Memorandum from Transparency International
(UK)
1. Appendix 1 briefly introduces Transparency
International (UK) and the defence against corruption programme.
QUADRIPARTITE SELECT
COMMITTEE RECOMMENDATION:
FOLLOW UP
2. Transparency International (UK) notes
the recommendation (page 141) in the Quadripartite Committee
Strategic Export Controls 2007 Review:
"We recommend that the Government press
for the inclusion of provisions in the arms trade treaty to promote
good governance and combat bribery and corruption in arms transfers"
3. Transparency International (UK) very
much looks forward to hearing from the Secretary of State for
Defence how this is being actively followed up.
DBERR AND MINISTRY
OF DEFENCE
4. It is important to keep separate economic
and security considerations at all times during the process of
considering the issue of an export licence. Transparency International
(UK) therefore welcomes the movement of the defence exports promotion
group out of the Ministry of Defence and under the remit of the
DBERR and FCO. It is hoped this will allow for a more objective
and transparent debate by government of these issues.
5. Recent reports have indicated that the
arms promotion group may be retained in a form closer to its previous
DESO form than previously envisaged. Transparency International
(UK) believes that the independence of this body from the Ministry
of Defence must not be undermined.
COMMITMENT TO
TRANSPARENCY
6. The new body's implementation plan states
its commitment to "highest business standards and ... appropriate
clarity and transparency".[2]
However, there is no detail as to what constitutes transparency
and clarity. Given the problems of the last few years, it is essential
that the new UKTI Defence and Security Group states clearly both
how transparency will be ensured, and sets up structures that
ensure regular communications with the public, civil society and
interested bodies. Transparency International (UK) expects this
to be absolutely explicit in the Service Led Agreement.
7. Transparency International (UK) outlines
below two proposals for enhancing transparency, one specific and
one more general. We would welcome an opportunity to meet with
the new UKTI Defence and Security Group, as well as the Ministry
of Defence, to discuss how transparency and accountability can
be enhanced.
AL SALAM
8. A litmus test of the Government's commitment
to fighting bribery will be the conditions surrounding the new
"Al Salam" contract for the sale of military aircraft
and related services to Saudi Arabia.
9. It is greatly in the interests of both
Governments to show beyond doubt that the new contract is consistent
with current recognised standards of corporate and public integrity.
Transparency International (UK) would like to learn what proposals
the Secretary of State may have for restoring confidence in these
major transactions.
10. Transparency International (UK) believes
a powerful, visible way to do this would be to set up a body comprised
of respected institutions from both countries that would monitor
the financial, equipment and associated support areas during the
whole life of the contract.
11. This would be set up by the two Governments
to demonstrate their commitment to showing that the contract is
consistent with recognised standards of corporate integrity. We
believe that such a positive initiative will improve the image
of the UK and Saudi Arabia after the Al Yamamah saga and go a
long way towards restoring faith in the UK's anti-corruption efforts.
12. Transparency International (UK) has
written to the Prime Minister, the former Secretary of State for
Trade & Industry, the Secretary of State for Defence, and
the Head of the FCO Middle East Desk, commending this proposal
to them, and would be happy to discuss this matter further with
Secretary of State for Defence.
ENHANCED DUE
DILIGENCE
13. In order to ensure that the UK tax payer
is not under-writing corruption abroad in the name of arms exports
promotion, the new arms promotion body should demand higher standards
of due diligence from UK industry, including:
(a) publication of the names of intermediaries
and advisers utilized by UK defence companies and publication
of all fees paid to them and the services provided by the latter;
(b) commitment to undertaking face to face
due diligence before appointing an agent, adviser or other intermediary,
and on a regular basis thereafter, eg annually or bi-annually.
(The issue of agents is expanded upon in Appendix 2);
(c) demand that subsidiaries and joint ventures
observe the same high standards of due diligence required in the
UK. (The issue of joint ventures is expanded upon in Appendix
3); and
(d) formal monitoring of any "offset"
arrangements in connection with defence deals.
Because of their opacity, offsets are vulnerable
to bribery and corruption. Transparency International (UK) would
be happy to provide more details on this subject.
2 UKTI announce new defence and security group"
SBAC, 11 December 2007 http://www.sbac.org.uk/community/cms/content/preview/news_item_view.asp?i=17715&t=0 Back
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