Back to 4. Corruption in sustainment and contracting
Risk Areas
Disposal of mission assets, usually coming at a point when international forces are winding down, transitioning or withdrawing, poses significant corruption risks. Withdrawals tend to focus attention on the home country and take it away from the operational theatre, which is no longer a key preoccupation in mission planning.
Refusal to divulge the identity of beneficial owners and or/company officers, i.e. those who draw benefits from companies and those who direct companies’ actions
Shareholders, owners or company officers who are, or have recently been, public officials (could indicate a revolving door)
Reports of divested equipment in adversary hands
Reluctance of either contracting officers or purchasers to undergo due diligence and/or audit procedures
Interest in asset disposal from host nation stakeholders with no apparent legitimate rationale
Contracting relationships not only create tangible financial flows, but also result in intangible, social and political links between mission forces and local service and goods providers. They can be an important resource for local stakeholders, who can use them to build up their own political and economic position.
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Collusion – illegal cooperation or conspiracy aimed at distorting the tendering and procurement process – can create the appearance of competition while in fact directing resources to particular powerbrokers through a network of seemingly independent companies.
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The fragmentation of the supply chain to include significant numbers of subcontractors, agents and intermediaries has been identified as key a contributor to corruption risk. In 2013, more than 90 per cent of reported US Foreign Corrupt Practices Act (FCPA) cases were found to have involved third party intermediaries.
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Disposal of mission assets, usually coming at a point when international forces are winding down, transitioning or withdrawing, poses significant corruption risks. While they might no longer be significant for the mission itself, these assets, if they make their way into the hands of malign networks, can prolong conflict and strengthen spoiler groups.
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These are specific measures that can help mitigate corruption risks in sustainment and other areas of activity that include contracting, such as humanitarian aid and reconstruction.
Promoting strong integrity standards among mission personnel can help set expectations for relations with the host nation, and prevent creation of new opportunities for corrupt networks.
Ensuring that financial flows do not exceed the host nation’s absorptive capacity will diminish the risk of diversion by corrupt networks; tying funding and assistance to improvements in governance can help create momentum for reform.
Civil society organisations can be valuable allies in the fight against corruption: they can help set strategies, understand what could be improved and how, and oversee specific projects using mission funds.
Stronger oversight of mission resources will help limit opportunities for corrupt networks, and helping develop host nation or civil society oversight mechanisms will help create longer-term accountability of host nation forces.
Ensuring that the international mission is able to receive and process signals of wrongdoing from those familiar with the projects it finances increases the likelihood of detection and diminishes the appeal of corruption.