Memorandum submitted by Campaign Against
Arms Trade
1. The Campaign Against Arms Trade (CAAT),
which was established in 1974, is working for the reduction and
ultimate abolition of the international arms trade, together with
progressive demilitarisation within arms-producing countries.
CAAT has worked on three of the topics in your additional call
for evidence—Private Military and Security Companies, export
credits and bribery.
PRIVATE MILITARY
AND SECURITY
COMPANIES
2. While mercenaries have long been around,
the growth of the "Corporate Mercenary" company, which
both the industry and the Government prefer to call the Private
Military and Security Company (PMSC), is a fairly recent phenomenon.
The growing industry is anxious to legitimise itself, but has,
nonetheless, attracted much criticism of its activities in places
such as Sierra Leone and Iraq.
3. CAAT intends to respond to the Foreign
and Commonwealth Office's consultation on Promoting High Standards
of Conduct by PMSCs. It is extremely disappointing that the Government
is proposing to abdicate responsibility for regulating the industry
to the trade association, the British Association of Private Security
Companies (BAPSC). The Government appears to feel that by working
with the trade association; by itself only using PMSCs with high
standards; and liaising on the international level, will be enough.
4. Since the activities of PMSCs can result
in killings and in human rights violations, this is totally inadequate.
Not least, it fails to address the fact that overseas governments,
mining companies, media organisations, aid agencies and others
also have contracts with PMSCs—the UK government's purchasing
power is not a solution in these cases.
5. CAAT thinks the Government should immediately
scrap its proposal of self-regulation by BAPSC and make an alternative
proposal which includes the following features:
(a) PMSCs should be prohibited from combat and
banned from providing training, strategic advice and other support
for combat;
(b) all other PMSC services should be open to
individual licensing requirements and open to prior parliamentary
and public scrutiny. This should be complemented by an open register
of PMSCs;
(c) the PMSCs should be made responsible under
UK law for any breaches of human rights or the laws of war that
may be committed by their employees.
EXPORT CREDITS
6. Recently, military industry, more than
any other, has benefited from Export Credits Guarantee Department
(ECGD) support. Even though arms account for just 1.5% of total
UK exports, in 2006-07, 42% of all export credits were for military
goods and, in 2007-08, the figure was even higher, 57%. Arms manufacturer
BAE Systems topped the list of companies receiving export credit
guarantees.
7. This has now changed. Although on 31 March
2008 the ECGD's total liability for BAE's Saudi Arabia arms
deals was £750 million, the company cancelled the cover
with effect from 1st September 2008. BAE has kept ECGD cover for
other military deals, including those with South Africa and Romania,
but the removal of its Saudi business would have left the ECGD
without approximately half its income. For the ECGD staff, it
was fortuitous that the economic downturn has given the ECGD new
roles.
8. At least in the near future, it appears
that military goods will form a smaller proportion of the ECGD's
portfolio. CAAT does, however, still have concerns arising from
the Industry and Exports (Financial Support) Bill and the proposed
Letter of Credit Guarantee Scheme (LCGS) and is responding to
the consultation on the latter. CAAT does not think there should
be any ECGD cover for military projects, or other unproductive
expenditure, but thinks the current proposals might make matters
worse than at present.
9. Although it is, of course, understandable
that the Government would wish to introduce new measures to support
business during a financial crisis, it is essential that this
does not mean that any anti-corruption, human rights, development
or environmental checks are watered-down, or responsibility for
them devolved.
10. For instance, CAAT's understanding of
the LCGS is that a master guarantee would be given to a bank,
which would then be responsible for the individual customers.
Notwithstanding that the Government says that the LCGS would probably
be used for small amounts, so would more likely involve consumer
products than military goods, infrastructure projects, etc, there
is a danger that once standards are relaxed there will be more
exceptions to them.
11. As the ECGD does not screen military
projects for human rights, environmental or development impacts—it
relies on the export licensing process, even thought this has
an extremely poor record of taking human rights concerns into
account, takes little notice of development impacts and makes
no environmental assessment—it is the attitude to anti-corruption
that is most pertinent to CAAT. Here the ECGD still needs to repair
the damage done to its international reputation. The October 2008 Report
from the Organisation for Economic Co-operation and Development's
Anti-Bribery Working Group said that the SFO had handed the ECGD
evidence of misrepresentations by BAE to the ECGD in connection
with the issuance of insurance, but that the ECGD had done nothing
about it.
12. As with PMSCs and the BAPSC, CAAT does
not think the Government should pass its responsibility for ensuring
that its funds do not underwrite corruption (or, indeed, exports
with socially undesirable impacts) to a third party, in this case,
the banks. The progress made with anti-corruption measures and
the Business Principles must not be rolled back for the sake of
short-term expediency.
DRAFT BRIBERY
BILL
13. Together with The Corner House, CAAT
took legal action on the Government's December 2006 decision
to stop the Serious Fraud Office (SFO) investigation into BAE's
Al Yamamah arms deal with Saudi Arabia. In July 2008 the
House of Lords overturned a High Court ruling and said that the
SFO Director had acted lawfully when he ended the inquiry after
threats from Saudi Arabia to the UK's national security.
14. CAAT has not made a submission to the
Committee examining the draft Bribery Bill as it believes others
have greater expertise to undertake the detailed legal critique
required. However, CAAT believes it is vital that the loophole
that allowed the House of Lords' judgment is plugged. People with
friends in powerful places should not be able to use threats to
evade justice, even when these threats are couched in terms of
national security.
15. The new anti-bribery legislation must
make it clear that investigations and prosecutions cannot be stopped
on grounds of national security unless there is an imminent risk
to life and all other options have been explored.
June 2009
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