Functional reforms in Defence

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Better control over policy Better defence budgeting Organisation reform
On operations Procurement Better use of secrecy
Military intelligence

 

What are functional reforms?

BETTER CONTROL OVER POLICY 

Defence policy refers to the laws, strategies, and approaches used by governments to decide on the scope and activities of the military and national security agencies. It includes policies on exporting and buying defence equipment. The potential for corruption from the manipulation of defence policy is considerable.

  • A corrupt elite is able to hide key elements of defence policy. This will impact public understanding of where resources are channelled, increasing the possibility that these resources are diverted to corrupt ends.
  • Defence policy can be manipulated to exploit procurement demands. If policy- makers highlight a particular security risk as urgent when it is not, this may lead to unnecessary purchases that are susceptible to corruption.
  • In its most extreme case defence policy and processes may be so deeply manipulated that the sector is subject to ‘state capture’, where an elite in power shapes all important decisions.

The reform is easy to say but may be harder to implement; to change the internal MOD processes to strengthen the way that defence policy is developed and approved. Bulgaria (here) and South Africa (here) are two countries that made major changes in response to issues of corruption and excessive influence.

There also various high-corruption-risk areas of policy which may need addressing, for example:

  • Where military foundations or military-led entities own substantial businesses and property: whether military-focused or entirely civilian
  • Where military foundations or entities also own their suppliers
  • Where the military owns substantial assets and there is a plan/intent to dispose of them
  • Where a practice has developed that permits, or turns a blind eye to, officers using soldiers for private enterprise

There is expertise available on ways to address these carrion risks, such as from DCAF, as in the reports opposite and available her and here.

 

Comparative country data from TI: Analysis of control of defence policy +/-

The TI analysis of country MODs asks: Is there formal provision for effective scrutiny of defence policy? Is the country’s national defence policy debated and publicly available? Does the government have a transparent and well-scrutinised process for arms control decisions that align with international protocols?

The results are shown in the table opposite.

 

 

 

 

BETTER DEFENCE BUDGETTING 

Though governments have a duty to invest adequate funds to protect citizens and the national interest through maintaining professional, well-equipped, and properly resourced military and security services, budgeting can be open to abuse.

There is plenty of available knowledge on what a sound defence budgeting process looks like. The reform is best made internally – improving the budget development process within the MOD. Scrutiny of the process by internal audit or by commissioning outside experts may also be helpful.

However, if the circumstances are too difficult for this to be possible, then enabling greater scrutiny of the defence budget externally is also an option.

This is done officially by a Parliamentary defence Committee, or similar body.

Example: POLAND Improvements in defence budgeting

Example: TAIWANImprovements in defence budgeting

Comparative country data from TI: Analysis of defence budget oversight

GREATER BUDGET TRANSPARENCY

There has been a history of defence budgets being kept out of the public eye, and parts of the defence budget being hidden within other ministry budgets. This is poor practice. Apart from genuinely secret items, usually a very small percentage of the total defence budget, there is no good reason not to publish the defence budgets.

As with the defence budgeting process, there is plenty of knowledge on what good practice looks like. Questions to ask include:

  • Does the government publish a defence white paper or other official defence and security document?
  • In law, are off-budget military expenditures permitted? In practice, are there any off-budget military expenditures?
  • In law, are there provisions regulating the mechanisms for classifying information
    on the grounds of protecting national security and military intelligence?
  • Are regular reports (i.e. in- year, mid-year and year-end) regarding the execution of the defence budget published?
  • Are defence and security sectors audited, and the information obtained made publicly available?
  • Does the country submit defence budget information to regional or international organisations?
  • Is there a freedom of Information act?
  • Is the defence budget proposal made publicly available?
  • Is the approved defence budget made publicly available?
  • In practice, can citizens, civil society and the media obtain detailed information on defence budgets?
  • Does the defence budget include comprehensive information, including military R&D, training, construction, personnel expenditures, acquisitions, disposal of assets, maintenance, etc.?
  • Are reports pertaining to the execution of the defence budget made available to the public and to the legislature regularly (in- year, mid-year, year-end)?

 

Greater defence budget detail

Defence budgets should be as fully detailed and specified as for any other major Ministry. In some countries this is not true, with much less budget disaggregation, either in terms of the headings or the individual line items.

Compare the level of detail in the defence budget with the level of detail in the budgets of other ministries.

Example: BURUNDI

The defence and security budgets in Burundi were much less detailed than in other ministries, as at 2015. The chart below shows the size of the budgets (blue bar), the number of budget categories (red bar) and the number of budget lines (green bar) for 6 ministries; Agriculture, Economy, Interior, Justice Police and Defence (the scale on the left is shown only for the budget). Though the budgets for defence and police greatly exceed the budgets for other ministries, the number of budget headings and the number of budget lines are dramatically fewer.

Comparative country data from TI: defence budget transparency         +/-

Approximately one third of countries assessed as part of the TI defence countries database publish a defence budget that is detailed and transparent. These countries often have mechanisms in place allowing them to maintain a justifiable level of secrecy while ensuring that the defence budget is disclosed in a manner that means accountability can be enforced.

 

 

More information: TI report: The transparency of national defence budgets(2011). If you want more detail, this earlier report from TI examines the evidence for how 90 countries manage defence transparency, in response to 20 questions. available here.

Secret budgets

Secret budgets are pools of money spent on defence and security items or services that are not openly disclosed to the public. They may cover new weaponry, covert campaigns, sensitive equipment, and troops for secretive operations. In cases where the intelligence service’s budget comes from the defence budget, they may also relate to covert aspects of the service’s operations. On the other hand, secrecy gives corrupt actors a useful way to cover up illicit movements of money divorced from any oversight.

At the ‘good practice’ end of the range, a country like Norway has zero secret defence budget: none at all. The more open countries have secret defence budgets in the range 0-4% of the defence budget.

Example: GERMANY and secret defence budgets    +/-

In 2012, EUr 1 million of the German defence budget of EUr 31.87 billion was designated for secret spending. The largely transparent budget of the intelligence services in the country means that secret budgets are very unlikely to exceed one per cent of the total defence budget.

The process of legislative oversight of such items is fairly technical but displays several clear areas of good practice that do not seem to be compromised or corrupted. For example, there is a ‘committee of trusted members’ in the Budget Committee of the German Bundestag entitled to agree or not agree with the secret expenditure and to authorise them or not. This is a cross-party committee, who will notify the fuller Budget Committee of the total amount of secret spending. This oversight is on a statutory footing, as per Article 10a of the Federal Budget Code. Their findings are given to the ‘committee of trusted members’ in the budget Committee of the Bundestag for inspection, and to other relevant individuals as specified by Article 10a of the Federal Budget Code.

Example: BULGARIA and secret defence budgets    +/-

Spending on the National Intelligence Services in Bulgaria for 2012 is reported to comprise about 1.6 per cent of the aggregate defence budget. Two committees are provided with comprehensive information on secret spending:
The Parliamentary Sub-Committee, which exercises parliamentary control over the National Service, the National Security Service and the “Military Information” Service to the Ministry of Defence. The head of the Sub-Committee has even been interviewed on radio on the remit of the committee, the structure of military budgets, and areas for reform. This indicates parliamentarians appear to recognise the need to connect with the public on their work, despite its classified nature.

Comparative country data from TI: scrutiny of secret defence budgets

 

 

ORGANISATION REFORM

Organisations can always be better. But sometimes particular features of defence organisations encourage corruption and/or actively block corruption reforms. Here are three common examples.

Reducing autonomy of the three services

One of the major vulnerabilities in defence organisations is where the three services, army/navy/air are each almost entirely independent and autonomous. Having central groups, such as procurement and audit, that are staffed by professionals is one way to limit excessive autonomy and favouritism within one service. Reform to centralise procurement across all three services has taken place in many countries. One example, the Colombian military, is described below, where they developed a single professional procurement organisation for purchases above a threshold value. Such a change can be hard to implement as it constrains the personal power of the service chiefs and/or service heads of procurement.

Example: COLOMBIA widespread defence reform               +/-

 Reducing corruption in non-lethal activities

Because a defence organisation is primarily structured around being a fighting force, there is often much less attention paid to activities that are not directly related to fighting. Examples include sale/purchase of land and property, purchase of non-lethal material like fuel, clothing, electricity, sale of surplus assets, maintenance of vehicles and property. Sometimes these problems can be addressed by giving them more prominence and seniority in the organisation structure.

Excess staff numbers in the Ministry

Excess staff numbers in the defence ministry, often the outcome of a nepotistic environment, in the ministry are not only an obvious limitation to efficiency, they can also be one of the greatest barriers to corruption reform. Moving key obstructers to different jobs or splitting off some of the functions to other agencies, are classic remedies. Bulgaria in 2010-2012 is one country where the reformers made great efforts to make the ministry more effective by being more streamlined: the example is described more here.

Example: BULGARIA widespread defence reform

INTEGRATING ANTI-CORRUPTION ON OPERATIONS

Corruption is a feature of all conflicts, playing a key role in the power-struggle between competing groups for resources and power. This places mission leaders in a challenging situation because it means engagement with corrupt entities is frequently inevitable. The choice is often whether to deal with one corrupt entity, or another even more corrupt entity. In places such as Afghanistan, the Democratic Republic of Congo, Haiti, Iraq, and Mali, we have seen how corruption can threaten mission success and long-term stability.

Yet mission leaders, national officials and their civilian and military staffs charged with leading, planning, and implementing international missions often lack the understanding and skills to tackle the corruption issues that can have such a devastating impact on operational goals.

There is detailed guidance for military leaders on how militaries can better prepare for corruption issues on operations. Written as a collaboration between TI Defence and two senior former military officers, the handbook follows the following structure:

  1. Why is corruption a threat to mission success?

What is corruption?
Corruption, unrest, and conflict
Transparency, accountability, and counter-corruption (TACC)

2. Understanding corruption risks in operations

The ten main corruption pathways

Corrupt networks

Corruption risks within mission forces

Leadership and strategy

  1. Specific preparatory actions

Threat assessment Intelligence
Force structure & personnel Contracting & logistics Training
Civil-military coordination Data & metrics
Legal

4. Capacity building of host nation security forces

5. Existing guidance on anti-corruption from other sources

NATO JALLC recommendationsJoint and Coalition Operational Analysis Report

UK Land Warfare Centre: Corruption on operations guidance Current doctrinal guidance

ISAF contracting guidance
Embassy of Denmark: Anti-corruption guidance note

  1. The ten main corruption pathwaysCriminal patronage networks

    Factionalism

    Elections

    Organised crime

    Narcotics

    Exploitation of natural assets

    Land title and expropriation

    Borders

    Foreign aid

    Military, police, and militias

Several military forces have worked through this guidance in order to better prepare themselves. These include NATO forces such as Allied Rapid Reaction Force (ARRC). NATO has several useful publications on the subject, see here and here.

 BETTER DEFENCE PROCUREMENT 

This is a huge subject. Large defence organisations employ tens of thousands of procurement professionals, and there are countless manuals and courses on professional defence procurement practice in almost every country.

There have been some major corruption-reducing successes in improving defence procurement, for example:

The EU forcing competition in defence procurement across all EU countries

The introduction of e-procurement in many countries, which helps by reducing the extent of human interactions in the procurement process.

Despite the progress, there continues to be a lot of corruption in defence procurement.

Here are the results of a detailed review of defence procurement risks in one European country. Their procurement department reviewed all the contracting risks and concluded that the top three were as follows:

Specific procurement corruption risk Votes (20 people)
1. Improper political influence 19
2. Improper bidder influence 13
3. Poor/inadequate technical specifications 10

Their practical risk reduction measures were summarised as:

  • Training, selection and remuneration of procurement officials (8)
  • Improving procurement planning (5)
  • Better regulation and procedures (5)
  • Experts who can better define the specifications (3)
  • Other suggestions (20)

This ‘top three’ could probably be replicated in many countries, though in that country they did not have one of the other major procurement risks: single source procurement (contracts being awarded without any competitive process), and its cousin, secret procurement (also usually single source, but this time without much visibility or scrutiny even within the ministry).

The slide below shows just how often single source procurement is used in the defence sector:

Tracking this indicator – the percentage of defence procurement that is done without competition – is a crucial first step. It can usefully be broken down further into the single source percentage for militaryequipment/services and the single source percentage for non-militaryequipment/services.

Many countries have worked hard on reducing corruption risk in their defence procurement. UK..   Bulgaria, for example, changed the rules in 2011 for their “special procurement procedures” for secret tenders. For the first time ever, information about special tenders could be found on the website.

You can read more on single source procurement and how to address it in this TI-DS report.

An important feature of defence procurement that has to be taken into account is national preference in the production of military equipment and services. Many nations want to keep a national capability to produce arms, and this has to be considered as it changes the dynamics of competitive procurement, and sometimes leads to a necessity for single sourcing. The corruption issues related to national companies can be addressed by open-book budgeting and additional scrutiny committees. The more common problem, in my experience, is that the ‘national preference’ rules become applied too widely and without challenge, once again fuelling bad practice and corruption.

(add the other procurement risks from the typology)

 

BETTER RULES ON SECRECY 

There are good reasons for secrecy in the operations of military forces. However, these rules frequently become oppressive and well beyond functional need. The reason for this is usually just convenience: for example, the easiest way not to get criticism about something is not to publish it. Claiming that the document is ‘restricted’ in some way and therefore cannot be published is an easy way to accomplish this. Similarly, not to hold an open tender on grounds of secrecy starts off by being bureaucratically convenient but can quickly become a corrupt practice.

Secrecy issues are important in multiple areas of a defence system: in how/where decisions are made, in procurement, in budgets, in publications.

Secrecy rules are often rigid, but a review of them in order to introduce better clarity and openness is well worth doing. For example, the Bulgarian MOD in 2011 changed their internal rules on publication entirely, because everything was previously marked as confidential or secret, and nothing was being published on the MOD website.

BETTER CONTROL OF MILITARY INTELLIGENCE 

Intelligence services worldwide conduct covert and secretive activity in the name of national security. Due to the nature of their work, such secrecy might be accepted as a necessary evil by citizens, but the implications of this view on corruption risk are substantial. This may include sensitive financial and political information that, in corrupt hands, may be used for personal gain, blackmail, or party-political advantage. Such profiteering may undermine not only the integrity of the services, but also national security, if use of this information for legitimate purposes—tackling genuine security threats—is of secondary interest to corrupt gain.

Corruption risk also arises from the significant budgets that may be devoted to the activities of intelligence services. In some states these budgets may be very high indeed, yet disclosure of budgetary procedures and even vague indications of the destination of funds may be entirely lacking. Such opacity clouds certainty over whether significant sums of money are being used legitimately, or for illegitimate gain. Such lack of traceability may facilitate bribery of parties whose work may overlap with intelligence service staff (e.g. witnesses and journalists). It may also be used by agents seeking access to confidential areas or data, as a means to pay their way in.

The Centre for Democratic Control of the Armed Forces (DCAF) has considerable expertise on how to ensure proper control and oversight of intelligence, including reports such as those opposite, available here and here.

Several countries have resolved major problems with corrupt control of military intelligence, the most notable example being Peru at the time of President Alberto Fujimori (see here). In others the problem has become very public, eg Colombia at the time of President XXX (see ehere).

Example: BRAZIL and control of intelligence services        +/-

In Brazil, there is explicit statutory reference to how the intelligence services are formally scrutinised. Federal Decree 7547, Articles 4 and 12, provide reference to oversight of the intelligence services. The rules and budgets of the intelligence services are legally regulated by the Brazilian Comptroller General in tandem with the National Congress.

Example: ITALY and control of intelligence services          +/-

The intelligence services in Italy were reformed in 2007 on the back of a number of scandals including illegitimate monitoring activities and information planting. The reform itself is a good indication of political will and attitudinal change reflecting an unwillingness to allow the intelligence services to act with impunity. As part of this reform, a new Parliamentary Committee for the Security of the republic (Comitato parlamentare per la sicurezza della repubblica) was established with the specific task of ensuring intelligence service activity is carried out in line with the law and the constitution. Several formal features of committee activity help reduce the risk of corruption in the intelligence services:

  • The composition of the committee is multi-partisan. Ten members, five from the lower parliamentary house and five from the upper house, are appointed to reflect the majority and the opposition parties proportionally.

Annual reports of the Committee of Foreign Affairs and National Security report effective oversight, and academic sources and media articles do not contradict this. Formal mechanisms, according to available knowledge, are effectively implemented.

  • Considerable powers of investigation. So long as legitimate reasons are given, the committee can call for a hearing of individual members of the intelligence services, and anyone external to the services who may have salient information relevant to a matter can be investigated.
  • Considerable access to information and locations. The committee is entitled to access documents in judicial authority, to access materials in on-going investigations, and to consult classified materials according to specified procedures. They are also entitled to inspect intelligence services buildings.
  • Advisory capacity. The committee has a proactive as well as a reactive role. It is entitled to express opinion on draft decrees or rules affecting the organisation or staffing of the security services.
  • Urgent information or reports. The committee has the power to submit urgent information to the chambers of parliament when it feels this is necessary.

 

Comparative country data from TI: control of military intelligence+/-

The TI analysis asks: Are the policies, administration, and budgets of the intelligence services subject to effective, properly resourced, and independent oversight? There is a wide variation among countries.

 

 

Section 8 

Section 9 

 


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