Defense Firms’ Anti-Corruption Efforts Scrutinized

 - October 5, 2012, 11:40 AM

Multinational pressure group Transparency International has published a study claiming that two-thirds of the world’s biggest defense companies “do not provide enough public evidence about how they fight corruption.” The group says that its Defense Companies Anti-Corruption Index studied the 129 biggest defense companies worldwide with a combined revenue of over $500 billion. Transparency International estimates the global cost of corruption in the defense sector to be at least $20 billion per year, based on data from the World Bank and SIPRI. It claims that the top leadership at defense companies “do not publicly speak up enough on the importance of preventing corruption.”

Only 34 of the 129 companies provided internal information on their anti-corruption systems for the study. Transparency International says it analyzed publicly available information on the others. It found that 60 companies “provide very little evidence of having basic systems in place to prevent corruption and instill strong ethical values.” The group therefore places them in the lowest two bands of a six-band rating system that it devised.

Only one company–Fluor–merited inclusion in the top band, by virtue of its “extensive” anti-corruption systems. Another nine companies had “good” systems and were placed in the second band–Accenture, BAE Systems, Fujitsu, Hewlett-Packard, Meggitt, Northrop Grumman, Serco, Thales and United Technologies. Major aerospace exporters placed in the lowest band because researchers could identify “very little evidence” of anti-corruption systems included Antonov, China’s Avic, General Atomics, Irkut, IAI, Kawasaki, Kharkov, Patria, Russian Helicopters, ST Engineering (Singapore), Sukhoi and United Engine.

The study includes a foreword from Lord Robertson, the British politician and former secretary-general of NATO. “To the despair of many trustworthy people working in the sector, defense has maintained a reputation for dishonesty and corruption,” he wrote. But, he added, “as governments toughen their attitudes toward corruption, having a reputation for zero tolerance will be a distinguishing asset for a defense company.”