Global Policy Forum

Bribery and Corruption Still Rampant


By Frank Vogl

Earth Times
March 2001

Major US corporations claim that they want to see a 'level playing field' in global commerce. They have campaigned for international treaties that criminalize bribe payments to foreign officials by all multinational corporations so that foreign firms have to face similar laws to the 1977 US Foreign Corrupt Practices Act (FCPA). Banning all foreign bribery by all multinational firms is the route to producing fairer and more even global business competition, assert US business leaders.

Many foreign governments and businessmen agree. Accordingly, there has been support in recent times in about 30 exporting countries for laws similar to the FCPA. But, many of the same foreign government officials and businessmen assert that a different set of rules applies to the international arms trade. Here, they claim, the US uses other unfair practices, forcing their foreign rivals to either bribe or die.

The playing field is far from level in the arms trade. The US accounts for close to 55 percent of total international annual arms sales of around $700 billion. The British and French are in joint second place -- far, far behind the US -- accounting for about 15 percent each. No other nation obtains even double-figures.

US manufacturers often produce the most sophisticated systems thanks to massive Pentagon support for research, development and production. The temptation is great for foreign manufacturers to use bribes to counter these Pentagon-aided US advantages.

After all, generals may be a lot more tempted to pocket big bribes as a result of buying old weapons systems from European manufacturers, than acquiring the most sophisticated US systems that come without kick-backs attached. As a result, the buying country's budget has been wasted and its military readiness undermined.

But quality is only one element in the arsenal of US business advantages. US exporters often deploy the full force of the White House, Pentagon and State Department in massive political and diplomatic offensives. No nation can compete with the sole Super Power in this game of direct leverage, where foreign government officials quiver as US businessmen and generals join with top administration officials to promote purchase orders to foreign heads of state. The Bush administration is likely to take this game of political pressure to an unprecedented new level, so stimulating even more bribery by rivals of US industry. Rarely before has US business taken such total charge of the Pentagon. Not only does the Secretary of Defense come from big business, but so too do the new heads of the Army, Navy and Air Force.

Defense Secretary Donald Rumsfeld has been a titan of American industry for two generations. Now, President Bush has nominated James Roche, a vice president at military aircraft seller Northrop Grumman to become Secretary of the Air Force; Gordon England from arms and naval vessel manufacturer General Dynamics to become Secretary of the Navy; and, Thomas White, a top executive at Enron (a Texas company whose chairman, Ken Lay, is a close friend of George W. Bush) to become the new Secretary of the Army.

The arms industry is the most secretive of all industries. Deals, bids, sales programs and product pricing are shrouded in mystery. Ever aspect of this game hits a flashing sign that says 'off limits -- national security.' The secrecy provides a cover for bribery on a vast scale. The recently published official US government's annual report entitled International Crime Threat Assessment, states that: "About half of the known bribes in the last five years were for defense contracts."

Arms bribery makes generals think more about their bank accounts than the men whose lives are risked in military duty. Arms corruption adds to the arms race and provides government buyers with an incentive to purchase more weapons than their countries require. The sense of entitlement to lavish bribes can be so pervasive in the top military ranks in some countries that, for example, one large developing country's navy was said to have more admirals than ships.

If the US wants to fight global corruption in arms, then it needs to review its dominant position in the world market. It needs to recognize that the more dominant it becomes, so the more the foreign arms makers will resort to bribes. If US business and the US Administration believe in a 'level playing field,' then they need to consider how to scale-back the level of direct political pressure they place on foreign governments in support of US arms sellers.

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