Most defense companies still show little evidence of having ethics and anti-corruption programs in place, according to a recent report from Transparency International (TI). However, more are addressing the risk of corruption than three years ago, when TI published its first Defence Companies Anti-Corruption Index. The second such report from the multinational pressure group assessed 163 defense companies from 47 countries, using publicly available information. Sixty-three of the companies also provided internal information to TI for the new report.
“We found a big improvement since 2012, more than we expected,” said Mark Pyman, director of TI’s UK defense and security program. He told AIN that TI had tightened some criteria that it used to assess the companies and added questions on offsets and "whistleblowing." “Some companies encourage internal whistleblowing, because they prefer that to happen, rather than employees going to the media,” Pyman explained. TI sent a draft of its 2015 assessment to all the companies in the index; 73 of them commented on the draft, he revealed.
TI placed the companies in six bands, with those showing the greatest evidence of anti-corruption programs in band A, and those showing almost none in band F. Only four companies were placed in band A: Bechtel, Fluor, Lockheed Martin and Raytheon. Twenty-three more were placed in band B, including Airbus, BAE Systems, Cobham, Exelis, Finmeccanica, Meggit, Northrop Grumman, Rafael, Rockwell Collins, Rolls-Royce, Thales and United Technologies. Pyman told AIN that76 companies improved their rating from the 2012 report by moving up one or more bands.
But two-thirds of the companies (107 of them) were placed in the bottom half of the index by TI. As might be expected, a high proportion of these were not North American or European. But they also included AAR, Moog, Ruag and Zodiac in band E, and General Atomics, Nexter, Terma and Turkish Aerospace Industries (TAI) in the bottom band F. Pyman denied a suggestion that companies outside Europe and North America scored poorly because of language barriers (the research was conducted by TI’s UK-based staff). “We had two Mandarin and two Russian speakers in the team,” he told AIN.
The report provides 10 recommendations for improvement to defense companies. It also notes three key areas “in need of improvement.” According to TI, only 13 companies reported evidence of regular due diligence on agents; only eight companies had whistleblowing mechanisms that encourage reporting; and only three companies could demonstrate good anti-corruption procedures in offset contracts.
