Scrutiny of Arms Export Controls (2011): UK Strategic Export Controls Annual Report 2009, Quarterly Reports for 2010, licensing policy and review of export control legislation - Foreign Affairs Committee Contents

9  Combating bribery and corruption

108. The 2008 CAEC Report examined allegations of corruption in defence contracts in the 1970s and the challenges of bribery and corruption in the present day.[171] In evidence to that inquiry, and again to this inquiry, Transparency International (TI) highlighted findings of the US Department of Commerce that the defence sector accounted for 50% of all bribery allegations in 1994-1999 despite accounting for less than 1% of the world trade.[172] The CAEC's 2010 Report stated that the UK ranked 17th in the TI table of least corrupt countries in the world.[173] The International Development Committee, one of our constituent Committees, has recently launched an inquiry into financial crimes and development.[174]

A specific Criterion

109. Mr Rob Parker of Saferworld told us that corruption was linked to Criterion 8 on sustainable development and therefore could be considered within that Criterion when considering licensing applications.[175] Our predecessor Committees in 2008 and 2010 made a series of recommendations relating to:

  • the application of the Criterion 8 methodology to test whether the contract behind a licence application is free from bribery and corruption;
  • the creation of a requirement for those seeking export licences to produce a declaration that the export contract has not been obtained through bribery or corruption;
  • the revocation of licences where an exporter had been convicted of corruption; and
  • the amendment of the National Export Licensing Criteria to make conviction for corruption by an exporter grounds for refusing an export licence. [176]

110. During this inquiry, TI put forward two reasons why consideration of corruption via Criterion 8 would be insufficient. First, corruption was a 'cross-cutting risk' affecting all eight criteria of the Common Position. The User Guide to European Council Common Position defining common rules governing the controls of exports of military technology and equipment considered best practice to include assessing corruption risks for Criterions 2, 5, and 7. TI said:

    Corruption facilitates the diversion of arms (Criterion 7) to regions for which UN sanctions are in place (Criterion 1) and where they threaten international humanitarian as well as human rights law (Criteria 6 and 2), hence posing a serious risk to "regional peace, security, and stability" (Criterion 4) and facilitating "the existence of tensions or armed conflicts" (Criterion 3). In the past, this has often also meant that states have not "achieve[d] their legitimate needs of security and defence with the least diversion for armaments of human and economic resources" (Criterion 8).[177]

111. Second, TI pointed out that corruption in the global arms trade is not confined to those countries which qualify for consideration under the sustainable development-focused Criterion 8.[178]

112. TI also questioned the way the UK used Criterion 8 (Sustainable Development) in relation to corruption. The Government's Annual Report on Strategic Exports 2009 does not mention bribery or corruption at all, and that no Standard Individual Export Licence (SIEL) and Standard Individual Trade Control Licence (SITCL) applications have been refused or revoked because of Criterion 8 in 2009, 2008 or 2007.[179] TI recommends that Member States agree a new 9th criterion whereby prospective arms transfers would be refused where there was a clear risk that corrupt practices might exist.[180]

113. Other NGOs were supportive of such a proposal, but questioned whether it was likely to happen.[181] Mr Martin Butcher of Oxfam, said:

    Clearly, within the EU, having this in some way included in the common position would be the best way of dealing with the issue of corruption. Whether it is possible to do that by an entirely new criterion, as Rob has said, or whether it needs including in one of the existing criteria is open to debate.[182]

114. In response to the suggestion of a separate Criterion 9, specific to corruption, the BIS Minister, Mr Mark Prisk, said:

    I don't think it's something that we would be minded to support, and I doubt whether it would be successful. I think on the whole we've got to distinguish here between dealing with the risks of an unacceptable use or an illegal use, and how a contract is secured, and they're actually two distinct things, so I think we shouldn't confuse in law those two different elements. My instinct is that this is something that is unlikely to progress, and it's not something that we would support.[183]

When pushed further on where in the Common Position, corruption considerations would be found, the BIS Minister, Mr Mark Prisk, said:

    That depends on whether you're talking about, as I have said, the way in which a deal is secured. The questions in my mind are, "What is the use we're dealing with? Who is the organisation we're dealing with? What are the country and region? And what are the potential risks?" I regard those as being distinct from the specific issue of corruption. I think once we start confusing those two as being one and the same, there's a danger of actually losing our focus on making sure that we're involved in responsible and legitimate exports.[184]

115. We conclude that the Government has failed to demonstrate satisfactorily whether, and if so how, it assesses the risk that individual arms exports may be linked to bribery and corruption during the licence approval process. We recommend that the Government sets out fully in its response to this Report whether such an assessment is made for all arms export licence applications, and if so how.

116. We further recommend that, given that Criterion 8 applies only to developing countries and that bribery and corruption are not confined to such countries, the Government gives full consideration to proposing the insertion of an additional Criterion into the EU Common Position on arms exports obliging Member States to assess the risk of bribery and corruption before approving an arms export licence to any country.

171   Scrutiny of Arms Export Controls (2008), Session 2007-08, HC 254, Chapters 6 and 7 Back

172   US Department of Commerce Trade Promotion Co-ordinating Committee Report (March 2000) Back

173   CAEC, Scrutiny of Arms Export Controls (2010), Session 2009-10, HC 202, para 102 Back

174   The terms of reference are available on the International Development Committee website..  Back

175   Q 12- Q 13  Back

176   CAEC, Scrutiny of Arms Export Controls (2010), Session 2009-10, HC 202, para 106; Scrutiny of Arms Export Controls (2008), Session 2007-08, HC 254, para 112 Back

177   Ev 45 Back

178   Ev 45 Back

179   Strategic Export Controls, 2009 Annual Report, HC 182, p23; Strategic Export Controls, 2008 Annual Report, p23; Strategic Export Controls, 2007 Annual Report, p27. Back

180   Ev 45 Back

181   For example, see Q 23  Back

182   Q 23 Back

183   Q 119 Back

184   Q 120 Back

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Prepared 5 April 2011