The Defence Industry as an Ally in Reducing Corruption

[Author of boxes 20.1 and 20.2 is Todor Tagarev]

For an anti-corruption regime to function effectively, the defence industry must be associated with it. Defence suppliers increasingly recognise the importance of corporate social responsibility and legitimisation, associated with greater transparency. This chapter presents the integrity policies of two major defence contractors and outlines further measures that can be taken by the defence industry and governments to enhance the integrity of the defence sector.

1. Defence Industry as Part of the Solution to Reducing Corruption: An American Perspective

Some argue that corruption in certain marketplaces is simply a cost of doing business within that market. The implication of this premise is that efforts to fight corruption are futile and unnecessary. One should simply accept this tax on doing business and move on. This view ignores the very real evils of corruption. It destroys public trust in governments and corporations, lessens the quality of products and services procured using public funds and undermines the efficient functioning of the free marketplace. Fortunately, this view is becoming less credible in today’s interconnected world where large scale corruption—which in the end is almost always discovered—is publicized and criticized to the detriment of all parties involved.

In recent years, the defence industry has been buffeted by allegations of corrupt behaviour around the globe. This has significantly weakened confidence in an industry that largely depends on public funds. It may seem incongruous therefore to say that a partnership between industry and government represents the only effective means to fight corruption. If one steps back, however, it seems logical that the problem of corruption must be attacked from both the supply side—typically the defence industry—and the demand side—typically government agencies or personnel.

This section examines the supply side of corruption, focusing on best practices undertaken by major defence corporations within the United States, Lockheed Martin in particular, to ensure that business is conducted in accordance with high ethical standards.

The Defense Industry Initiative (DII)

Most of the major defence contractors within the United States belong to the DII. The initiative was established in 1986 in response to an erosion of public confidence in the industry caused by widely reported instances of fraud, waste and abuse both within industry and the Department of Defense. All DII signatories agree to adopt and adhere to six self-governance principles, presented in Box 20.1.

   For the full text of this chapter see the accompanying file below.