Transparency International issued a new report, Raising the bar: Good anti-corruption practices in defence companies, that identifies seven anti-corruption practices for defense contractors that are critical for promoting an ethical culture and reducing global corruption risks.
According to the report, the “defence sector faces unique risks to corruption due to high-value contracts, requests for official secrecy, and close government interaction on the buyer and seller side.” To mitigate these risks, the report urges defense contractors to consider how they rate on the following practices:
- The extent to which the company reports information on its ethics and anti-corruption program to the public.
- The extent to which company leadership speaks up against corruption, both internally and externally.
- How the company’s board of directors assure themselves of the effectiveness of their anti-corruption program.
- How the company carries out corruption risk assessments.
- How the company manages the corruption risk of third parties.
- How the company trains its staff, especially those in exposed roles.
- How the company follows-up on complaints from whistleblowers.
Among the many corruption risks that are present, Transparency International notes that “[a]gents and intermediaries pose the biggest risk of corruption for defence companies, since they interact closely with high risk parties such as government officials (e.g. procurement or customs and immigrations officials).”
The report therefore recommends that contractors conduct due diligence of all potential agents and intermediaries, taking into account such factors as the specific country involved, local anti-corruption regulations and enforcement, contact with government officials, and potential conflicts of interest. Contractors may also want to secure the right to audit their agents and intermediaries, provide compliance training, and require management approval for all agent contracts worldwide, the report says.
A copy of the full report is available here.