Corruption in the defence sector to get greater attention

The negative consequences of corruption in the South African 1999 arms deal continue to undermine the country. Transparency International has launched a new index to assess the way a country manages the risks of graft in this sector.

Published on 06 February 2013 in ISS Today

Gareth Newham
Head, Justice and Violence Prevention, ISS Pretoria

Most countries want to believe that they can rely on their military to secure their sovereignty and protect them from foreign threats. However, what is often not fully appreciated is how this capacity is frequently undermined because of the susceptibility of the defence sector to corruption. This is because the secrecy that generally surrounds large contracts for the procurement of military hardware provides ample opportunities for corrupt arms dealers, politicians and state officials to siphon off money or solicit bribes without being held accountable.

The Stockholm International Peace Research Institute estimated that in 2011 global military expenditure reached US$1,7 trillion. While Africa only accounted for 2% of this, it still spent US$32 billion that year. Much of this was spent on buying military weapons and hardware from developed countries. However, as Andrew Feinstein details in his book The Shadow World: Inside the Global Arms Trade, weapons procurement is usually shrouded in secrecy and, because of the toxic combination of vociferous greed and unaccountability, more often than not involves corrupt practices. It is therefore interesting to note that between 2007 and 2011 weapons transfers increased by 24% when compared to the previous four years. This was during a time when the global financial crises saw governments around the world slashing their social spending. Annually, it is estimated that at the very minimum, corruption related to the global defence sector spending amounts to US$20 billion.

Fortunately, many armed forces around the world are increasingly becoming aware of how corruption leads to massive wastage of resources on equipment that is not needed, or that is substandard and can threaten rather than enhance their security. It is therefore both timely and appropriate that Transparency International (TI) released its Government Defence Anti-Corruption Index on 29 January 2013 (see www.ti-defence.org). This index is based on an assessment of the mechanisms that are in place to address the risks that can result in corruption in the defence sectors.

In the first of what will be an annual assessment, 82 countries, which account for 94% of the world's military expenditure, were included in the index. The first edition of this index reveals that 70% of the countries assessed do not have adequate mechanisms in place to stop corruption from occurring in their defence sectors.

The costs of corruption in the defence sector are well known in South Africa. The decision, shortly after the birth of democracy in 1994, to purchase military weapons in what was termed the 'arms deal' continues to haunt the country today. As a result of the corruption that occurred in the arms deal, the country is now saddled with military equipment that it does not need and cannot maintain or use. The direct and opportunity costs of buying this military hardware have been carefully detailed in the 2011 book The Devil in the Detail: How the Arms Deal Changed Everything, by Paul Holden and Hennie van Vuuren. For example, had the R30 billion in 1999 terms been spent on infrastructure or initiatives to productively develop the country, anywhere between 300 000 and 575 000 more people would have been employed than is currently the case. Instead, corrupt deals between the political elite and armament companies saw hundreds of millions of rands diverted into the back pockets of politically powerful and connected individuals.

Additionally, arms deal corruption caused incalculable damage to the institutions that were meant to uphold the rule of law and strengthen our democracy, as politically powerful individuals scrambled to protect themselves from investigation. Today, South Africa's intelligence and criminal justice institutions perform far below what they are capable of because compromised individuals have been appointed into the upper echelons for their personal and political loyalty and not their ability. Indeed, the failure to hold senior politicians to account for corruption in the arms deal has been credited with the start of what is now a substantial corruption problem that is widely recognised as undermining South Africa's ability to solve pressing problems.

Fortunately, South Africa is blessed with a strong constitution, an independent judiciary, a courageous media and a vibrant civil society that provide an important counterbalance to those individuals who are willing to abuse state power for their own purposes. This provides the many honest hard working people both within and outside of the state with avenues for exposing and addressing corruption despite the glaring absence of political will to do so.

The high levels of corruption resulted in South Africa dropping 14 places to number 69 out of the countries measured by the TI Corruption Perception Index between 2010 in 2012. Nevertheless, there is still hope, as South Africa does not rank among the most corrupt nations and the corruption still evokes anger as opposed to resignation among many citizens. On the Government Defence Anti-Corruption Index, South Africa scores an overall D+, which is an average on a scale from A (low risk) to F (critical risk). Nevertheless, the D band still indicates a relatively high level of risk of corruption. South Africa is therefore recognised as having strong systems in some areas and very poor systems in others. Consequently, the country finds itself on par with countries such as Israel, Kenya, Lebanon, Mexico, Thailand, Ukraine and Nepal.

The index is quite rigorous in that it considers 77 systems, processes and mechanisms that could mitigate the risk of corruption and it is therefore worth considering the findings in-depth. In summary, however, among South Africa's strengths are that it has a relatively open process for developing defence policy, the defence budget is published annually, secret information can be shared with the appropriate Parliamentary Portfolio Committees, the military is not involved in commercial enterprises to generate funds, the defence department publishes its procurement plans and there is a strong legislative framework for addressing corruption.

The weaknesses include that senior personnel in the intelligence and defence sector are appointed for personal loyalties as opposed to merit, there is a lack of adequate control exercised over arms exports, corruption risk assessments are not carried out, commanders are not trained to identify and respond to corruption risks, the legislative framework is inadequately adhered to and there is little transparency and accountability for off-set providers.

Given that the TI index makes explicit various strengths and shortcomings, it provides a valuable method for a country to identify and assess its capacity to reduce corruption in its defence sector. Since this index will come out on an annual basis, it will also allow for the defence sector to assess whether its ability to manage these risks is improving or deteriorating. It also presents actions that senior state officials, legislators and civil society activists can take to improve anti-corruption initiatives and provides practical examples of good practice.

As the long-awaited Seriti Commission of Inquiry into the arms deal slowly stutters into life, its findings could play an important role in strengthening South Africa's ability to prevent corruption in the defence sector. Already, however, there are allegations that the commission is compromised and forms part of the longstanding campaign by senior politicians to cover up malfeasance in the arms deal. Its credibility will finally be determined by the extent to which it undertakes its work in a transparent manner and uses its powers to effectively obtain information from those involved. Even then, it will be up to the President to consider the report in a timely manner and act on its recommendations, which will determine whether South Africa can finally put this matter to rest.

Gareth Newham, Division Head Governance, Crime and Justice Division, ISS Pretoria

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