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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