BUILDING INTEGRITY & REDUCING CORRUPTION Defence procurement & Parliamentary oversight

1. BUILDING INTEGRITY & REDUCING CORRUPTIONDefence procurement & Parliamentary oversight Leah Wawro Transparency International UK Defence & Security Programme

2. 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 Defence companies & industry associations Research Tools and training Others: parliamentarians, intl. organisations Civil society & media

3. IMPACT Why does corruption matter- a citizen’s perspective DANGEROUSCorruption undermines military effectiveness. Poor equipment risks the lives of troops. DIVISIVECorruption destroys citizens’ trust in government and the armed forces. WASTEFULThe defence sector is worth $1.7 trillion a year. The waste from corruption is in billions of dollars.

4. 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 defence & security forces.

5. HOW DOES CORRUPTION HAPPEN IN DEFENCE MINISTRIES & ARMED FORCES?

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

7. RESULTS: EUROPE & CENTRAL ASIA

8. GI FINDINGS: CROATIA CROATIA: BAND C 66% 53% 63% 45% 31% POLITICAL FINANCIAL PERSONNEL OPERATIONS PROCUREMENT • 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 legislation has exemptions for defence and intelligence • Low levels of competitive, open bidding

9. 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

10. GOOD PRACTICE EXAMPLES: PROCUREMENT • Brazil • Agents and brokers banned • Procurement is generally competitive, not single-sourced • 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 single-sourced 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 diligence through State Audit Council • 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

11. 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

12. 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 decision-makers to publicly justify rationale for defence spending • “AusTender” website has extensive detail on plans, contracts awarded • South Korea • Tiered system for balancing security and budget transparency. Three categories: • Budget items presented in full to entire national assembly; • Disaggregated items available without restriction to members of defence committee only; • Disaggregated items revealed to defence committee only with some restrictions • Proposed and final budget available online • 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 awareness and support.

13. WHAT CAN BE DONE? • 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 • Establish an anti-corruption Director & unit .

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