“Parallel market: corruption and the international arms trade” – public lecture

LONDON: The 2005 Campaign Against Arms Trade lecture will by given by journalist and political economist Joe Roeber of Transparency International^[1]. It will be held in the Old Theatre at London School of Economics (LSE), Houghton Street, London W2 from 6.30pm to 8.30pm on Wednesday 9th February^[2].

Corruption is both a crucial and timely issue. To explain why the arms trade persists, we need to address the driving forces behind it, including the significant role of corruption.

The international arms trade is said to account for 50% of all corrupt international transactions. A conservative estimate of the level of commissions paid is 10%, in an industry worth $40bn a year (Transparency International (UK) report, April 2002). Allegations of bribery surrounded the UK’s largest ever arms sale, Al Yamamah to Saudi Arabia, and the National Audit Office report on the subject was suppressed. It remains one of the few NAO reports never to have been released.

The UK government’s position with regards corruption remains at best ambiguous. Recent reports have exposed commission payments made by BAE Systems to Saudi princes, which facilitated arms sales to Saudi Arabia. There is an ongoing Serious Fraud Office investigation. Yet, despite these allegations, the Ministry of Defence’s Defence Export Services Organisation continues to promote deals with Saudi Arabia. The government’s Export Credit Guarantee Department had given in to pressure from BAE Systems, Airbus Consortium and Rolls-Royce and agreed to weaken new anti-bribery rules. But recent legal action by campaigners has blocked this decision.

Joe Roeber of Transparency International said:

The official arms trade is the most corrupt of all legal international trades and one in which governments are inextricably entangled. Bribery is commonplace.

Corruption means that beside the actual market for the physical goods dependent on real supply and demand, there is a second hidden market where bribes paid to the buyers influence the amount spent and how it is spent.

Bribery leads to an increase in the flow of arms, much of it to poor countries, that they may not need and cannot afford. This is a waste of desperately needed resources.^[3]

ENDS

Editor’s Notes

Any views expressed are personal to the speaker and do not necessarily reflect those of CAAT as an organisation.

1. Joe Roeber works with Transparency International (UK), a non-profit making, independent, non-governmental organisation, dedicated to increasing government accountability and curbing both international and national corruption. Joe joined TI (UK) in 1996 after careers in the chemical industry, journalism, academia and oil consulting. His background has been excellent preparation for the study of corruption in the international arms trade, which has occupied him since 1997.

2. To register for the lecture contact outreach(at)caat·org·uk or telephone 020 7281 0297. Admission is free.

   The lecture itself will last for around 45 minutes followed by 45 minutes of questions and debate from the audience. The lecture room can accommodate 460 people and invitees include those active at all levels in political parties, journalists, academics and trade union members.

3. Longer quote by Joe Roeber of Transparency International:

   The official arms trade is the most corrupt of all legal international trades and one in which governments are inextricably entangled. Since governments make the decision to buy and sell, it is inevitable that corruption in the trade is very often political. Moreover, governments are often at the root of the problem. While it is difficult enough to monitor deals in such an opaque market, the government-sanctioned secrecy surrounding critical aspects of the business actually provides the conditions that allow corruption to flourish.

   There are two markets for arms: the market for the physical goods dependent on supply and demand and a hidden market where bribes are traded for influence. It is in the second market that procurement decisions may be taken.

   The result is an increase in the flow of arms, much of it to poor countries, that they may not need and cannot afford them. The governments of arms-exporting countries must ask whether the damage done by corruption to some of the most vulnerable people in the world is justified by the claimed, at best marginal and in any case hotly disputed, benefits to their own rich economies.