BUILDING INTEGRITY REDUCING CORRUPTION Defence procurement Parliamentary oversight

BUILDING INTEGRITY & REDUCING CORRUPTION Defence procurement & Parliamentary oversight Leah Wawro Transparency International UK Defence & Security Programme

WHAT WE DO Our vision is a world where Defence Ministries, Security Ministries, Armed Forces, Security Forces and arms transfers are transparent, accountable and free from corruption. Defence Ministries & Armed Forces; police and security forces Civil society & media Defence companies & industry associations Research Tools and training Others: parliamentarians, intl. organisations

IMPACT Why does corruption matter- a citizen’s perspective DANGEROUS Corruption undermines military effectiveness. Poor equipment risks the lives of troops. DIVISIVE government armed forces. WASTEFUL Corruption destroys citizens’ trust in and the The defence sector is worth $1. 7

IMPACT Why does it matter to the military and defence officials? Defence officials tell us that corruption: • Wastes scarce resources • Hurts operational effectiveness • Diminishes public trust Corruption is a strategic issue for

HOW DOES CORRUPTION HAPPEN IN DEFENCE MINISTRIES & ARMED FORCES? POLITICAL PERSONNEL PROCUREMENT Defence & Security Policy Leadership Behaviour Technical Requirements/Specifications Defence Budgets Payroll, Promotions, Appointments, Rewards Single Sourcing Nexus of Defence & National Assets Conscription Agents & Brokers Organised Crime Salary Chain Collusive Bidders Intelligence Services Control Values and Standards Finance Packaging Export Controls Small Bribes Offsets FINANCE OPERATIONS Contract Award & Delivery Asset Disposals Disregard of Corruption In. Country Subcontractors Secret Budgets Corruption Within Mission Seller Influence Military-owned Businesses Contracting Illegal Private Enterprises Private Security Companies

GOVERNMENT DEFENCE ANTICORRUPTION INDEX 2013 • Assesses vulnerability to corruption • 5 key areas: political, personnel, operations, financial, procurement • Tool to help guide reform • Independent assessment with MOD input

RESULTS: EUROPE & CENTRAL ASIA

GI FINDINGS: CROATIA: BAND C 66% POLITICAL OPERATIONS + + + - 53% FINANCIAL PROCUREMENT 63% 45% 31% PERSONNEL Parliamentary Defence Committee generally transparent No evidence of off-budget expenditure, contingency funds small Well-established payment system Defence budget lacks detail; limited time to review prevents strong parliamentary scrutiny Lack of transparency in Military-owned businesses No provisions to protect and encourage whistleblowing in defence sector

PROCUREMENT: GOOD PRACTICE Good Practice • Transparent, detailed procurement process available to public • Procurement based on well-defined defence strategy • Controls on tender boards • Competitive procurement: single-sourcing approx. 10% or less • Transparency and due dilligence in offsets • High standards for companies • Control of agents and brokers • Controls on sub-contractors and subsidiaries • Anti-collusion mechanisms

GOOD PRACTICE EXAMPLES: PROCUREMENT Brazil • Agents and brokers banned • Procurement is generally competitive, not singlesourced • By law, financing package must be published before contract is signed Poland • Transparency in full procurement cycle; • Details of tender proceedings available online • Transparency for both competitive and singlesourced procurement • Clarity in asset disposals, including what funding received goes to Greece • Following scandals, Greece plans to phase out offsets by end 2014 • Ongoing offset contract subject to extensive due Potential tool: Defence Integrity Pacts • Independent Monitor • Technical support team: local and international • Timescale: from procurement announcement to end; include offsets • Funding: directly by government; regional fund; clause in contract

PARLIAMENTARY OVERSIGHT Good practice: • Defence committee with strong powers of scrutiny over budget • Scrutiny of acquisition planning, defence procurement; no items • exempt Access to audit reports • Parliamentary committee provided with extensive information on secret items; line-item description of expenditures and audits • Power to scrutinise and oversee intelligence services • Disclosure of past and future purchases

GOOD PRACTICE EXAMPLES: PARLIAMENTARY OVERSIGHT Australia • Joint Standing Committee on Foreign Affairs, Defence & Trade can call witnesses and have full access to relevant documents. This may be at the call of Ministers or the Legislature. • Committee can ask government decisionmakers to publicly justify rationale for defence spending • “Aus. Tender” website has extensive detail on plans, contracts South Korea • Tiered system for balancing security and budget transparency. Three categories: A. Budget items presented in full to entire national assembly; B. Disaggregated items available without restriction to members of defence committee only; C. Disaggregated items revealed to defence committee only with some restrictions • Proposed and final Potential tool: Defence Expert Consulting Group • Challenge: technical complexity of defence • Group of experts from diverse backgrounds. • Source of expertise, assist parliamentarians. • Independent of the military (though may include retired military personnel). • Well-respected group member will help raise public

WHAT CAN BE DONE? 1. 2. . 3. 4. 5. 6. 7. 8. 9. Engage leadership, build confidence Analyse and understand the risks Use good diagnostic tools, surveys and metrics Develop a counter-corruption plan Training on counter-corruption Clear Codes of Conduct Procurement reforms; use of monitors Engage media, civil society Work with defence and security contractors

Questions, comments, feedback? www. ti-defence. org Leah Wawro: leah. wawro@transaprency. org. uk