Netherlands

Researcher + Peer Reviewer3634: Asset disposals are not all conducted by the MOD itself. The Central Government Real Estate Agency (CGREB) of the Ministry of Interior and Kingdom Relations is responsible for the sale of real estate. The Domeinen Roerende Zaken (DRZ) of the Ministry of Finance is responsible for the disposal of movable property. The MOD is only responsible for the sales of strategic equipment, like tanks and fighter aircraft. (9)

The sales of all three types of asset disposals are transparent and at least some information is publicly available. The Ministry of Defence notifies the House of Representatives of contracts involving sale of defence equipment with information on the goods themselves, the buyer and financial details. However, for reasons of commercial confidentiality these details are often not made public. (7) The aggregate value of the sales of strategic goods to foreign buyers is published in the annual reports on arms export controls (8), and the financial proceeds of sales for non-strategic moveable goods is made public via the Domeinen Roerende Zaken, which is part of the Ministry of Finance (1). Information on strategic equipment is published in the annual Materiel Projects Overview. (11) All these sales and their organisations are subject to the audit of the Audit Services. (12)

Despite media reports to the contrary, parliamentary documents confirm that the parliament does not have a constitutional right to approve sales of defence equipment or stop them, although it is notified of them as a matter of policy. (5) However, the government has pledged to include a “subject to parliamentary approval” clause in agreements to sell strategic goods (5) and incorporated it in its standard contract. Whether and how this provision should be applied is a matter of debate. (6)

Researcher + Peer Reviewer3634: Asset disposals are scrutinised by the Audit Services, and by the Court of Audit when it considers it necessary (3). These reports are not publicly available and therefore lack transparency. However, the results can be included in a summarised form in the Court of Audit’s audit of the annual report of the respective ministry. These are publicly accessible. (4, 5, 6)

Researcher + Peer Reviewer3634: The total budget for national security is mainly divided among three ministries: Defence, Interior & Kingdom Relations and Security & Justice. These budgets contain secret expenses. In the Defence budget, the secret expenditure is €5,264 million (0.07%) out of a total budget of €7.6 billion (3). Of the budget of the Ministry of Interior & Kingdom Relations, the only national security related expenditure is that of the national security service (AIVD) (2). Its secret expenditure is €9.2 million (4.9%) out of a total budget of the AIVD of €189 million. In the budget of the ministry of Security & Justice, the secret expenditure is €3,057 million (€0.06%) out of a total budget for the police and counter-terrorism of €5.4 billion (1).

In sum the total secret budget is €17,5 million (0,13%) out of €76,012 bn budget comprising defence spending and the expenditure of two non-MOD intelligence services. This constitutes 2.3% of the budget.
The numbers for the 2015 budget remain similar. (4-6)

Researcher + Peer Reviewer3634: Parliament only receives information on the entirely aggregated secret budget; this is also publicly available in the defence budget. (6) The parliamentary Committee for Intelligence and Security Services (CIVD - see Q19) provides oversight of the intelligence services; however, there are no indications that this committee has any more detailed information about the secret budget.The CIVD’s annual report suggests its members have not discussed secret expenditures (9), though it is not possible to tell whether they have received any data. Execution of budgets is also overseen by the Committee on National Expenditure (10), but it is unclear whether the Committee receives more information.

While the legislature is not given full information about secret expenditures, oversight exists in the form of an audit by the Court of Audit. The Court of Audit’s president is charged by law with scrutinising secret expenditures and reporting any irregularities to the relevant government minister. (Article 87(5), Comptabiliteitswet 2001)

Researcher + Peer Reviewer3634: According to article 87.3 of the Comptabiliteitswet (Accountancy law), the president of the Court of Audit is the only person who is authorised to scrutinise secret expenditure. The president then reports any findings only to the responsible minister. The parliament is not included in the audit procedures. There are also no indications that the special parliamentary Committee on Intelligence and Security Services (CIVD), which consists of the chairs of the various parliamentary fractions, is provided with some kind of audit report of the president of the Court of Audit (the Committee only has occasional access to classified information).

However, the Minister of Defence can request a closed meeting in which the Minister can provide confidential information to the Committee on Defence. Meetings of the Special Parliamentary Committee on Intelligence and Security Services are always confidential. (4)

Execution of budgets is also overseen by the Committee on National Expenditure (15) and the Court of Audit reports to the Committee; however, it is unclear whether the Committee receives more information.

RESPONSE TO TI REVIEWER: Agree, score 1 selected.

Researcher + Peer Reviewer3634: All military expenditures are formally authorised in the defence budget. (3, 4) The Ministry of Foreign Affairs does keep a budget for international security, meant to finance international deployments in which defence, development and diplomacy are combined. (1, 2) While this could be seen as extra-budgetary expenditure, the budget for international security is clearly indicated in the budget of the Ministry of Foreign Affairs and therefore subjected to the regular audits and parliamentary scrutiny.

RESPONSE TO PEER REVIEWER 2 AND GOVERNMENT REVIEWER: Agree. Text edited and score changed to 4.

Researcher + Peer Reviewer3634: There are no off-budget expenditures. All military expenditures are formally authorised in the defence budget. (3, 4) The Ministry of Foreign Affairs does keep a budget for international security, meant to finance international deployments in which defence, development and diplomacy are combined. (1, 2) While this could be seen as extra-budgetary expenditure, the budget for international security is clearly indicated in the budget of the Ministry of Foreign Affairs and therefore subjected to the regular audits and parliamentary scrutiny. (1, 2, 3).

RESPONSE TO REVIEWERS: The Budget for International Security is on the budget of the Ministry of Foreign Affairs, and makes it therefore extra-budgetary spending instead of off-budget spending (4). Score revised.

Researcher + Peer Reviewer3634: The classification of information is regulated by two governmental decrees. These are the &quoute;Besluit voorschrift informatiebeveiliging rijksdienst&quoute; of 2007 ('Decree for regulation of information security of the state) and the &quoute;Besluit voorschrift informatiebeveiliging rijksdienst bijzondere information&quoute; of 2013 (Decree for regulation of information security of the state exceptional information). The documents contain levels of classification depending on the sensitivity of information; they mandate the departmental Secretary General (i.e. the top civil servant) to appoint officers responsible for classification and to review classifications of particularly sensitive documents. They also provide for a review of classification after a pre-set period of time or when documents are transferred into archives. (2, 3)

The Secretary General is the primary instance for the review of classified information. The Dutch Review Committee for the Intelligence and Security Services (CTIVD) has the opportunity to review the actions of the intelligence and security services, which includes their decisions for classifying information. The policies are also scrutinised by the governmental Audit Services. The Court of Audit can start investigations into the policies of the ministries; in 2012, it published a report on information security. (1) There is also a review mechanism related to the Dutch Freedom of Information Act: a refusal to divulge information based on exemptions such as national security can be appealed to an administrative review body and to the courts.

Score 3 has been selected to reflect absence of a more comprehensive independent review process and criticism of the application of the FOIA, which also has a bearing on the assessment of the effectiveness of information classification. (6)

Researcher + Peer Reviewer3634: The MOD does not own any significant commercial businesses. It does have a public-private partnership with Dutch Aero Services for the maintenance of aircraft engines, which can be seen as a commercial activity: this partnership can acquire work from clients other than the Dutch MOD. For example, the partnership maintains F100 engines of the air force of Thailand. However, the commercial value is limited, as it is budgeted for €15 to €25 million for the period 2011-2020. This means a maximum of €2.7 million per year, which is 0.04% of the total defence budget. (1, 2)

Researcher + Peer Reviewer3634: The MOD's public-private partnership with Dutch Aero Services for the maintenance of aircraft engines (2, 3) is subject to independent scrutiny by the Audit Service Defence (part of the Central Government Audit Service). The Audit Service Defence prepares reports, but these are not publicly available; it does, however, publish a report with a summary of its findings along the annual report of the MOD. This is publicly available. (1)

RESPONSE TO PEER REVIEWER 1: Score 4 in Q30 allows for ownership of small commercial businesses, not more than 1% of the defence budget.

Researcher + Peer Reviewer3634: The government explicitly outlaws unauthorized private enterprise. In the 'Additional jobs' directive, it is stated that all additional activities should be reported to the commanding officer. The commander has to evaluate the integrity risks with the help of the Office for Extraordinary Assignments. Sanctions for unauthorised commercial activity include termination of employment. (5)

Over the last few years, there have been several accounts of illegal private enterprise. In 2011, an MOD employee headed a department that organised technical courses at the navy, while at the same time, this individual had a private business in coaching and preparing students for their exams. Although the individual communicated his private enterprise and potential conflict of interest several times to his management, the control mechanisms in place were inadequate. Even after it became clear that the individual violated the rules, his employment was not terminated. Other accounts concern the private use of vehicles at the Defence Materiel Organisation. According to witnesses, the management protected one another when incidents occurred. (1-4) Given the evidence of lack of application of sanctions, score 2 has been selected.

Researcher + Peer Reviewer3634: There is evidence of a strong commitment of the MOD to anti-corruption and integrity measures. In 2011, a committee reviewed the entire integrity policy and made recommendations for improvements. These recommendations have been accepted and implemented by the minister. However, there are only minor public statements of senior defence personnel on the issue of integrity.The existence of institutions such as the Central Defence Integrity Organisation (COID, tasked with building a culture of integrity) and of military and civilian Codes of Conduct (see Q8 and Q47), also testifies to commitment of the senior leadership. However, as the commitment is not strongly publicly stated, score 3 appears adequate.

Researcher + Peer Reviewer3634: The Netherlands Criminal Code (sections 362-3) criminalises active and passive bribery of public officials. Sanctions include imprisonment of up to four years or a maximum fine of €81,000. (8)

Criminal prosecution is conducted by either by the regular Public Prosecution Service or, in cases of high-level public officials, by the specialised National Police Internal Investigations Department. (8) The signals on the implementation of the measures against corrupt personnel are mixed. Some media reports indicate that effective action is undertaken. Also, during an interview, a trade-unionist stated that sanctions are consistently applied. However, other media reports indicate that there are incidents in which violations are concealed. (1-7)

RESPONSE TO GOVERNMENT REVIEWER: Agree, score 3 appears to fit the existing situation best.

Researcher + Peer Reviewer3634: In 2011, new regulations on whistle-blowing for defence personnel were introduced. These regulations ensure that the identity of the whistleblower is safeguarded and that whistleblower is better protected against retributions from colleagues or managers. (5) General regulations pertaining to whistleblowers in the public sector establish that staff can make reports to the an internal Integrity Counsellor, or
to an external Committee for Government Integrity. They can receive advice form the Office for Promoting Ethics and Integrity in the Public Sector, and the government-funded Advice Centre for Whistleblowers in the Netherlands also provides information and advice on the process. The anonymity of whistleblowers has to be protected if requested. The regulations also define what constitutes retribution (for example withholding of pay or leave, or promotion opportunities) and require that managers and those who receive signals protect the whistleblower from retribution. (6)

In theory, whistle-blowing is therefore actively encouraged, and the whistleblower is protected. In practice, there are some signals that whistle-blowing is not always well received (2). There are also media reports that substantiate this.

RESPONSE TO TI REVIEWER: No new evidence has been suggested and the available material better supports a score of 3. Score maintained.

Researcher + Peer Reviewer3634: Special attention is paid to personnel in sensitive positions. All employees of the MOD require a Verklaring van Geen Bezwaar (VGB) (Declaration of no objection), which has to be renewed every two years. The MIVD investigates (potential) employees on possible indications of illegal or improper behaviour. The level of investigation differs depending on the sensitivity of the function.

Further, the Ministry of Defence has a strict job circulation policy. Military staff are assigned to a position for two to three years; under certain circumstances, this can be extended to five years. Senior civilian employees are also bound by a five-year time frame. A prohibition to conduct business with the MOD within two years after leaving the MOD is also in place. The oversight of personnel in sensitive positions is provided through whistleblowing mechanisms and integrity risk-assessments conducted by the Central Defence Integrity Organisation, which provide a basis for preventive measures, and internal and external audit services. (3, 4) However, it appears that a comprehensive list of sensitive positions is not in place, hence score 3 has been selected.

Researcher + Peer Reviewer3634: The exact numbers of civilian and military personnel are publicly available and reported in the annual budget, but also in an annual personnel report (1, 2). More detail is provided on numbers within rank, age, gender, civilian/military and service groups. The number of personnel entering and leaving the MOD is also reported. (1,2) There is no evidence that would suggest these numbers are not accurate.

Researcher + Peer Reviewer3634: The MOD publishes extensive tables with the various pay rates, as well as allowances, for both military and civilian personnel. These are all available online (1, 2, 3, 4). Information on allowances makes clear that both civilian and military employees can receive a temporary allowance, training allowance, unsocial hours and other subject-specific grants; salary-related bonuses are also a possibility. However, the exact data related to allowances (for example, criteria for awarding them and how they are calculated) does not appear to be publicly available, though there is no evidence of regulations not being in existence.

Researcher + Peer Reviewer3634: The MOD publishes the precise dates of payment, agreed with the Ministry of Finance, online. There is no evidence of shortcomings in this process; an interview with officials of a trade union confirms this. (1) Basic pay, which is publicly available, is not subject to adjustments. (see Q39)

Researcher + Peer Reviewer3634: The appointment system for the selection of military personnel at middle and top management level appears objective. The vacancies are internally published via the intranet and the announcements contain a job description and selection criteria. The selection procedure is also stated. Score 3 has been selected to reflect uncertain extent of independent oversight.

Researcher + Peer Reviewer3634: Promotions are regulated by the Voorlopige Voorziening Uitvoeringsregeling AMAR (Temporary Provision Executive Regulation) paragraph 3.3. There are three ways of promotion: 1) promotion within the basic training and education, which takes place after completion of certain programmes; 2) promotion when the person is accepted to another higher position, or by completing career training, which is mainly used for officers; 3) promotion through experience, which is mostly applicable to the ranks of private and corporal. The criteria are objective, and mainly based on years of working experience. (2)

There is no evidence of promotions being scrutinised by independent personnel. However, as stated above, the promotions only happen in the three cases discussed. These promotions are bound by either objective criteria, like years of working experience and completing basic training or career-relevant training, or a consequence of a successful application and selection procedure. For the latter category, the regular selection procedures apply. Therefore, the promotion procedures are subjected to checks and balances. Above that, the promotions to the most senior ranks like brigadier general or higher are conducted by a 'governmental decision'.

Researcher + Peer Reviewer3634: Conscription still exists in the Dutch law, along with procedures and criteria for the draft. However, this law has been suspended since 1996 and no conscripts have served in the Dutch armed forces since then. Conscription would be reactivated if the Netherlands entered a state of war; the Prime Minister, with the Royal Assent and the consent of Parliament, can also call for conscription to be reinstated. However, there is currently a very remote possibility.

Researcher + Peer Reviewer3634: Conscription still exists in the Dutch law, along with procedures and criteria for the draft. However, this law has been suspended since 1996 and no conscripts have served in the Dutch armed forces since then. Conscription would be reactivated if the Netherlands entered a state of war; the Prime Minister, with the Royal Assent and the consent of Parliament, can also call for conscription to be reinstated. However, there is currently a very remote possibility.

There is no voluntary conscription in the Netherlands and the armed forces are based on voluntary military service.

Researcher + Peer Reviewer3634: There is no evidence of the existence of 'ghost soldiers' in the media, and an interview with trade-union officials confirms this (1). Given that the number of military and civilian personnel and pay rates are publicly known and basic pay is not subject to adjustments; that the payment system is well-established; and that chains of command are separate from chains of payment (see Q38, Q39, Q40, Q46), it is unlikely that ghost soldiers do exist. It should also be noted that there is internal and external audit oversight of all financial transactions. There is no evidence that this audit process is flawed with respect to payment systems, which would further make the existence of 'ghost soldiers' unlikely.

Researcher + Peer Reviewer3634: The chain of command and the salary chain are separate: a separate department, the Service Center for Human Resources facilitates the payroll administration. It falls under the Service Command and is separate from the operational services. (2, 3)

Researcher + Peer Reviewer3634: There are Codes of Conduct for all military and civilian personnel with respect to corruption and integrity. These are published in the Algemeen Militair Ambtenarenreglement AMAR (General Military Personnel Code) chapter 11a (1). The integrity code starts with an oath which addresses different aspects of integrity. It also addresses other activities, including gifts and direct or indirect acts of bribery. The Secretary General direction SG A/872 'Integrity Protection', addresses this topic more thoroughly, discussing issues such as bribery, gifts, conflicts of interest and post-separation activities. It is not publicly available, but it is published on the intranet for all the MOD personnel. There are several brochures in which the MOD communicates the integrity Codes of Conduct to third parties and its personnel.

The oversight of these Codes of Conduct is done through the Central Defence Integrity Organisation (COID) and the respective commanding officers. If there are incidents, they can be reported to the COID and to a special official. Criminal prosecution is conducted by the general Public Prosecution Service. The MOD publishes a breakdown of integrity-related cases and breaches annually. (5)

RESPONSE TO TI REVIEWER: Annual publication of data on integrity-related breaches indicates that oversight mechanisms are in place. Score maintained.

Researcher + Peer Reviewer3634: There are indications that breaches of the Code of Conduct are effectively addressed. This is clear from media reports listed as sources and it was confirmed by a trade union representative interviewed. However, there are also some media reports suggesting that the MOD did not act decisively. (1-5) The results of internal investigations into Code breaches are not publicly accessible, although the MOD's annual reports do provide statistical information on integrity breaches.

When breaches of the Code are also criminal offences (such as bribery), criminal cases are tried by civilian courts and the results are therefore publicly available.

Researcher + Peer Reviewer3634: All military personnel receive courses on integrity and military ethics during their basic training, although it is not clear to what extent this involves specific anti-corruption elements. Selected German/Dutch staff officers at the 1st German-Netherlands Corps (1 GNC), a NATO formation, have participated in two ad-hoc sessions on the topic of corruption. In October 2014, TI-UK Defence and Security Programme led a workshop for 1 GNC officers and officials, analysing the impact of corruption on international security; in May 2015, representatives of TI-UK DSP participated in a 1GNC scenario-based exercise and provided expertise on anti-corruption.

There is no evidence of systematic, comprehensive training for civilian members of staff. Some training sessions have been provided by the Central Defence Integrity Organisation (COID), but there is no publicly available information on how comprehensive, widespread or regular these courses are. Since procurement staff are required to follow the regulations of the Handbook on Procurement and the Secretary General Directive A/872, 'Integrity Protection' (which is not publicly available), it seems likely that training might be available. It could not, however, be confirmed.

Researcher + Peer Reviewer3634: There are military and civil courts. The military courts only deal with cases described in military law and specific to the armed forces, such as desertion or insubordination. These court rulings are publicly available on the website of the Dutch judiciary (rechtspraak.nl). All other cases are dealt with by civil criminal law and therefore handled by a civil court. All judicial decisions are publicly accessible on the website of the Dutch judiciary (rechtspraak.nl), as mandated by general legal provisions. There is no evidence of cases that are not made public. Moreover, while this is not a specific policy of the MOD, the Ministry does publish an annual aggregated overview of all integrity-related charges. These are subdivided in different categories and compared with the numbers in earlier years. (5)

The prosecution record as reported in the media is mixed: while there are reports of effective prosecutions (the majority), there also appear to be cases in which violations may have been concealed. (7-12)

Researcher + Peer Reviewer3634: Facilitation payments are criminalised by the Dutch Criminal Code, which includes payments received in return for acting in a lawful and permitted manner, as well as payments received in return for acting unlawfully, among its definition of active and passive bribery. There is no exemption for facilitation payments to foreign officials, which are thus also criminalised. (9)

Furthermore, facilitation payments are strictly forbidden by the Algemeen Militair Ambtenarenreglement AMAR (General Military Personnel Code), chapter 11a article 126d. It states that no reimbursements, rewards, gifts or promises can be accepted. In practice, the employee can only receive a gift if its worth is less than €50; however, it is also explicitly stated that all monetary gifts or coupons are illegal. According to the overview of integrity breaches in the MOD's annual report, there have been 71 breaches concerning financial matters in 2012 These is no evidence that suggests that the sanctions are not effectively applied.

Researcher + Peer Reviewer3634: The MOD does not have an explicit doctrine addressing corruption as a strategic issue for operations (1, 2) and the strategic focus on fighting corruption lies with other actors in the operations: the deployment of the Dutch military is almost always part of a broader 'comprehensive approach', in which defence is only one aspect of the mission. The other two ingredients are diplomacy and development. The Ministry of Foreign Affairs plays a central role in this comprehensive approach. In the International Security Strategy, the Ministry of Foreign Affairs specifically emphasises the strategic importance of improving the rule of law and good governance, and an essential aspect are anti-corruption efforts. (3)

However, there is strong evidence that the armed forces are aware of corruption as a strategic issue for operations. The 2014-2017 Dutch strategy for engagement in the Horn of Africa (covering military deployments with NATO, and under EUCAP, EUTM, and UNMISS as well as development aid) lists corruption (particularly government corruption as facilitating aid diversion) as the no. 1 risk to engagement in Somalia. Given the document's 3Ds perspective (Defence, Development, Diplomacy), it can be concluded that this document is also evidence of an awareness of corruption as a strategic issue on operations.(5) The MOD’s “Catalogue of National Operations” includes a national risk assessment, which cites a key risk as “the interrelationship between extremism and the criminal underworld (corruption, influencing stock markets, influencing public administration, and criminal involvement in vital enterprises)” as a major threat. (6, p.43). Dutch military personnel who participated in operations in Afghanistan have expressed frustration at their efforts being subverted by corruption, nepotism and patronage networks, which meant that the 'select few' were controlling most of what was happening on the ground. (7) Finally, a party-political document on a potential Mali mission suggests that the Netherlands could contribute intelligence capacity, which is to fit well with strengthening aid and the rule of law. (8)

Furthermore, selected German/Dutch staff officers at the 1st German-Netherlands Corps (1 GNC), a NATO formation, have participated in two ad-hoc engagements on the topic of corruption. In October 2014, TI-UK Defence and Security Programme led a workshop for 1 GNC officers and officials, analysing the impact of corruption on international security; in May 2015, representatives of TI-UK DSP participated in a 1GNC scenario-based exercise and provided expertise on anti-corruption.

Researcher + Peer Reviewer3634: All military commanders at all levels receive training on integrity during their regular training programmes. There is no specific anti-corruption training for all commanders who are to be deployed, although general integrity training aimed at ethical concerns in the armed forces is likely to be offered through the Dutch Institute of Military Ethics. However, in special cases, when military personnel leave for individual deployments, anti-corruption training can be included in the courses they complete.

There is no evidence that commanders do not apply this knowledge in the field and the interviewees also believe that commanders do use this knowledge in the field. Further, the MOD takes corruption in operations very seriously. During an interview, it was stated that if there are rumours of breaches of anti-corruption regulations by deployed personnel, these individuals are immediately returned to the Netherlands, and a formal investigation is conducted. However, this could not be verified through publicly available information.

Selected German/Dutch staff officers at the 1st German-Netherlands Corps (1 GNC), a NATO formation, have participated in two ad-hoc engagements on the topic of corruption. In October 2014, TI-UK Defence and Security Programme led a workshop for 1 GNC officers and officials, analysing the impact of corruption on international security; in May 2015, representatives of TI-UK DSP participated in a 1GNC scenario-based exercise and provided expertise on anti-corruption.

Researcher + Peer Reviewer3634: The evaluation of the deployment in Uruzgan, Afghanistan, gives weight to corruption and integrity, but it is mainly focused on the Afghan institutions and the Dutch anti-corruption efforts. It addresses the Dutch troops' own impact on corruption to some extent, as it provided large sums of donor money. The evaluation mentions that &quoute;there was a constant critical attitude and dialogue about the continuation of the efforts for certain organisations.&quoute; It also mentioned that monitoring of these activities was very difficult, but this indicates that they do monitor their activities. There is no evidence of the regularity of this monitoring. (1)

Normally, the COID conducts integrity risk-analysis for departments of the MOD. However, it is unclear if they also investigate these risks in operations. The interviewees could not confirm whether these specific investigations take place. (2, 3)

RESPONSE TO GOVERNMENT REVIEWER: No public information on the topic has been found. Score was raised to 2 to reflect uncertainty on the extent and role of deployed monitors.

Researcher + Peer Reviewer3634: There are extensive regulations on local contracting. This is addressed in the Handbook on Procurement and the Secretary General direction A/872, 'Integrity Protection'. (2) These documents are, however, not publicly available. Whilst on deployed operations, a special staff section (J8) is responsible for the local contracting and finances. This section receives specific training for local contracting. There is also a designated official who is responsible for compliance with the regulations. However, it has not been possible to ascertain the extent to which these regulations address corruption risks.

Researcher + Peer Reviewer3634: The Dutch government does employ PMCs and a 2011 article (7) suggests that the sector may be on the rise in the Netherlands. During the deployment of Dutch forces in Uruzgan, Afghanistan, local private security personnel - the Afghan Security Guards (ASG) - were hired. They were used for compound protection; patrolling and manning checkpoints.(2) Furthermore, the government uses private security personnel to protect embassies in exceptionally insecure environments.

The MOD and the Ministry of Foreign Affairs state that the selection of PMCs is done according to &quoute;very high quality standards&quoute;. Therefore the selection criteria 'quality' is the most decisive in this process. The procedures and standards are described in the Handbook on Procurement of the MOD. The MOD states that MOD experience has shown that the monitoring of the contracts provides sufficient safeguards.

The actions of the PMCs are bound by strict and precise instructions. In the case of the ASG, they were not subjected to Dutch or ISAF command, but their contract stated that &quoute;they have to follow instructions of the ISAF commander&quoute;. The contract further states that ASG personnel should respect the Afghan law and the human rights. The rules of engagement are based upon self-defence, and if they are required to use force, they have to report it according to the regular Dutch procedures. There is evidence that this happens.

In 2008, the Advisory Council on International Affairs (AIV) published a report on the use of PMCs by the Dutch government. One of their conclusions was that there are gaps in the contract which limit the possibility of prosecuting contractors who commit crimes due to the Netherlands demanding immunity from the host country for all its personnel, governmental and private. However, the Netherlands does not have jurisdiction in Afghanistan over Afghan nationals who commit crimes. The AIV concluded that this effectively means a situation of impunity for the contractors. In the government's reaction to the report, it stated that it does have clauses in the contract with ASG that the immunity can be revoked. Therefore the MOD argues that there is no 'immunity gap'. (1, 3)

The Netherlands is signatory to the Montreux Document and the International Code of Conduct for Private Security Service Providers (ICoC), both of which lay out good practices and guidelines when it comes to employing PMCs. The Document stipulates that PMCs should be subject to the criminal laws of the country contracting them and the country on whose territory they are registered and operate. It stipulates that when hiring a PMC, the state employer should ensure that the PMC has not been involved in organised crime, bribery, and corruption, and that its staff are properly trained, which includes anti-corruption training. The Document further encourages employing states to ensure that PMCs have policies against corruption. (3)However, the provisions of the Document are not legally binding, although the International Code of Conduct Association assesses PMCs' suitability to join the Code and audits their performance. (5) It is, however, unclear to what extent this is effective, particularly as standards are still being formulated. (6)

In sum, there are standards for the selection of PMCs and their tasks. However, there are shortcomings with respect to the possibility of prosecution when crimes are committed.

Researcher + Peer Reviewer3634: Procurement at the Dutch MOD is subjected to several relevant regulations: The European procurement directives (Public procurement 2004/18/EC, Defence procurement 2009/81/EC), the national procurement regulations, the provisions of the Public Administration Probity in Decision-making regulations (BIBOB) and the Code of Conduct of the European Defence Agency (the latter is non-binding). Both European procurement directives have been transformed into national law through the Defence & Security Procurement Law (Aanbestedingswet op defensie- en veiligheid) and the Procurement Law (Aanbestedingswet 2012).

The Defence & Security Procurement Law defines a number of exemptions from its provisions (Articles 2.16, 2.17 and 2.127), including among other categories:
- national intelligence and security procurement processes, for example in the field of encryption. However, these are paid out of the secret budget, which is only 0.07% of the total defence budget. According to the interviewees, there is independent scrutiny for these types of procurement.
- government-to-government procurement and multinational R&D projects
- procurement for international operations.

On the issue of corruption, both procurement laws have the same provisions. They compel the governmental organisations to disqualify tender providers from the procurement process if they commit bribery and fraud (Article 2.76 of the defence procurement law). However, they do leave an opening to bypass this rule if there is a compelling general interest to do so. The BIBOB policy guideline provides more specific regulations on integrity and corruption, requiring the contracting authorities of the national government to investigate the integrity of companies for contracts above a certain threshold in the field of works (e.g. construction contracts), the environment and IT.

If the MOD is the contracting authority, the bidding actors also have an opportunity to address corruption within the MOD. Complaints or undesirable behaviour can be reported to the Central Organisation Integrity Defence (COID). Through the COID, the bidding actor can contact the integrity official of the contracting authority. If there are doubts on the legality of a specific procurement process, these can be addressed formally through the formal complaints procedure or the appeal procedure.

It is unclear what kind of independent scrutiny applies to exempt items, as no public information on the issue could be found.

RESPONSE TO TI REVIEWER: Score 3 maintained due to lack of evidence re. oversight of items exempt from the provisions of the Law.

Researcher + Peer Reviewer3634: The procurement cycle of the MOD is guided by the Defence Materiel Process (DMP, 2, 3). The DMP is applicable to all projects in the field of materiel, infrastructure, automation and exploitation from a threshold of €5 million. The DMP consists of several phases, from setting of requirements to evaluation. The financial size and the political sensitivity of a project determines how centralised the project is, and in how much detail the parliament is briefed. However, the parliament has to be informed, by the MOD, of all projects above the threshold of €25 million. The minimum requirement is for the MOD to annually report on the progress through the Materiel Projects Overview (MPO) or the annual budget and annual report, but higher thresholds require more in-depth reports. In general all communications with the parliament are accessible to the public, however the Defence & Security Procurement Law lists exceptions such as commercially sensitive information and national security considerations, which would prevent information form being made public.

The Defence & Security Procurement Law mandates that its provisions - including those on transparency and provision of information - apply to the entire life cycle of procured items, thus including disposal. (5) The specific tenders of the MOD are published online on the Tenders Electronic Daily, TenderNed and the Electronic Bulletin Board. Especially on TenderNed, all &quoute;more mundane&quoute; tenders are published. (1, 4)

RESPONSE TO PEER REVIEWER 2: The disclosure threshold is specifically pegged to limits set under European Directive 2009/81. (Source 5 paras 2.3-2.4; Source 6)

Researcher + Peer Reviewer3634: There are two oversight mechanisms for the defence procurement cycle. One is the formal political cycle: parliamentary approval is necessary for acquisitions above a certain threshold. The parliament is therefore informed about the progress of procurement two letters from the MOD, the annual Materiel Projects Overview (for projects worth more than EUR 25 million), the budget and the annual report. (5, 6) Material on each project in the annual Materiel Projects Overview contains a list of parliamentary briefings and consultations that have been conducted in association with it, including questions answered and studies discussed with MPs. (5, p. 52) Therefore, parliamentary oversight is clearly detailed over each major project

The second oversight mechanism is independent audit. This is conducted by the Audit Service Defence (ADD), part of the Central Government Audit Service. These departmental audit services are considered independent. Specific reports of the audit services are generally not publicly available, but the main findings of the audit services are published in a summarised form annually.

On top of this, there is the Court of Audit, tasked with the overall audit of all government departments. It scrutinises major defence acquisition projects such as the F-16 fighter aircraft replacement project (8, 9), and can inquire into other procurement projects if there is reason to suspect irregularities. The reports coming out of these inquiries are available to the public.

The oversight mechanisms do have some shortcomings. In 2012, the ADD published a report on the information availability and decision-making processes of investment projects. One of its conclusions was that there are sufficient checks and balances, but that they do not always work as expected, citing the complexity of procurement processes as one of the main reasons. (4)

Researcher + Peer Reviewer3634: The MOD provides information on the actual and potential defence purchases in the annual Materiel Projects Overview (MPO), the annual budget and the annual report (1-4). The MPO and the annual budget contains detailed information on each project of more than €25 million. For current projects, the annual expenditure is projected for up to 2018. The annual report publishes in detail the expenditure per project that was already realised. For planned projects, the budgeted expenditure is assessed, but due to commercial sensitivity, the exact budget is classified. A broad price range is included in information made public. (1-3)

This information is open to legislative scrutiny, as each annual report of planned and current projects is specifically addressed to the parliament. (1, 4) It can also be scrutinised by the Court of Audit, particularly when there are issues related to large expenditures such as the acquisition of the F16. (5, 6) It is, however, unclear how regular and targeted audits are.

The Defence & Security Procurement Law defines a number of exemptions from its provisions (Articles 2.16, 2.17 and 2.127) and some of these items - including those procured for intelligence purposes and multinational R&D projects - might not be made public. (7)

Researcher + Peer Reviewer3634: The issue of bribery and fraud is addressed in the Public Procurement Act and the Defence & Security Procurement Law. They compel governmental organisations to disqualify bidding companies from the procurement process if they commit bribery and fraud (Article 2.76, 1). However, it is possible to bypass this rule if there is a compelling 'general interest' to do so (Art. 2.78, 1). All companies who have contracts with the government are also required to sign the general Terms and Conditions; article 21 thereof specifically bans bribery and conflicts of interests.

The BIBOB policy guideline provides more specific regulations on integrity and corruption (5). According to this guideline, the contracting authorities of the national government are required to investigate the integrity of companies for contracts above a certain threshold in the field of works (i.e. a type of procurement process encompassing, among others, construction and civil engineering), the environment and IT. This investigation starts with a questionnaire, and if integrity is questionable, the BIBOB office becomes involved. This office will then start an investigation into police and judicial documentation.

However, there is no mention of the need for formal and publicly declared compliance programmes.

Researcher + Peer Reviewer3634: The procurement requirements are explicitly derived from the national defence and security strategy. The broad defence policy is publicly available in its most recent policy paper, &quoute;In the interest of the Netherlands&quoute;. (5) In the procurement cycle, the link between the specific procurement need and the policy is explicit. In the requirement phase (phase-A), the parliament receives a letter in which the MOD presents the reasons why the equipment is necessary for the Ministry to fulfil its tasks. In the annual Materiel Projects Overview, this link is also made. (3, 4)

For example, a letter to parliament providing justification for acquisition of tanks states:

“This project is part of the policy to further improve the operational deployability of the military. It fits in with our commitment to provide better protection of deployed units and at the same time the effectiveness of the main weapon to further increase. The project reinforces the following operational capabilities of military power: effective deployment and safety and protection.” (6, p. 52)

The audit is conducted by the independent, intra-government Audit Service Defence (ADD) and by the external Court of Audit, which scrutinises major defence acquisition projects such as like the F-16 fighter aircraft replacement , and inquire into other procurement projects if they have reason to suspect irregularities. (7, 8) The reports coming out of these inquiries are available to the public. The report of the Audit Service Defence are generally not publicly available, however, the main findings are annually published in a summarised form.

Researcher + Peer Reviewer3634: Both the qualitative and the quantitative requirements are clearly identified in the defence procurement cycle. (2) The Ministry of Defence is required to update the parliament on procurement projects and in the update letters, the MOD clearly addresses the quantitative and qualitative requirements. These are both separate sections in the MOD letter which sets the requirements (phase A). Many of these communications are publicly available (3). There is no evidence that there are occasionally opportunistic and unplanned purchases.

Researcher + Peer Reviewer3634: The Defence & Security Procurement Law enshrines competition as a procurement principle in all cases but ‘extreme urgency and crisis (Article 2:23; 'crisis' is defined in the Law, providing a framework for decisions). Provisions of the Law do not apply to listed exemptions (Articles 2.16 and 2.17), which include multinational research projects and government-to-government contracts.

The limited-competition procurement processes include those paid for from the secret budget, which is only 0.07% of the total defence budget; the total value of contracts is likely to be under 10% of the defence budget. All procurement is under the scrutiny of the audit services and the Court of Audit. (6) According to article 87.3 of the Comptabiliteitswet (Accountancy law), the president of the Court of Audit is the only person who is authorised to scrutinise secret expenditure. (8) The president then reports any findings only to the responsible minister, who can in turn provide some information to parliament. (9)

The MOD publishes its tenders on the Dutch TenderNed, the European Tenders Electronic Daily and the European Defence Agency’s Electronic Bulletin Board. The procurement process is conducted as open competition. The Dutch government can demand offset requirements up to 30%. These are also open to competition. (5)

It is unclear whether exemptions to the Defence & Security Procurement Law are justified to scrutinisers.

Researcher + Peer Reviewer3634: The tender boards are subject to the regulations in the Handbook Procurement and the Secretary General direction A/872, Integrity Protection. These are, however, not publicly accessible. It also seems that general codes of conduct applying to defence personnel and containing regulations on bribery and conflict of interest are applicable. (6, 7)

The audit processes in place are those pertaining to procurement audits as such. Procurement is audited by the independent intra-government Audit Service Defence (ADD) and the external Court of Audit, which scrutinises major defence acquisition projects such as the F-16 fighter aircraft replacement project, and inquire into other procurement projects if they have reasons to suspect irregularities. The reports coming out of these inquiries are available to the public. The reports of the internal audit services are generally not publicly available, but their main findings are published annually in a summarised form.

Researcher + Peer Reviewer3634: EU regulations ban uncompetitive behaviour by companies and associations though, for example, article 81 of the EC treaty (1). The Dutch competition law also strongly disallows collusion (3, article 6), and the law applies to defence sector firms as well. The Authority for Consumers and the Market (Authoriteit Consument en Markt) is the oversight mechanism for collusion and its website presents many examples of it no-tolerance approach. However, no examples of collusion in the defence sector have been identified. Possible sanctions include prosecution and heavy fines (but not debarment).

Researcher + Peer Reviewer3634: Procurement staff are organised into a professional department in the Ministry of Defence. They are required to follow the regulations of the Handbook on Procurement and the Secretary General Directive A/872, 'Integrity Protection' (which is not publicly available), and therefore ought to have training on procurement issues (this, however, could not be verified through publicly available information). A special department within the Defence Materiel Organisation - the Oversight Defence Suppliers (TDL) are tasked with ensuring that contractors meet their obligations on reporting and delivery. In the pre-contractual phase, it supports the project managers and procurement staff. In the contract phase, the TDL provides oversight on the obligations of the suppliers, or monitors implementation if direct supervision is outsourced in cases of contracts with non-Dutch companies. (4) For this, specialised personnel is needed, and therefore specialised training can be assumed; however, no publicly available information has been located.

However, there have been reports of staff shortages at the Defence Materiel Organisation, which resulted in delays at various projects. Following a reorganisation in 2007, the DMO still appears to be struggling with the new structure and attempting to work across military commands for particular procurement projects. (1, 2, 5)

Researcher + Peer Reviewer3634: There are two complaints mechanisms. The first is the possibility to file a complaint with the Central Defence Integrity Organisation (COID) and contact an &quoute;Integrity Official&quoute; through the COID. The second possibility is to file a formal complaint in the court systems (arbitration court is one possibility) as formulated in the Defence Procurement Law, articles 3.2 to 3.7. However, according to the defence industry official interviewed (no public sources on the issue are available), there are signals within the industry that companies' perception is that in practice a complaint could be disadvantageous, and that companies are not well protected against discrimination in future tender opportunities.

There is no direct evidence that these mechanisms are used. An annual summary of reports on integrity issues contains no specific category for industry reports.

Researcher + Peer Reviewer3634: Sanctions for corrupt activities of a supplier are in place. Article 21 of the general terms and conditions for public procurement states that bribery and conflicts of interests will lead to a cancellation of the contract. (1) The Defence & Security Procurement Law also foresees debarment from future bids as a sanction for corrupt practices. Budders are required to submit a statement confirming that the grounds for exclusion do not apply to them; if the declaration is found to be untrue, the contract can be terminated. (6, Art. 2.74, 2.76) Criminal responsibility can also attach to legal entities; corrupt suppliers can be fined with up to EUR 810,000 and their employees can be fined (up to EUR 81,000) or imprisoned for up to four years.

There is also some evidence of a company being disciplined after serious corruption charges, although they are from outside the defence sector. A car supplier, PON, won a tender to supply the police with new vehicles. However, there have been serious corruption allegations, after which the minister of Security and Justice cancelled the possible extension of the contract. Further steps could be taken when the investigation was concluded. (3, 4, 5)

Researcher + Peer Reviewer3634: The Dutch regulations allow offsets on contracts that are exempted from EU defence procurement legislation through article 346 of the Treaty on the Functioning of the EU and are worth over EUR 5 million. Suppliers are then required to subcontract 60% of the total financial value of the contract to Dutch companies. The Dutch government treats offsets as a way for Dutch companies to participate in the supply chain of key manufacturers of defence equipment, and to secure access to and maintenance of expertise related to technology. (5) Offset contracts - i.e. contracts between the foreign supplier and Dutch companies - fall under the responsibility of the Commissariat of Military Production at the Ministry of Economic Affairs. (3)

The Netherlands’ Defence Industry Strategy, jointly issued by the MOD and the Ministry of Economic Affairs, makes no reference to the need to ensure integrity and counter corruption risks in offsets. (5) General laws regulating bribery and other corruption-related crimes are likely to apply (particularly as some instances of bribery in the private sector are criminalised), but specific offset-related provisions could not be located.
There are no specific indications that the offset program is followed up with audits to check its integrity. However, the parliament is informed through an annual report on the offset policy. In this report, the details on the offset projects are shared in an aggregated format. The Ministry of Economic affairs monitors these offset contracts, but again, it is not clear whether integrity is targeted as part of monitoring or audits. (4)

Researcher + Peer Reviewer3634: There is some transparency in the offset process and annual reports have been published on the progress of the offset policy and fulfilment of contracts. This provides aggregated information on, for example, the value of contracts and the type of orders the Dutch companies received. The annual report also contains a commercially confidential section, which is sent to the parliament, but not made available to the public. This section provides more detailed information on the current offset agreements. (2)

There is also an online publicly accessible database containing information on foreign suppliers with offset obligations. However, only the company name, branch and contact details are accessible. There are no details on the specific value of the obligations, and it is not clear which Dutch companies receive offset orders. (1)

Researcher + Peer Reviewer3634: There is an online publicly accessible database listing foreign suppliers with offset obligations. (1) There is some competition for these contracts, as multiple companies compete for the available offset opportunities. However, they are less formal than the competition for the main contract, as the main contract is published online on the various publicly available platforms. These tenders are specified and the qualification criteria are published. According to the interviewee, for offset contracts this is less formal and less open.

Researcher + Peer Reviewer3634: It is known that intermediaries are used (based on the cited interview), but there is no known policy through which they are controlled or limited. In the general terms and conditions of public contracts, article 21 specifically addresses bribery and conflicts of interest which can lead to cancellation of the contract. (1) This article directly addresses third parties, suggesting that corrupt actions of intermediaries could also lead to the cancellation of the contract.

Researcher + Peer Reviewer3634: The parliament is informed in advance of each major arms procurement. Projects (and prospective projects) worth over EUR 25 million that are included in the annual “Materieelprojectenoverzicht” documents,which provide a summary of all expensive purchases and sales from the MOD. Parliament is briefed separately on the contents. (4) The publicly available information contains the value of the contract and the supplier. A classified letter containing additional financial information is also sent to the parliament. (1)

After the signing of the contract, an annual report is published on the progress on the major arms projects. This contains more specific information about the payment timelines and the interest rates. Examples of such reports are publicly available. (2, 3)

Researcher + Peer Reviewer3634: According to the MOD's general terms and conditions, the supplier can only subcontract if it has a prior consent of the ministry (article 6). However, the prime contractor is still responsible for meeting the obligations in the contract and the general terms and conditions, and to ensure that subcontractors do not meet exclusion criteria, including bribery and corruption. (2, 3) There is evidence that defence procurement legislation requires all main contractors to ensure that their subcontractors comply with the same standard of ethical criteria as applied to main contractors: the contracting authority is empowered to exclude subcontractors (both during the selection phase and during the execution of the contract) based on the same criteria which apply to the main contractor, and this includes corruption and bribery. (Article 2.66, 2.76, source 3)

Researcher + Peer Reviewer3634: There is little evidence of major political influence by selling nations on the acquisition decisions, and it is made unlikely by the planned acquisitions process, basing of purchases on identified requirements and 'needs statements' which need to be reported to parliament, and internal and external audits which focus on objective criteria and verify whether the process has been followed (see Q57-Q60, Q62-Q63). Examples of such audits are publicly available. (4) Political influence cannot be entirely ruled out though, especially in broad international cooperative project like the F-35 and the NH-90. (1)

RESPONSE TO REVIEWERS: Given lack of incontrovertible evidence combined with the possibility thereof, score 3 appears to be the best choice.