Corruption Report

The UK government and arms trade corruption: a short history

by Nicholas Gilby

Abstract

Cover of report

This is the fourth in our series of Goodwin Papers. Download the PDF or order a printed copy from the office.

Based on archival sources, this discussion paper examines the UK Government's approach to corruption within the UK arms industry and shows it has very dirty hands. At the time the Defence Export Services Organisation was founded it was known at the highest level that corruption pervaded the arms trade, but civil servants were told to look the other way and not ask awkward questions about the deals they were helping to seal. Hard evidence of official knowledge of corruption in arms deals in Venezuela and Indonesia is unearthed for the first time. Hitherto unseen documents from the 1970s show how, when confronted with the problem of corruption in the arms trade, officials at the highest level were at pains to ignore their suspicions and devise guidelines to avoid addressing the issue, even allowing publicly-owned companies to continue employing 'agents' with no questions asked. It puts the continuing debate over the Export Credits Guarantee Department's anti-bribery procedures into sharp perspective and demonstrates the incredible irresponsibility of the MoD, DTI, FCO and ECGD in knowingly fostering a corrupt industry.

Some of the main National Archive documents (in pdf format)

Venezuela
  • A 1967 letter from the UK Embassy in Caracas to the Foreign Office saying the "question of bribery" would "almost certainly" arise on Government-to-Government arms sales to the country and asking whether it is acceptable practice in Government-to-Government deals.
  • A reply to the Embassy in Caracas from a senior figure in the Defence Sales Organisation (DSO) in the MoD. It categorically states bribery occurs "day by day" in the arms trade, says DSO turns a blind eye and focuses on achieving sales. It states the role of agents is to pay bribes, encourage unnecessary military spending and that their work is "complementary" to DSO's.
Indonesia
High-level discussions on corruption
  • A DTI briefing paper lays out with startling frankness high-level Government knowledge of corruption in deals by UK companies overseas. It shows how the Government had knowledge of dubious commissions through Exchange Control and that the ECGD backed such deals with public money. It rejects unilateral action on the issue.
Guidelines on the use of agents in arms sales
More dodgy deals

These documents are published courtesy of The National Archives