.

Mitsubishi’s comeback was abetted in large part by Boeing’s outsourcing more of its aircraft manufacture to overseas suppliers. As Boeing came to rely on foreign contractors, Japanese manufacturers moved in, designing and supplying some of the jet’s most vital sections.

A full third of Boeing’s new 787 Dreamliner is supplied by Japanese manufacturers, including Mitsubishi Aircraft’s parent company, Mitsubishi Heavy Industries, which makes the jet’s carbon-fiber composite main wings.

Even so, Boeing and Mitsubishi could not be further apart in their approach to jet-building. In contrast to the cutting-edge 787, Mitsubishi’s regional jet uses only a little of the advanced carbon fiber that its parent company supplies to Boeing.

Neither does the regional jet use the volatile lithium-ion batteries that have become a major headache for Boeing, overheating on two planes in January and prompting American and Japanese safety regulators to ground the entire 787 fleet.

Mitsubishi’s caution underscores the importance, to the company and to Japan, of getting the regional jet project off the ground in an industry where reputation for reliability is paramount. That is especially the case, experts say, for a country long absent from the business of making planes, save military jets under license from the United States, and a series of small private jets.

In the late 1950s and 1960s, Mitsubishi participated in a consortium to develop the YS-11 plane, a 60-seat turboprop airliner led and largely financed by the Japanese government, which was eager to restart the country’s aviation industry.

Leading the YS-11’s design was Teruo Tojo, one of the Mitsubishi Zero fighter’s original engineers and the second son of Hideki Tojo, the Japanese wartime leader who was executed as a war criminal by the Allies. But with no experience in making civilian jets, Mr. Tojo and his team of engineers struggled with the YS-11’s design.

Regulators in the United States who tested the plane said early versions of the aircraft rolled from side to side and leaked rainwater. Its air-conditioning systems broke down. Passengers complained its roaring twin engines were too loud. And despite generous state backing, soaring manufacturing costs crippled the consortium’s finances. In 1973, barely 10 years after the YS-11’s maiden flight, the consortium canceled the project. It built just 182 aircraft and sold its planes at a loss.

“We wanted to sell to the world, but on the ground, we felt we were chasing an impossible dream,” Mr. Tojo, who eventually became vice president of Mitsubishi Heavy Industries and president of Mitsubishi Motors, reminisced in a 1990 interview with the Nikkei Sangyo Shimbun newspaper. “Who would buy a plane made in Japan?” Mr. Tojo passed away last year at the age of 98.

Burned by the YS-11 flop, Japan shifted its aviation strategy to supplying, and learning from, the largest aircraft makers of the time, of which the largest was Boeing. Japanese suppliers have played an increasingly bigger role in building Boeing aircraft, supplying 15 percent of the 767 jet, 21 percent of the 777, and 35 percent of the 787.

The Japanese government quickly became one of the largest financial backers of those projects, handing out billions of yen in subsidies to help Japanese suppliers develop technology and win lucrative contracts from Boeing. Though the government declines to reveal exact numbers, estimates by researchers at the State University of New York of how much Japan has handed out to 787 suppliers in subsidies and loans over the past decade are as high as $1.6 billion. .

This article has been revised to reflect the following correction:

Correction: April 9, 2013

An earlier version of this article referred incorrectly to the DC-3 aircraft. It is propeller-driven; it is not a jet.

Article source: http://www.nytimes.com/2013/04/10/business/global/japan-re-emerges-in-the-aerospace-arena-with-a-new-jet.html?partner=rss&emc=rss