Abstract
This article discusses patterns of corruption in the arms business around the world. It finds corruption to be widespread, almost ubiquitous in some sectors such as submarines, and affecting developed democracies as recipients as much as other countries. Anti-corruption efforts face severe challenges in proving corruption in highly complex financial cases involving multiple jurisdictions. However, they also face obstruction from exporter governments who are reluctant to prosecute their national defense industry champions so that even where investigations bear fruit, companies tend to receive light treatment. The article argues that corruption in the arms trade is not merely and simply a matter of individual and corporate greed, but is, on the seller’s side, also an element of defense industrial policy as countries seek to maintain advanced technological capabilities in the face of limited domestic demand, widespread international competition, and a buyer’s market. For recipients in buyer, and sometimes also seller, countries, an underemphasized aspect is the role of arms trade corruption as a means of securing political finance by senior politicians involved in decisionmaking. Thus, the practice occupies a systemic role in political competition, complicating efforts to tackle it.
Highlights
That the international arms trade is susceptible to corruption has long been recognized
This is followed by a section that considers the relation between arms trade corruption and domestic political power plays in both buyer and seller countries and how such corruption is often closely linked to political finance
The only case we have found in which anyone went to prison for paying bribes to foreign officials in relation to an arms deal, or for collaboration in such activities, is that of two mid-level German executives of the company Ferrostaal, for bribes in connection with submarine sales to Greece and Portugal
Summary
Understanding the systemic nature of arms trade corruption is crucial to understanding why and how it operates and to our prognosis and prescriptions for reform. On the side of the bribe recipients—in the buyer, and sometimes the seller country—if the motivations for seeking kickbacks in connection with arms deals is political as well as personal ( the latter is undoubtedly a factor in many cases), the driving forces behind arms trade corruption may be deeply embedded in the structure of political power and competition in a country rather than merely and being a function of the individual greed of particular leaders and decisionmakers. In several countries, including the U.S and the U.K., a strong consensus appears to be emerging across the political spectrum on the need to strengthen financial transparency and to combat corruption, money laundering, and other financial crimes (including transparency on the beneficial ownership of companies and foundations) to make it harder for corrupt dealings to hide behind anonymous shell companies. Notes For comments on a draft version of this article I thank participants at the SIPRI arms industry workshop, March 2018, as well as an anonymous reviewer
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