Croatian Round Table

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Croatian Round Table Curbing corruption in
defence procurement Zagreb, February 21,
2007 Transparency Internationals Defence
Anti-Corruption Initiative Mark Pyman Defence
Project Leader, Transparency International UK
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• Defence establishments can address corruption
• Can take the lead across government
• Reducing corruption Building integrity
• Increases operational effectiveness
• Reduces wasted Increases trust
• Use own discipline Use MOD powers
• Use civil society Use transparency
• Use companies to assist
• Pride in a democratic defence establishment

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1.Defence - facts and figures 2. Corruption
risk areas and possible solutions 3. TIs
defence work
Contents
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Defence is perceived as very corrupt
Among the business sectors mentioned previously,
which are the two sectors where the biggest
bribes are likely to be paid?
The results reflect the percentage of respondents
who mentioned the particular sector. This
question was not posed in the BPI 1999.
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But..Defence companies also hate corruption
Source Control Risks Survey, December 2006
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2. Corruption risk areas and possible
solutions
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Six corruption risk areas in defence
establishments

• Corrupt influence in defence leadership
• Non-transparent sources of funding
• Defence Procurement
• Pay, pensions, promotion and reward
• Property, privatisation and sale of assets
• Misuse of intelligence

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Constructive tools and interventions exist-
Improving procurement Public engagement Codes of
conduct for officials Defence Integrity
Pacts Professionalised procurement NOT using
secrecy rules Independent reviews Electronic
procurement Transparency requirements Enlisting
help of bidders Fewer single source bids
Political leadership
Government Defence and Security a-c reform
MOD Sanctions and enforcement MOD discipline MOD
investigations/police
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3. TIs defence work
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History of the project
Stockholm
Cambridge
Stockholm
Cambridge

• 1990s No international energy for reform
• 2000, 2001 Conferences sponsored by Sweden, UK
• Meetings between defence companies, governments,
  NGOs. Requested TI to establish a global project
• 2003 TI received funding to establish an
  international team
• A. Building collaboration B. Building experience

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A. Building collaboration
3. Arms Exporting governments have engaged
Defence Industry a-c coopn
Exporting And importing Govt support
NATO and other intl bodies
1. NATO is engaged World Bank and other IDBs
watching European Defence Agency watching
2. Large defence companies are ready to be part
of the solution
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1. NATO engagement

• NATO keen to build integrity of defence
  establishments and in improving operational
  effectiveness
• Working in cooperation with TI and Defence
  Academies
• Timetable
• Workshop of practitioners Slovakia March 2007
• Exploring with 2-3 Defence Ministries Autumn
  2007
• Follow up conference around October 2007
• NATO political approval Spring 2008
• NATO training modules early 2008

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2. Large defence companies are working to raise
standards

• Companies are developing a common anti-corruption
  code
• In Europe Thales (France) Saab (Sweden), BAE
  (UK), EADS, Finmeccanica (Finland), Rolls Royce,
  Dassault, Ruag
• In USA Lockheed Martin, Boeing, Raytheon, ITT,
  GDC, etc
• First public announcements July 2006
• This ad-hoc community of defence companies meets
  every six months regularly. The meeting is
  chaired by Lord Robertson, former NATO Secretary
  General
• European and US defence industry associations are
  engaged

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3. Governments are the most important players

• Arms Exporting governments have engaged, the
  support of the national Armaments Directors is
  critical
• Engaged so far UK, USA, France, Italy, Germany,
  Sweden
• Arms importing countries are seeking to improve
  the integrity of their procurement procedures
• eg South Korea, India, Colombia, Poland, Latvia
• Creating a precedent of civil and non-government
  oversight in defence Using Defence Integrity
  Pacts for key procurements

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Example Poland
B. Building experience

• Poland is rated in the CPI as the second most
  corrupt country of the EU
• Counteracting corruption was one of the
  priorities of the election campaign in 2005, and
  a priority of the new government
• Reform-minded Minister of Defence, Mr. Radoslaw
  Sikorski (resigned February, 2007)
• The Minister appoints a special anti-corruption
  advisor who invites TI to cooperate
• Independent Monitor invited to monitor a
  procurement process for VIP jets in November 2006

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Poland Defence Ministry actions so far

• Introduction of elements of Defence Integrity
  Pacts
• taking independent advice on technical
  documentation,
• appointing the independent monitor,
• training seminars for the ministry officials
• Improvements introduced to ensure conflicts of
  interests among members of tender commissions are
  eliminated
• Limitation of the single-source procedure, more
  competition
• Prosecutions first general charged in a
  corruption case
• Use of electronic auctions, (30 in 2006, 400
  planned for 2007). MoD has become the leader in
  government

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Poland Defence Ministry lessons so far

• We need to have consistency in our activities
  breaking down the resistance and inertia of the
  administration
• We need experts from outside the defence sector
  to change current thinking and procedures
• It helps to have several sources of analysis
  forces decision making after a comprehensive
  discussion, prevents hiding problems under the
  carpet
• We cement change by changing procedures makes
  them reliable internally and externally

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Croatia

• CPI 3.4 out of 10 in 2006 (Poland 3.7)
• Increase of perception of corruption since 2000
  (when CPI was 3.9 along with many EU countries to
  be )
• Peoples voice 2006 Corruption affects
• Political life 78 Business life 79 Personal
  life 40
• Many new a-c laws. New anti-corruption programme
  in May 2006
• EU commission remains critical of its sucess,
  especially at the highest level Strong
  political will to step up efforts are needed,
  especially on high level corruption (EC Progress
  report, November 2006)
• Published Defence plan 2006 - 2015. Clear
  procurement priorities.
• Major acquisitions Armoured Personnel Carriers,
  Jets

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• In conclusion
• Defence establishments can address corruption
• Can take the lead across government
• Reducing corruption Building integrity
• Increases operational effectiveness
• Reduces wasted Increases trust
• Use own discipline Use MOD powers
• Use civil society Use transparency
• Use companies to assist
• A suggested next step Independent Monitors for
  the
• major Croatian defence procurements

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Finally.. some evidence in favour of
defence..The defence establishment may be better
perceived by the public than other arms of
government
Lowest
Highest
Source Transparency International Global
Corruption Barometer
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Thank youContact mark.pyman_at_transparency.org.uk