The majority of governments studied in this Index fail to protect themselves adequately against the risk of corruption in the defence sector. Fifty seven of the 82 countries assessed, or 70 per cent, have high to critical risk of corruption, scoring in bands D, E, or F. These countries leave themselves exposed to the danger and waste that corruption in this sector brings.
Just two countries, Australia and Germany, are in Band A, exhibiting strong protection against the risk of corruption in their defence sectors. These countries have defence establishments that are accountable to their citizens; they are transparent about their spending and activities, and have strong controls in place to combat corruption that are actively enforced. Thirty per cent of countries, those in bands B and C, have low or moderate risk of corruption, but with shortcomings that still leave them exposed. There is room for improvement everywhere: not one country received a perfect score across all 77 questions.
The Index considers corruption in national defence establishments in five key risk areas: political risk, financial risk, personnel risk, operations risk, and procurement risk. Click the tabs to the right to read more about each risk area.
Political oversight is key to ensuring that defence establishments are accountable to citizens. Defence policies, budgets, and decisions must be subject to the legislative scrutiny and control that represent their citizens’ needs. But only 12 per cent of countries showed highly effective mechanisms for such scrutiny of the defence sector, and in 45 per cent of countries, such mechanisms are in place but are inadequate. In more than half of countries studied, there is no independent external oversight of intelligence services’ policies, budgets, and administration. Only five countries were found to have strong controls in place to regulate the export of arms, which are publicly available and open to legislative scrutiny.
Defence and security establishments exist to protect citizens and the nation, yet only two defence establishments out of the 82 studied have a policy of engaging with civil society. Secrecy hurts public trust in the armed forces and ministries of defence: assessors in just two countries found that the public believed that defence and security institutions were strongly committed to countering corruption and bribery in their institutions.
There were also positive findings. Most governments analysed have signed up to international anti-corruption instruments like the UN Convention Against Corruption and OECD Anti-Bribery regulations. Natural resources can be exploited by militaries and defence institutions, but the Index found that in most countries with significant natural resources, defence institutions are either not linked to those resources, or if they are, they are subject to public and legislative scrutiny.
The 82 countries in this Index account for 94 per cent of global military expenditure in 2011--that’s USD 1.6 trillion in one year. The defence sector tends to command a large budget, with significant income and expenditure compared to other sectors. But although taxpayer money is spent in this sector, high levels of secrecy remains the norm: 70 per cent of countries studied fail to disclose the percentage of defence spending on secret items to the public. 40 per cent of countries don’t even provide this information to their legislatures, or to a legislative committee on defence.
National security is often used as an excuse for classifying defence budget information as secret. A certain level of secrecy is justified in this sector, but, in general, far too much information is unnecessarily classified and this can act as a veil for corrupt activities. Sixty-five per cent of governments studied lack any formal legal regulations to ensure that information is classified on the basis of genuine national security concerns.
One major source of income for defence establishments is the sale of assets--surplus land, buildings, or weapons. Yet 40 per cent of governments studied have no controls of asset disposals in place.
In countries where military institutions have ownership of businesses, commercial interest creates large conflicts of interest and thus an increased risk of corruption. Of the 64 countries with military-owned businesses, only eight score well on the question regarding the scrutiny of such businesses; the remaining 56 countries lack transparency and are not subject to effective oversight.
Preventing corrupt activities by members of the armed forces and civilian personnel is key to an effective defence establishment. It was in this category that countries scored the highest, with more than half of countries studied scoring above 50 per cent, though there were still important areas where improvement is needed.
In nearly 80 per cent of countries studied there are mechanisms to punish personnel who have been found to take part in corruption, and they are generally well-enforced.
More than 70 per cent of countries studied have timely and well-established payment systems, which are often aided by automated systems that pay directly into personnel’s bank accounts rather than being paid through a commander. In around 10 per cent of countries studied, however, ghost soldiers (or fictional soldiers that exist only on the payroll) are a corruption issue.
Despite generally good performance in this risk area, there are notable aspects where more work is needed. The largest gap is in the protection of whistle-blowers: just six countries (seven per cent) have strong and effective protection of whistle-blowers; of these, only three—Germany, Norway, and Singapore—actively encourage whistle-blowing. This makes the reporting of corruption and impropriety challenging, and often dangerous, for individuals.
Most countries also fail to implement measures specifically for protecting and training personnel in sensitive positions, such as officials in procurement, contracting, financial management, and commercial management. To prevent corruption in these high-risk positions, governments should pay special attention to how these individuals are selected, how long they are in place, and oversight of their work.
Corruption is a strategic issue that can determine the success of a military operation or peacekeeping mission. In Afghanistan, the international military has come to recognise that corruption is a principal risk that could cause their intervention to fail. The complexity of military operations, particularly in challenging conflict environments, heightens corruption risk. Scores in this risk area reflect the challenge of combating corruption on military operations: the average score in this area is 28 per cent.
Only two countries studied, the United States and Greece, include anti-corruption in their military doctrine. In two thirds of countries, no training at all is provided for commanders to guide their behaviour and help them tackle corruption while they’re deployed. Just 10 per cent of countries—Australia, the United States, Sweden, Taiwan, South Korea, and Greece—regularly deploy personnel to monitor corruption during operations.
Contracting on operations can be particularly complex, with serious issues in respect to both international and local suppliers. Corruption in contracting can also lead citizens to conclude that the intervening forces are corrupt, thus greatly reducing the operation’s credibility. Not one country scores well on this question, which indicates that they do not have guidelines and training in place to control corruption risk in contracting on operations.
The use of Private Military Contractors (PMCs) can increase the risk of corruption. Where such companies are used, strong controls are needed to ensure that strong control of PMCs is maintained and there is transparency of their activities and remuneration.
Buying and selling arms and defence equipment has always posed high corruption risks. Procurement in the defence sector is complex, with elaborate characteristics such as the highly technical product requirements, the use of agents and brokers, offset contracts, and complicated financing packages. These unique risks are often poorly controlled by governments.
Forty two per cent of countries have either no evidence of procurement oversight mechanisms, or do have mechanisms in place that are non-transparent or inactive. Only five countries (or six per cent) have well-established, strong legislation covering defence and security procurement. These include clauses specific to corruption that either prevent exemptions for this sector, or give provisions for independent scrutiny if information is classified as secret for national security purposes. Eleven per cent appear to have no defence procurement legislation at all.
Thirty five per cent of countries in the Index have no restrictions, or ineffective restrictions, on the use of agents and intermediaries in the procurement cycle. Another 40 per cent have some controls over the participation of agents and intermediaries, but enforcement may be weak. Just seven countries strongly control and limit the use of agents, or forbid them altogether.
Offsets contracts are arrangements made by governments and companies entering a contract that require the companies to reinvest a percentage of the value of the deal in the importing country. The offset contract is more prone to corruption as the main contract itself, but is rarely subject to sufficient scrutiny: Only 10 per cent of governments studied impose stringent due diligence requirements on contractors during offset contract negotiations, and assess offset contract performance with audits. Forty-five percent of governments do not impose any due diligence or auditing requirements on offset contracts.
In nearly 70 per cent of countries, governments do not require companies they contract with to ensure that their subsidiaries and sub-contractors have anti-corruption programmes in place. This increases the risk that corruption gets ‘pushed down the line’ without accountability. Only the governments of South Korea and Germany impose such requirements formally on the main contractor, with evidence of enforcement.