Corruption

Transparency International (UK) estimates that 'the official arms trade accounts for 50% of all corrupt international transactions' and considers that 'a conservative estimate of the level of commissions paid is 10%'.¹ It needs stressing that this refers to the 'official' arms trade. What is happening at DSEi is the official arms trade. What the government promotes is the official arms trade.

Arms deals often involve huge sums of money and are always shrouded in secrecy. This combination renders them liable to corruption. Corrupt payments can generate a demand for weaponry where none should exist, potentially diverting resources from social needs, including health and development.

Though there appears to be little will to investigate allegations of corruption, they seem to keep cropping up. In just the past year BAE Systems alone has faced four sets of allegations involving deals with South Africa,² the Czech Republic,³ Qatar⁴ and India.⁵ The company denies the allegations.

The official UK government position?

A Defence Export Services Organisation (DESO) webpage, dated 1st March 1999 but still displayed in December 2002, had a section entitled 'Special Commissions' which said that all requests to give commissions should be referred to DESO which would confirm whether such payments could be made.⁶

The Export Credits Guarantee Department (ECGD) is not exactly critical of commissions either. In response to a parliamentary question on 9th June 2003 about the ECGD and BAE Systems' deal with South Africa, Trade & Industry Secretary Patricia Hewitt said, the 'ECGD's application process requires certain details of agents' commission to be disclosed to ECGD in order that it can follow its due diligence procedures. In this case such due diligence procedures were followed and no irregularities were detected. For reasons of commercial confidentiality specific details of the commission paid cannot be revealed.'⁷

What does all this mean? DESO and the ECGD should explain the difference between 'commissions' and 'bribes' and how these relate to other obscuring terms such as 'facilitation payments'.

Secrecy

Corruption thrives in conditions of secrecy and the only way to address it is to open up the world of arms deals. Arms export licences need to be made available for comment in advance of deals, allegations of corruption need to be thoroughly investigated and, as an easy first step, the National Audit Office investigation into the massive Saudi Arabian deals of the 1980s should be released (the Public Accounts Committee decided not to publish the report, despite the fact that most of its members were not even allowed to read it!).

Unfortunately, the government support for DSEi and the secrecy surrounding it does not give much grounds for optimism.

1 www.transparency.org/ pressreleases_archive/2002/2002.04.25.armstrade_tiuk.html, accessed 16.8.03
2 Guardian, 30.6.03
3 Guardian, 12.6.03
4 Observer 2.6.02; Private Eye 4.4.03
5 Sunday Times, 6.7.03
6 Guardian, 13.6.03; Susan Hawley, 'Turning a Blink eye', The Cornerhouse, June 2003
7 Hansard, 9.6.03