Portugal

Researcher + TI Reviewer3904: Procedures and controls related to asset disposals are clearly stated in listed sources, but the Court of Auditors' reports show multiple problems in reporting and data gathering. Auditors mention a general lack of benchmarks in IT systems, lack of standardization in information gathering procedures and deadlines for the disclosure of information being stretched. There is no indication that any steps have been taken in order to fix these issues: some of these issues are mentioned in 2014 about reports being drafted in 2009.

Moreover, there is no easily available source for the verification of asset disposals and the exact destination of proceeds. Planned disposals are also difficult to establish beforehand: Appendix II of Organic Law 7/2015 stipulates aggregate categories in which to apply asset disposal procedures, while Ministry dispatches on asset disposals provide only vague information which does not specify the destination of proceeds. The data is highly aggregate and it is very difficult to determine in advance which assets are to be disposed of.

Branch chiefs are to inform the Minister of Defence about which assets may be disposed of. The Directorate-General of Armament and Defence Infrastructure is responsible for the promotion and coordination of asset disposals, but there is no publicly available tool to monitor these oversight bodies

Researcher + TI Reviewer3904: Asset disposal is surveyed and audited by the Court of Auditors. These procedures are performed at most two years after disposal; because they are also scarce, media outlets tend to publicize them. Court of Auditors' reports on asset disposals hold up to the standards of all Court of Auditors' reports. The Court is generally perceived to be independent, as it holds the status of a Supreme Court, but its transparency is questionable. It does not conduct ex ante or real-time monitoring.

Some caution is advised in any strong assertion regarding scrutiny and reasonable timeframes. While legal provisions and structures are in place, evidence about actual scrutiny is not very strong; furthermore, monitoring and evaluation reports date back to 2011. CSOs are unable to exert pressure on State institutions towards more frequent auditing given the lag in disclosure of oversight findings.

Researcher + TI Reviewer3904: The Annual State Budget provides aggregate figures for both intelligence branches (SIS and SIED) and their joint support structure (SIRP), but does not provide detailed expenditure items.The Constitution precludes extra-budgetary expenditure, funds or allocations. The Law on Intelligence Services states that classified and &quoute;especially classified&quoute; expenses are not subject to approval by the Court of Auditors.

Although it is possible to infer a broad estimate from Annual State Budget Documents, as items are categorized on an economic and functional basis and the intelligence services are accounted for in each of these categories. On calculation, the budget of the two intelligence services and their joint structure, when added to the defence budget (for the purpose of calculation), account for 1.16% of the conflated budget.

Researcher + TI Reviewer3904: Discussion on secret items is not publicly available and there is clear distinction between secret items, classified expenses or &quoute;especially classified expenses&quoute;. The oversight apparatus of intelligence structures, namely its advisory and monitoring venues is populated by several political incumbents, including MPs, which would suggest that the legislature is provided with the vast majority of spending on secret items. A 2011 study by the European Parliament finds that “Members of Parliament often have access to classified information, but no specific rules have formally been established.”

The Council for Oversight on Intelligence Services is, according to the 2011 study by the European Parliament, provided with unlimited information on budget and projected expenditures as well as past expenditure.

The Council for Oversight on Intelligence Services reports some information on budgetary problems in intelligence services, but these documents do not mention secret items or classified expenses in any detailed way. These reports audit operational procedures and resource shortages, but fall short of providing analytical breakdowns of expenses by each intelligence service branch.

While there is evidence that legislators are provided with reports on the security sector and other classified programs, there is scarce evidence that the legislature is able to act up on those reports. Since 2009, intelligence service chiefs may be called to the Parliament but meetings are held behind closed doors and MPs are not allowed to pose questions. Such meetings indicate that MPs are acquainted with intelligence issues. However, a National Defence Committee member stated in 2011 that the Council for Oversight on Intelligence Services was unable to detect irregular activity and a 2013 newspiece quoted two of the three current Council for Oversight on Intelligence Services members as suggesting that the Council's capacity was questionable and had to move from limited to comprehensive oversight. The Parliament designates this Council's members, but there is no direct Parliamentary oversight.


The question has been scored on the basis of the level of information made available to the Council for Oversight on Intelligence Services and thereafter, Parliament. Given that the Council is a non-parliamentary body, it consists of three members only and there are issues with the degree of oversight, a top score has not been awarded.

Researcher + TI Reviewer3904: Intelligence spending is not audited by the Court of Auditors. It is formally scrutinised by the High Council for Intelligence Affairs, but its reports do not audit spending.

Researcher + TI Reviewer3904: Off-budget expenditure is legally permitted across the Portuguese public administration. It is framed in Law 41/2014 on Budgetary Framing and specified in yearly Decree-Laws on Budgetary Completion which regulate the State Budget. Any exceptional defence expenditure may fit this regulatory regime and any exceptional, unforeseen expenditure may fit into the Budget. Although there are specific situations mentioned in legal bills, such as deployments and peacekeeping missions, other expenses are included, as long as they are approved by the Minister of Defence. The Court of Auditors audits Budget Completion, but these audits are published with timelags of up to 24 months.

There is no concrete evidence of off-budget defence expenditure and if it exists, whether it is adequately controlled or audited. If it does exist, there is no credible justification for its exclusion from the defence budget, the State Budget or the State Budget Completion. The 2013 Budget Completion report compiled by the Court of Auditors suggests that expenditure is not appropriately registered in official books by at least seven Ministries, including the Ministry of Defence. This may include off-budget expenditure.

A mid-score has been selected on the basis that off-budget expenditure is permitted in exceptional circumstances but it is not clear whether there has been such expenditure by the Ministry of Defence in the recent past. If they do exist, they have not been recorded in a reliable way nor has there been any inquiry into them.

Researcher + TI Reviewer3904: As mentioned in the previous question, there is no concrete evidence of off-budget expenditure by defence institutions but there is a risk that they may exist, given they are legally permitted and expenditure was found not to be reliably recorded by the Ministry of Defence, as found by the Court of Auditors in 2013. A mid-score has been selected accordingly.

Researcher + TI Reviewer3904: There is a legal framework for establishing confidentiality based on State security. It has been revised because it was seen to be dated by the majority government coalition in 2014. Other parties saw change as needed, but there was variance in positions: the Socialist Party argued that any oversight should be headed by the Parliament but agreed with some of the proposed changes, while the Communist Party and the Left Bloc argued for toning down the bill and impose much stricter standards on what constituted State secrecy, in order to prevent abuse regarding State secrecy and the classification of information. Legal requirements are now stricter and requirements seem to be upheld, as shown in a recent case involving intelligence officers: one of the judges refused a key defendant's letter on the basis of potential State secrecy violation. Since 2012, a parliamentary council for oversight over State secrecy has a new legal regime for oversight.

There is a clear, if disputed, framework for establishing documents as confidential and legal protection of citizens’ rights to access information do not override it. However, as mentioned in Question 12B, Law 46/2007 regulates access to information and establishes a public agency Comissão de Acesso aos Documentos (CADA) which provides support to public bodies on access to information policy and manages complaints against public bodies which do not comply with legislation. The Lei de Acesso aos Documentos da Administração (LADA) prevents access to information when national security or commercial/industrial secrets are seen as threatened by requests. However, CADA holds very little power over information disclosure. In practice, defence-related complaints to CADA have seldom been filed and there is no follow-up on the success of information requests.

There is some agreement that procedures for establishing confidentiality are scrutinized, since MPs are involved in the process, but some argue that the Parliament should be the main body for the establishment of State secrecy. The above-mentioned council is seen as welcome development.

Researcher + TI Reviewer3904: Empordef is the state holding in charge of managing beneficial ownership in defence companies. The Ministry of Defence is responsible for sectoral guidance over it and as such has actual ownership but not necessarily power over commercial businesses in the defence industry. There is no limitation in terms of the types and extent of commercial enterprises defence institutions may own, given due consideration to conflicts of interest and other regulatory limits imposed on commercial enterprises in general.

There is a clear, if not complete, sense of Empordef’s portfolio and it complies with reporting requirements. However, corporate reporting requirements in general are not detailed and are difficult to read. Further, in 2007 an Empordef VP suggested that ethical guidelines were implemented in the holding due to rumoured corruption; in 2009, one of the largest corruption prosecution cases involved Empordef employees. This information remains valid as the holding company continued to be targeted as a focus of corruption allegations in the defence establishment. Because of its size and portfolio, these allegations are important as indications of structural problems in governance.

As mentioned by Peer Reviewer 2, Empordef was to be liquidated. This was approved by the Portuguese Council of Ministers on July 9. Companies owned will be integrated into the Ministry of Defence and Ministry of Finance structures and 38.6 per cent of its shares in the communications specialist EID are to be sold.

Researcher + TI Reviewer3904: Empordef is part of the State Enterprise sector and is thus subject to audits by the Court of Auditors and the Directorate-General of Treasury and Finance. The Court of Auditors is charged with approving Empordef's financial reports. Further, Empordef contracted PriceWaterhouse Coopers for the 2013 Annual Report. Reports are publicly available, but the Court of Auditors' report dates from 2012 and financial information is updated only until 2013.

As a supreme audit institution and a member of INTOSAI, the Court of Auditors is generally held as independent although it is perceived to not be particularly effective in influencing decision-making. The Directorate-General is held as well-resourced, but its influence is also questionable.

As mentioned in Question 30, Empordef is being liquidated. This was approved by the Portuguese Council of Ministers on July 9. Companies owned will be integrated into the Ministry of Defence and Ministry of Finance structures and 38.6 per cent of its shares in the communications specialist EID are to be sold.

Researcher + TI Reviewer3904: It is illegal for public workers to engage in entrepreneurial activities with direct links to their core activity; commercial enterprises with more than 10 per cent ownership positions held by public officeholders are barred from entering public procurement procedures. These restrictions apply to defence employees. It is not clear, however, how cases of unauthorised private are taken up. The Military Criminal Investigation Police does not target corruption specifically and there has been no sector-wide investigation into unauthorized private enterprise by employees as yet. However, there are indications and suggestions this may take place, as is suggested by the recently completed Parliamentary Hearings on defence procurement.

As indicated in the comments for Question 35 and 50, while there are indications that corrupt activities (and it is assumed here that unauthorised private enterprise would be considered as such) are addressed, the judicial system is seen as slow and ineffective, which may be the case with respect to cases of unauthorised private enterprise as well.

Response to Peer Reviewer 2: Comments edited to reflect lack of such evidence. The score has been selected on the basis that there is no solid evidence of unauthorised private commercial activities by personnel.

Researcher + TI Reviewer3904: There is no record of current or former incumbents in the Ministry of Defence committing to strong anti-corruption measures.

Evidence of commitment is apparent through the publication of several anti-corruption plans, but there is no evidence that these plans result from institution-wide efforts or from leadership by senior members of the Armed Forces. None of these plans significantly commit to sector-wide anti-corruption with the full backing of senior officials. The National Defence Institute has never promoted an initiative on corruption, anti-corruption or transparency in the defence sector and there are no recorded speeches where the Minister of Defence or any Armed Forces chief commits specifically to anti-corruption.

Researcher + TI Reviewer3904: The Military Justice Code provides a number of sanctions against personnel found to have taken part in bribery and corruption. The Statute on Military Personnel provides additional detail on the duties of military staff in the Armed Forces.

Sanctions include written admonishment, short-term imprisonment, dismissal and prosecution. There is evidence that these are carried out in isolated instances, as disciplinary action is to be published in the Official Gazette. The National Guard is usually salient in the media when it comes to petty corruption. Large-scale corruption cases are rarely mentioned in media outlets. The submarine affair is a notable exception, but the case was closed without perceived involvement from Navy ranks. There is evidence that action has been taken against personnel found to have taken part in bribery for attempted corruption and military judges at the Supreme Court of Justice have decided on a number of cases. However, as mentioned in the comments for Question 50, the judicial system is often delayed and seen as inefficient.

Researcher + TI Reviewer3904: There is limited to no whistleblower protection in general or pertaining to the military. While an addition for the protection of public sector officials was provided in 2008, it is reported to be perceived as weak and ineffective and primarily only as a response to international condemnation. Further, whistleblowers can be criminally prosecuted of face civil lawsuits for defamation. This is reportedly more pronounced when it comes to reporting corruption or misconduct of powerful officials.

The 2013 study on whistleblowing in Europe found that there are no formal reporting channels and typically, officials report wrongdoing to their supervisors. It also found that almost universally, whisleblowers (including those from the public sector) knew they would face reprisal and public officials specifically should be prepared for the possibility of having to give up everything. There is no evidence there is a different organizational culture protecting whistleblowers in the military in Portugal.

Researcher + TI Reviewer3904: Procurement, contracting, finance or any other management staff positions are regulated by general public employment legislation. High-level positions are subject to special regulations. Since 2012, selection of candidates to high-level positions has been monitored by a specially-appointed commission, but there is some evidence that this commission lacks the political clout to fully depoliticize the recruitment process.

There is no evidence that mid-level positions related to sensitive roles are subject to strict vetting procedures. However, anti-corruption plans show special attention to staff in procurement and financial management positions. This is evident in the Army, Airforce and Navy Anti-Corruption plans, which identify risks related to procurement procedures and set relevant goals in terms of risk management. It is also illegal for public workers to engage in entrepreneurial activities with direct links to their core activity; commercial enterprises with more than 10 per cent ownership positions held by public officeholders are barred from entering public procurement procedures. These restrictions apply to defence employees.

However, there is no evidence that these positions are subject to rotation, post-retirement restrictions or of any other restrictions. Defence-related positions are not differentiated and there is no mention of these positions being seen as more vulnerable to corruption.

Researcher + TI Reviewer3904: All military personnel are duly accounted for in yearly dispatches published in the Official State Gazette by the Council of Ministers. Civilian personnel numbers are not easily accessible. While aggregate statistics are available in the Public Administration Employment Statistics, the Air Force is the only branch of the Armed Forces making its staff listings available.

These numbers are very likely to be accurate, as the State holds detailed staff listings throughout its payment systems. These are not audited or audit reports are not publicly available.

Researcher + TI Reviewer3904: Pay rates and allowances are published and openly available, both pertaining to military and civilian personnel. 2008, 2009 and 2014 legislation, as provided in sources 1, 4 and 5 is in force as of 2015. The single wage table defines all wage rates for public workers (military and civilian).

Civilian personnel pay rates and allowances are more detailed in comparison with military personnel equivalent rates and allowances. Military allowances are specified in source 6, but there is little detail on the composition of allowances.

Response to Peer Reviewer 2: The question covers information on pay rates and levels of allowances in relation to different tasks performed. The level of granularity requested (the actual levels of pay rates and allowances of individual personnel) is beyond the scope of the question. Score maintained.

Researcher + TI Reviewer3904: Public workers are paid on time, but wages have fluctuated severely since 2010. As such, payment systems are not necessarily routine. Payment structures are published and are non-discretionary. There are indications that payment delays occur sporadically, but it is unclear whether this is due to structural failings or to non-systemic human failure, as in the case reported in source 3. It is reasonable to infer, based on the scarcity of reports on payment delays, that these are exceptional events.

The score reflects difficulties which apply to payment structures in the public sector more generally; there is no evidence of sector-specific failure or weakness. In the defence sector, auditing systems have been proven to work and corrective measures have been taken, as shown by source 4 and 5.

Researcher + TI Reviewer3904: Appointments of military personnel are legally structured and established. There is some evidence that these appointment procedures are followed to a certain extent. Human Resources departments arrange the process upon proposal by branch graduates. Promotions are not exempt from political pressure, as the current (as of 2015) Minister of Defence had suggested lower promotion numbers, as a means of limiting spending, but eventually approved larger promotion numbers. Officials' associations are usually vocal in this respect and demand higher promotion numbers. A 2011 Treasury Inspectorate-General audit, followed by a 2014 Court of Auditors' audit, support the claim that promotions, including senior appointments, are not sufficiently exempt from political pressure. There is no legal provision for external monitoring and no evidence that such monitoring is informally in place.

While the Ministry of Defence has had most of its high-level positions monitored by a specially appointed commission charged with oversight of senior public sector appointments, evidence indicates it is not sufficiently empowered to resist political interference.

Appointments based on personal choice or exceptional merit are subject to no monitoring. They involve a higher level of personal or subjective reasoning.

Response to Peer Reviewer 1: Promotions are covered in Question 42.

Researcher + TI Reviewer3904: Formalized procedures for promotion are defined in the Statute of Military Personnel. There are five different promotion regimes. Human resource departments in each branch are responsible for the organization of promotion procedures. There is no independent oversight of promotion procedures, as these are confidential. Furthermore, legislation requires one assessor and relinquishes a second one when the assessor is a rank general, operating directly under a single service chief or is a top rank officer (when not directly employed in the Armed Forces). These evaluation procedures are not formally appraised by external bodies.

A recent case related to promotions is the 2014 proposal by military chiefs (not promotion boards) to promote 4000 officials. The Minister of Defence justified his acceptance of promotion proposal appealing to the specific character of the military and the fact that these promotions did not threaten financial control over military expenditure. The 2015 process proceeded in the same fashion. Promotion processes are not sufficiently transparent, as only officers above a certain rank have their promotion published in the Official Gazette. Bulk promotions are mentioned but not audited.

Promotions boards do not exist as such. Final appraisal is the responsibility of single service chiefs and, in the case of higher ranks, is decided by the High Council for National Defence or, in the case of admirals or generals, depends on the formal nomination by the Government and subsequent validation by the President of the Republic. This is also specified in the Statute on Military Personnel.

Researcher + TI Reviewer3904: Compulsory conscription is not in force in Portugal.

Researcher + TI Reviewer3904: Voluntary conscription takes place in Portugal. There is an extensive regulatory framework on conscription and penalties on bribing and accepting bribes on all counts more broadly. The framework is detailed in the Statute of Military Personnel of the Armed Forces and the Military Discipline Regulation. However, no specific details concern conscription specifically.

A widely reported case suggested, in 2008, that bribing occurred before compulsory conscription was terminated. However, no report has ever been published on this and competent institutions do not publish policy guidelines on conscription procedures. It is unclear whether bribery for preferred postings takes place. There have been no reports on it which may indicate its limited occurrence.

Researcher + TI Reviewer3904: Payment systems and staff rolls are unlikely to be compromised, given the strength of monitoring over Human Resources funding. All expenditure is monitored and approved by the Court of Auditors, which can be considered independent.

However, a recent Court of Auditors' report suggests that payment systems are not completely error-proof and the Defence 2020 Reform must be adopted as soon as possible in order to prevent potential problems. The Court of Auditors' report also suggests, based on a 2011 Treasury Inspectorate-General audit, that the Ministry of Defence and particularly the Army ought to reform systems in place to account for military personnel and their wage structure. This suggests shortcomings which could make ghost soldiers or inappropriate payments possible.

Researcher + TI Reviewer3904: Chains of command are entirely separated from chains of payment by legal instruments and detailed specifications over payment structures. However, 2011 reports suggested that Human Resources administration in the Armed Forces was outdated and wage expenditure was out of control. There is no indication that the situation has changed extensively. The military officers' association reports frequently on problems in the Armed Forces payment structure, suggesting that there is a risk that chains of command may not be fully independent from chains of payment.

The score reflects formal provision, an assumption that separation between chains of command and chains of payment is the same for military and civilian personnel and the aforementioned risks.

Researcher + TI Reviewer3904: Unlike, for example, the healthcare sector, there is no sector-specific defence Code of Conduct. In its place, there are legal provisions in the Statute of Military Personnel in the Armed Forces, the Military Justice Code and the Regulation on Military Discipline on corrupt practice. Other ethical guidelines are provided for in Law 35/2014 where duties of public workers and associated sanctions are specified. Standards are specified in said Law and the current government has not advanced towards the stated goal of a single Code of Conduct for all public workers.

The Ethical principles quoted in the sources do not mention bribery, hospitality or conflicts of interest. Instead, these are very vague guidelines which mention personal honesty and integrity.

Ethical concerns are further considered within the frameworks of existing legislation on corruption, which applies to all public workers. Military personnel are bound to existing legislation on military conduct.
Military personnel are bound to existing legislation on bribery, hospitality and conflicts of interest. Any form of gift reception is sanctioned by law. This does not include civilian staff at the Ministry of Defence or any other defence-related public institutions, however.

As mentioned in Question 32, it is illegal for public workers to engage in entrepreneurial activities with direct links to their core activity; commercial enterprises with more than 10 per cent ownership positions held by public officeholders are barred from entering public procurement procedures.

All public sector employees are to also sign forms stating that they are sworn to comply with the Constitution and the Law.

There is no evidence of a robust oversight mechanism and there is no evidence of anti-corruption training that includes ethics as a module.

Researcher + TI Reviewer3904: As mentioned in the comments for Question 47, there is no defence-specific Code of Conduct but some conduct standards are specified in legislation.

Media salience of violation of ethics guidelines, either in the Public Administration or in the defence sector, is low. Prosecutions are not available per se: decisions made by Supreme Court of Justice judges in charge of military justice are available online. As discussed in Questions 35 and 50, prosecutions are often slow and seen as ineffective.

Researcher + TI Reviewer3904: Branch-specific anti-corruption plans mention training, but there is no indication that defence-related education and training facilities provide courses on anti-corruption, off-site or on-site. Mentions of training do not go into detail (the Army and the Airforce do not mention training in its anti-corruption plan; the Navy does so only in passing without specifying what kind of training its personnel is to receive. Moreover, where evidence of training opportunities does exist, these are targeted at specific personnel, usually mentioned in anti-corruption plans as tasked with plan development, implementation, monitoring and evaluation. The single area where training has been recognised as needed is procurement and there is no specification as to which staff members are to be trained. Sector-wide training does not exist or no information about it is publicly disclosed. Non-military institutions are not invited for training partnerships.

The score reflects a system-wide problem and not a defence-specific issue. There is very little training on anti-corruption, internal monitoring and evaluation or any other training related to the prevention and countering of corrupt practices. What little evidence there is of training lies in organizational plans and these provisions are not benchmarked. There are no performance indicators and there are no assessments by personnel or management on the need for anti-corruption training.

Researcher + TI Reviewer3904: Outcomes of prosecutions are, as a rule, made public in Portugal. Judicial secrecy no longer applies as a case is closed.

Prosecutions are seen as slow and ineffective, as reported in source 6. The judiciary is seen as the main deterrent of effective institutionalization of anti-corruption policy, as enforcement of sanctions is seen as slow and the Statues of Limitation deadlines impose very short timeframes (in the context of a very slow judicial system) to prosecute. This is not strictly a defence issue; it is systemic. The Ministry of Justice has reported increased swiftness of corruption trials, however.

The closure of Attorney-General investigations into the purchase of submarine vessels and the subsequent disclosure of case-closing arguments has been considered here inappropriate suppression of a case. The Inquiry rapporteur whitewashes the report's contents and states that there is no evidence of misdemeanor, although the report's own evidence suggests that there was enough grounds for prosecution on various counts.The final report on military expenditure by the Parliament has been criticized by opposition MPs as a “sleight of hand” by the majority coalition, as there seems to be evidence supporting wider inquiry and a more negative evaluation of defence ministry procedures. One of the MPs who has participated in the Inquiry has also published a book detailing his views on the handling of the submarine case.

Researcher + TI Reviewer3904: Portuguese legislation has recently evolved mechanisms to penalise facilitation payments and other forms of corruption. The Penal Code was amended for provisions against bribery and facilitation payments, while Law 19/2008 also details measures against bribery. Articles 372 to 379 specify various penalties against corrupt behaviour and attempted corrupt behaviour, including imprisonment for up to five years. None of these are specific to defence. However, public perception of the frequency of these payments continues to be unfavourable, as suggested by the GCB 2013. The Ministry of Justice reports a rise in the swiftness of corruption trials and the public perceives recent investigations as positive but revealing a very stark reality.

Portugal complies with the OECD Anti-Bribery Convention and UNCAC, but the effectiveness of enforcement is regularly called into question, namely by GRECO and the recent report by the EC on anti-corruption in Europe. Statistics on law enforcement and court activity show a large gap between investigation on corruption and successful trials.

Researcher + TI Reviewer3904: Portugal fully complies with NATO anti-corruption directives, but there is no known military doctrine principles emanating from within the Portuguese military concerning anti-corruption in operations. Armed Forces doctrine documents are not publicly available and are not subject to discussion in any venue. There is no evidence that anti-corruption is seen as a strategic issue in operations although it is recognised as an issue in wider governance.

Researcher + TI Reviewer3904: Branch-specific anti-corruption plans mention training, but there is no indication that defence-related education and training facilities provide courses on anti-corruption in operations. Non-military institutions are not invited for training partnerships.

There is no evidence that commanders in operations are given proper tools or training by national entities in order to deal with corruption. There is also no evidence of mishandled corrupt activities. Training at the Institute for Higher Military Studies might include a module on ethics in logistics, but this could not be confirmed or disproved. Military interviewees were not available to comment on this question.

Researcher + TI Reviewer3904: Operations reports do not mention the need for anti-corruption monitoring in the field. The National Strategic Defence Concept, as the closest policy document to doctrine, makes no mention of corruption in operations. There is no mention, in reports on Portuguese Armed Forces participation in operations and peacekeeping, of anti-corruption personnel deployed with the aim of conducting monitoring or evaluation missions. There are no ranks related to anti-corruption in the military and military training institutions do not hold anti-corruption in their curricula. There is no evidence that corruption monitors are deployed in the field.

Researcher + TI Reviewer3904: Portugal has no known, nationally produced guidelines or training pertaining to contracting or less broadly, procurement, in deployed operations or peacekeeping missions. Parliament is legally tasked with monitoring deployment and peacekeeping operations, but its mission reports are confidential.

Given that all Portuguese participation in operations is framed within NATO or the UN, their guidelines on procurement in operations would apply. However, the new strategic direction envisaged by the Ministry of Defence does not mention anti-corruption in any relevant way, nor is there indication that guidelines have been provided to deployed personnel. There is no mention at training or education facilities with anti-corruption modules.

Researcher + TI Reviewer3904: PMCs are part of the defence establishment to the extent that they participate as licensed intermediaries in the procurement process. PMCs must be licensed and possess security clearances, as must all individuals involved in procurement or intermediation. Law 49/2009 regulates access. Available evidence, namely budgetary outlays, suggests that PMCs do not provide personnel to the Portuguese Armed Forces. The score has been selected on the basis that while PMCs are not employed by the military, there are no regulations prohibiting this either.

Researcher + TI Reviewer3904: There is extensive legislation on defence and security procurement, stemming from national legislative initiatives and EU directive transposition. While there is no indication of item exemption, there are theoretically possibilities that items may be exempt, namely offset-related items or items falling under State secrecy or security priorities. The Public Procurement Code allows for some secrecy in article 62. Defence contracts are also exempt from Decree-Law 104/2011 in various instances, as specified in article 5. Lower-level, lower-budget purchases proceed through &quoute;ajuste directo&quoute; (direct award), a procedure which allows for single-sourcing when infrastructure contracts up to 150 000 euros are involved, goods and services up to 75000 euros are involved or when &quoute;other contracts&quoute; up to 100 000 euros are involved.

The Court of Auditors exerts surveillance over military procurement but does not perform real-time audits. It is unclear what level of scrutiny exempt items may be subject to, however. There have been various instances of malpractice and the Court has strongly rejected the Ministry of Defence use of single-sourcing (this is discussed further in Question 59 which assess procurement oversight). This points to the potential misuse of items exempt from defence procurement regulation. Further, there have been recent controversies related to the so-called Submarine Affair. A parliamentary committee report published on military procurement after (in 2014) indicated a large degree of arbitrary decision-making in military procurement as well. Other significant issues highlighted were: no quantification of needs, little evidence of sector-specific rules regarding contracts, inadequate technical expertise on offsets and minimal oversight over contract procedures.

Response to Peer Reviewer 2: The question has been answered in the comments above.

Researcher + TI Reviewer3904: The defence procurement cycle is not standardized or structured. Procurement cycles are not sought as methodological foundations and may be found only through formalized competitive procedures for military acquisition. The only clear indication of a procurement cycle lies in Law 7/2015, but there is no commitment to transparency in the new law. In this sense, it is not a significant improvement over Law 4/2006, the previous procurement bill.

There is no formal process of capability gap definition available to the public, there is no indication that such an assessment is conducted and the few bits of information available are related to past procurement procedures in the State procurement database. Asset disposals are mentioned in the Directorate-General of Armament and Military Infrastructure Annual Report 2013, but there is no information on decision-making regarding disposals or the precise destination of proceeds.

Although the years 2013-2014 have shown political will towards strengthened planning processes, the general framework pays little heed to calls for transparency and specific focus on anti-corruption.

Researcher + TI Reviewer3904: Oversight mechanisms in place include the Court of Accounts' 2nd section, the Inspectorate-General for National Defence, the Directorate-General for Treasury and Finance, the National Defence Commission and Parliament hearings. All of these are mandated to be transparent within the limits of the state secrecy and security regime and as such a number of documents may remain confidential. The Parliament Report on Military Procurement (2014) indicates how difficult it is even to MPs to access essential documents in order to perform appropriate audits. Close reading of each defence-related report suggests a lack of effectiveness, because recommendations do not vary on a year-to-year basis, allowing one to infer that the defence establishment is not sensitive to auditors' pressure and that the effectiveness of auditing is limited. The Court of Auditors does not perform real-time auditing, but oversees public bodies' accounts and has been seen to severely criticize the Ministry of Defence over its excessive usage of single-sourcing. However, there is no evidence that the critique had any effect. Further, the Attorney-General who investigates cases (as mentioned below), is appointed by the President under proposal by the government, which impacts independence.

Procurement irregularities, especially related to acquisition (e.g. Trident-class submarines, Pandur-class armoured vehicles), show that these institutions may be active but lack effectiveness and independence. The recent Parliament hearings on military procurement led to a dispute between majority parties and the opposition, who allege that severe irregularities have been taken out of the final draft report of findings. The closure of Attorney-General investigations into the purchase of submarine vessels and subsequent disclosure of case-closing arguments shows that parliamentary scrutiny was unable to shed light into defence ministry expenditure. Investigators were unable to find convincing proof of malpractice, but there is evidence that investigations might not have gone as far as they could have. The final report on military expenditure by the Parliament has been criticised by opposition MPs as a “sleight of hand” by the majority coalition, as there seems to be evidence supporting wider inquiry and a more negative evaluation of defence ministry procedures.

Further, the hearings also found that “minimal oversight over contract procedures” was a serious issue in defence procurement.

Researcher + TI Reviewer3904: The Minister of Defence is obliged to present an annual report on the progress of military acquisitions as stated in the Law on Military Programming There is evidence that these reports are presented on schedule, as they are reported by media outlets through journalists who are sited at the Parliament, but these reports are not published and freely available. The report itself is not subject to external audits. It details aggregate costs by Armed Forces branch, but there is no information on forward purchases (aside from plans detailed in the military programming law) or changed economic assumptions from the Law on Military Programming itself.

State secrecy allows for classification of items seen as affecting State security and defence resources are included in that category. Armed Forces chiefs are also legally allowed to classify information when urgency is a concern. The 2015 Law on Military Programming does not introduce changes in this regard.

Response to Peer Reviewers: Accepted. Score revised further to 2, given that the reports are not public and it is up to the discretion of reporters to provide information on purchases. Further, forward purchase plans are not made available.

Researcher + TI Reviewer3904: According to Law 49/2009, companies looking to operate as contractors in the defence sector must obtain a license. Requests must include full specification of goods and services which the company aims to produce or trade (according to the EU Common Military List), as well as full criminal records; moreover, licenses are given only to companies which attest to vague transparency standards and possess a security clearance. No reference to business conduct or compliance programmes is made. In case of malpractice or provision of false information, companies incur in a number of penalties, including immediate exclusion from bidding. There is no evidence that malpractice leads to exclusion from public procurement (this is covered further in Question 69 which discusses sanctions enforcement on corrupt companies).

Employees admit to widespread corruption in the enterprise sector and there is a general perception of malpractice in the private sector. No surveys specific to the defence industry exist as of yet.

Companies must comply with the Public Procurement Code and several other licensing requirements which are not sector-specific. There is no evidence that compliant companies are preferred against those without such commitments.

Researcher + TI Reviewer3904: There are at least six basic documents that frame procurement within strategic objectives, in addition to the National Defence Strategic Concept. They are:

1 - The Military Strategic Concept,
2 - MIFA 2014 (Missões Específicas das Forças Armadas - Specific Missions of the Armed Forces),
3 - SF 2014 (Sistema de Forças - Capability System),
4 - DF 2014 (Dispositivo de Forças - Organizational System) and
5 - Dispatch 11400/2014.
6 - Defesa 2020

The National Defence Strategic Concept is the first and foremost document on strategy, planning and policy in the defence sector. The only other document reflecting a clear strategic direction is Law 7/2015. These documents are openly published, but the required reports on yearly completion of acquisition planning, as far as the previous law (4/2006) was concerned, are not publicly available, even though the Minister of Defence is required by law to go to the Parliament's National Defence Committee to present the document.

There appears to be no audit procedure on the basis of the Strategic Concept although defence procurement itself is audited (see Question 59). Procurement requirements derive from these documents, as suggested in Dispatch 4332/2015, where the rationale for the purchase of a Multipurpose Logistics Ship is established on the basis of SF2014, DF2014, the Defence Strategic Concept and the Military Strategic Concept. However, no further evidence could be found of previous purchases having been based on strict strategic priorities. The National Defence Committee does not have a role in developing auditing procurement requirements. As discussed in the comments for Question 57, a parliamentary committee report on defence procurement in 2014 highlighted arbitrary decision-making in procurement, which are likely to be in regard to disconnection from national strategic priorities as well.

Of the six previously mentioned documents, only Dispatch 11400/2014 is publicly and easily available. Other sources are either unavailable or mentioned in secondary sources, but remain undisclosed and there is little indication of regular audits on any framework component.

Researcher + TI Reviewer3904: There are procedures in place to define requirements and there is at least acknowledgement of the need to define capability gaps on the basis of strategic documents (which are not publicly available apart from the National Defence Strategic Concept). This is seen in Dispatch 11400/2014 and in Cabinet Resolution 26/2013. It remains, however, that decisions in this domain are not taken on the basis of concrete, quantified evidence or at least a credible link between quantified data points and decision are not made by the defence establishment.

Military chiefs and the Minister of Defence speak of NATO and EU battlegroup commitments, but there is little to no quantified evidence pointing to strategic decisions on the basis of these commitments. Dispatch 11400/2014 is a clear departure from previous approaches, as it is capability-oriented and seeks to establish planning cycles. Thus far, the only procurement document explicitly linked to this Dispatch is the opening of a tender procedure for the acquisition of a multipurpose logistics ship.
The recent Parliamentary hearings on military procurement in 2014 showed significant issues with the procurement cycle and one that was highlighted was the lack of quantification of needs.

Researcher + TI Reviewer3904: Single-sourcing is actively discouraged on the basis of EU directives. However, this applies only to large-scale acquisitions, namely weapon systems and large purchases. Lower-level, lower-budget purchases proceed through &quoute;ajuste directo&quoute; (direct award), a procedure which allows for single-sourcing when infrastructure contracts up to 150 000 euros are involved, goods and services up to 75000 euros are involved or when &quoute;other contracts&quoute; up to 100 000 euros are involved. Recent sources show that the Ministry of Defence rarely complies with these legal limits and the Court of Auditors issued a decision with a severe critique of its reasoning for the single-sourcing of a €1 million purchase of software. Other cases include a maintenance contract with Agusta-Westland, several legal aid service packages and other, high-value contracts.

While a 2008 study had found the extent of single-sourcing in Portugal was only 22 per cent of the value of defence procurement, it is not possible to correctly evaluate the level of single sourcing in current times given the lack of available information from the government. An estimation has been made on the basis of the above information that this is likely to between 30 to 50 per cent of the value of all defence procurement.

Researcher + TI Reviewer3904: The Ministry of Defence's Purchase Unit serves as the public procurement tender board for defence-related operations, which is centrally managed by the Public Administration Shared Services Entity. This tender board is bound by existing ethical principles as applied to public workers, but there is no defence-specific code of conduct or regulatory regime.

The Court of Auditors audits all procurement decisions, making all procurement decisions verifiable, at least theoretically, in real time. However, the Court performs three control procedures: an ex ante control, wherein the Court must approve procurement decisions above a value specified in the yearly budgetary law (€350.000 in 2015); a concomitant control, wherein the Court surveys the procedure as it happens; and an ex post control, where the Court verifies documents after the contract was signed off.

The Court of Auditors provides audit results and reports, which are publicly available. These reports are completed with an average time-lag of two years.

Response to Peer Reviewer 2: Accepted. Score lowered to 3.

Researcher + TI Reviewer3904: Portugal's competition regime underwent changes in 2012 through the adoption of a new Competition Act (Law No. 19/2012 of 8 May). Article 9 of the Act in line with the Treaty of the Functioning of the EU (TFEU) is interpreted as prohibiting infringements &quoute;the object of which is to prevent, distort or restrict competition&quoute; and constitute quasi-criminal minor offences. Sanctions as such do not include criminal sanctions. Fines can be imposed amounting to 10 per cent of the turnover in the year immediately preceding the year when the final decision was taken by the competition authority. Debarment for a maximum of two years can also be imposed. There are no industry-specific exceptions.

Evidence of the use of single-sourcing incentives and problems related to revolving door patterns appear to make collusion a prohibited but tolerated practice. There is no public record of these penalties having been imposed in the defence sector.

A recent report suggests that collusion helped a large company initiate operations in aeronautics. The GSC-Ferrostaal deal, resulted in an investigation of numerous charges, including collusion, and a Parliamentary Hearing. However, the court case was closed without a trial and the Attorney-General's office implied that it lacked sufficient resources to investigate the case and that Statute of Limitation legal deadlines would have applied by then, making the case unsuccessful from the start.

Outside the defence establishment, high-profile cases such as Operação Face Oculta or Operação Furacão have resulted in trials and sentenced a number of political officers, but none of these implicated defence-related companies.

Collusion is often difficult to discern and even more difficult to prosecute, as judicial authorities lack the resources and expertise to ascertain actual instances of collusion and to appropriately audit potential colluding parties. Ownership structures are likely to be opaque and cross multiple jurisdictions, as well as sources of capital, thus making audits difficult for national agencies. This was the case with the submarine procurement case - the AG office requested information from its German counterpart, but was unsuccessful in retrieving information.

Researcher + TI Reviewer3904: While procurement staff are legally tasked with vigilance over contractual clauses that may be detrimental to the State, there is no evidence that they are given adequate training necessary to meet such expectations systematically. The Parliamentary hearings on military procurement identified problems in offsets contracts and an inability of staff in charge of overseeing contract completion with regard to their basic duties. Moreover, there is evidence uncovered by these hearings which indicate potential undue influence by senior officials.

Staff shortages are difficult to assess because departments do not provide a baseline against which to evaluate adequate staffing.

The case of the offsets commission illustrates this: from 2010 to 2013, stories about inadequate staffing served the purpose of showing how asymmetrical the negotiation towards the purchase of two Tridente-class submarines were. This is likely to be representative of procurement personnel throughout the defence sector.

There are no known penalties have been imposed upon contractors. Procurement staff are seen as generally unable to tackle technical challenges in complex contracts. The offsets management problem, evinced in the aforementioned Parliamentary hearings, stems from this inability and lack of resources.

Researcher + TI Reviewer3904: There are formal complaint mechanisms, either enforced through the Public Procurement Code or as a consequence of Portugal's EU membership (recourse to EU mechanisms related to the Common Market). There is an incentive structure that demotivates complaining about undue practice, as evidence indicates substantial procurement is likely to be single-sourced and the judicial system is seen as too slow. Further, it is unclear if companies that complain will be protected against discrimination in the future and how often the complaint mechanisms are used.

Researcher + TI Reviewer3904: The most basic sanction is operating license removal or debarment if a contractor fails to provide all information required for licensing. Further, harder penalties are incurred by non-compliant contractors, including fees up to 200 000 euros for companies and up to 70 000 for individuals or prosecution. Contractors who do not supply truthful information incur in imprisonment of up to 5 years or a fine up to 600 days. Attempted or actual arms smuggling results in the following sanctions: imprisonment from 2 to 10 years or fine up to 1200 days if no further sanction is due under law. Contractors who also incur in collusion face 4 to 12 years imprisonment or a fine up to 1440 days. In cases where negligence is verified, contractors face fines up to 360 days.

Enterprises and other collective entities face additional sanctions. These entities face closure if they incur in criminal activity. Imprisonment periods are broadly similar to those applicable to individuals. A month's imprisonment corresponds to 10 days fine and each of these corresponds to a fee between €25 and €5000. Further, collective entities may face judicial injunction, temporary debarment, prohibition of access to public subsidies, temporary closure and must pay for public information regarding judicial decision regarding their sentence.

However, these sanctions are unheard of in practice as has been seen in recent cases investigated and closed prematurely.

Researcher + TI Reviewer3904: Offsets contracts include auditing requirements. The Court of Accounts and the Commission on Offsets are mandated to audit offset execution. However, as suggested by ongoing Parliamentary hearings, due diligence requirements are lax, even if existent, and auditing works retrospectively, without any concrete incentive towards compliance. Pending offsets contracts maintain low execution rates and decision-makers have no clear solution with regard to due diligence or the incentivisation of compliance.

Researcher + TI Reviewer3904: The Government provides annual reports on offset programmes. There are no programme-specific reports. All existing contracts are mentioned, but full details of investments and details on beneficiary companies are not mentioned. Annual reports do not provide as much detail into each programme as would be required for public scrutiny. For instance, year-on-year economic impact, contribution to the Portuguese defence industrial base or employment-generating performance are not available. Performance is quantified based on expected execution (0-100%) but little qualitative detail about each programme is provided.

A Court of Auditors' report mentions failure on the offsets framework and the Parliamentary hearings on military procurement explicitly mentions offsets as a recurring weakness in the defence integrity system.

Researcher + TI Reviewer3904: Offsets were not subject to the same level of competition regulation than that of the main contract. The 2006 regulation established a vague regime which was replaced by directive EC/2009/81. The level of competition inherent in offsets contracts is contentious for two reasons. First, the supply chain was often unclear. Supply chains deserve reference with regard to offsets since some offsets contracts are awarded to companies which operate at different scales and in different positions within supply chains. Second, offsets were generally less monitored than main contracts because they fell under the supervision of an offsets commission which has been characterized as poorly staffed and resourced, as mentioned in source 4. The offsets commission ceased to function in 2011 and its functions transitioned to a Directorate-General on Economic Affairs.

For these reasons, it is sensible to infer that regulatory enforcement on offset competition is less intense and less strict than in main contracts. However, Portugal transposed EU Directive EC/2009/81 into Ordinance 104/2011 on the Regulation of Defence Procurement. This transposition imposes a phasing-out of offsets contracts and the annual offsets report does not mention any contractual obligation on offsets past 2011. Existing regulations are in line with European standards. EU countries still phasing out offsets may adopt the non-binding Code of Conduct on Offsets which encourages countries to “use offsets to help develop industrial capabilities that are competent, competitive and capability driven; use offsets to contribute to developing the depth and diversity of the European defence-related supplier base”.

The ongoing Parliamentary hearings on the Trident-class submarine purchase, which included an extensive offset programme, revealed low competition and lax actual regulation or regulatory enforcement.

Researcher + TI Reviewer3904: The use of agents and intermediaries is limited by law. The Ministry of Defence and the Directorate-General of Armament and Defence Equipment are tasked with analysis and approval of each formal request for intermediation activities, upon consulting with the Ministry of Foreign Affairs, which must state whether any intermediation is appropriate and opportune within the scope of foreign policy priorities. Requirements and controls are detailed in articles 16-211 of Law 49/2009. Intermediation is authorized upon publication in the Official State Gazette, but supporting documents are not publicly available. There are no known audits on the success ratio of applications for intermediation and the legal regime does not explicitly mention entities tasked with monitoring intermediaries' behaviour. However, financial intermediaries are lightly regulated, in line with financial intermediation in public procurement more broadly, given financial intermediation is seen as a requirement by most large-scale public procurement operations and this is not specific to defence.

State officials have been reported as using intermediaries. This applies especially to financial intermediation. In the Trident-class submarine purchase, the relevance of a well-known financial company is documented, as it provided services to both the Portuguese State and GSC-Ferrostaal.

Researcher + TI Reviewer3904: Principal aspects are not very detailed but are provided prior to the signing of contracts. Channels of distributions are less than appropriate and likely used in order to limit broad circulation. In two specific cases, those of EH-101 helicopters and C-295 aircraft, the Court of Auditors reported numerous failings in the ability of State parties to provide enough information to auditors. Financing packages were not easily available even to the Parliamentary Committee on Military Procurement, to which the Ministry of Defence stated that financing-related contracts were not held in its archives.

The score has been selected on the basis that while principal aspects of financing packages are generally available prior to the signing of contracts, this was not the case with a recent major arms deal.

Researcher + TI Reviewer3904: The Regulation on Defence Procurement is the legal framework of defence procurement in Portugal. It transposes Directive EC/2009/81 to the Portuguese legal system. There is no evidence of Government enforcing formal requirements of anti-corruption or generic compliance mechanisms beyond company law. The Public Procurement Code itself does not mention anti-corruption measures as mandatory.

There is no evidence of malpractice by subsidiaries or sub-contractors, but no known audit has been conducted.

Researcher + TI Reviewer3904: Evidence suggest that strategic requirements are second to opportunistic transactions and seller influence. Since there is no published policy on capability gaps definition and there are no quantified goals in the National Strategic Defence Concept, it is difficult to assess whether seller influence is high or low. A former Minister of Defence stated that the well-known submarine purchase was not high-priority in terms of the decision to purchase a multi-purpose logistical ship. Furthermore, the Parliamentary Report on Military Procurement provides evidence that procurement decisions do not have a sufficiently sound basis in technical and strategic needs to exclude seller influence.