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Most Defense Companies Fail Transparency Test for Anti-corruption Policies, Study Reports

Oct. 4, 2012
Transparency International UK analyzed 129 global defense firms Global corruption cost is at least $20 billion annually in defense sector, study says Just 10 firms received the top two grades

A large majority of the world's biggest defense companies do not provide enough evidence that they adequately prevent corruption, Transparency International UK said in a study on Thursday.

The pressure group analyzed the top 129 global defense firms and has published its Defense Companies Anti-Corruption Index, which grades from A to F how effectively companies combat corruption.

Almost two-thirds, or 85 companies out of 129, were judged to have inadequate information available on their anti-corruption policies, and scored the bottom grades of D, E or F.

"Two-thirds of the world's biggest defense companies do not provide enough public evidence about how they fight corruption," Transparency International UK said in a statement.

"This includes companies from all of the 10 largest arms exporting nations like USA, Russia, Germany, France, the UK and China -- who between them are responsible for over 90% of the arms sales around the world."

Those registering the bottom F grade included Abu Dhabi Shipbuilding, Aviation Industry Corp. of China, French arms manufacturer Nexter, Israel Military Industries and Kawasaki Heavy Industries (IW 1000/279).

French aerospace group Dassault Aviation (IW 1000/727), Japan's Mitsubishi Electric Corp. (IW 1000/91) and U.S. naval defense group DCNS were among companies that scored an E grade.

Nearly half of companies, or 60 firms out of 129, scored the worst grades E and F, meaning that they had very little or no evidence of having basic systems in place to prevent corruption and instill strong ethical values.

"Dangerous, Divisive and Wasteful"

"Corruption in defense is dangerous, divisive and wasteful. The cost is paid by everyone," said Mark Pyman, author of the study and director of Transparency International UK's defense and security program.

"Governments and taxpayers do not get value for their money, and clean companies lose business to corrupt companies. Money wasted on defense corruption could be better spent."

Global Cost at Least $20 Billion Annually

The campaign group estimated that the global cost of corruption in the defense sector was a "minimum" of $20 billion (15 billion euros) per year, and cited data from the World Bank and the Stockholm International Peace Research Institute.

Transparency added that just 10 companies scored in the top two bands -- A and B -- meaning that they have publicly demonstrated in considerable detail the systems and procedures that they have in place to prevent corruption.

Those 10 companies include Britain's BAE Systems (IW 1000/158), France's Thales (IW 1000/262), Japan's Fujitsu (IW 1000/72) and U.S. firms Northrop Grumman (IW 1000/162) and United Technologies (IW 1000/73).

Copyright Agence France-Presse, 2012

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