1. ALL CONTENTS EMBARGOED UNTIL 16/09/2013

2. THE PROBLEM Defence Corruption is: DANGEROUS: It undermines operational effectiveness and poor equipment hinders the safety of troops and citizens DIVISIVE: it destroys trust in government and the armed forces, and between personnel WASTEFUL: The sector is worth $1.6 trillion a year. Corruption in the sector diverts resources from where they are needed

4. THE GI: METHODOLOGY Questionnaire of 77 indicators filled out by an expert independent assessor, reviewed by two independent peer reviewers Comments by a government POC and TI National Chapter POC where possible Model answers for consistency and relevance DSP typology of risks underlies questionnaire Research finalised between July – October 2012 Objective answers where possible; reasoned assumptions acceptable where information is lacking

6. WATCHDOGS: INTRODUCTION The first major spin-off report from the GI Focus on legislative control of the defence sector to prevent corruption using three parliamentary functions: 1. Legislating 2. Oversight / scrutiny 3. Debate Two principal ambitions: – Understand the quality of legislative control using GI data and updated analysis – Push for change through recommendations and suggested tools EMBARGOED UNTIL 16/09/2013

7. WATCHDOGS: METHODOLOGY Use of data from 19 questions in the GI, fit into seven focus areas: EMBARGOED UNTIL 16/09/2013

8. WATCHDOGS: OVERALL FINDINGS (1) Legislatures in two-thirds of the 82 countries have insufficient controls of the Ministry of Defence and Armed Forces, giving rise to high, very high, or critical levels of corruption risk. Strong legislative scrutiny of defence policy is particularly rare: not evident in over 85% of countries. More positively, 16 of the 82 countries have legislative controls in defence that reflect low or very low corruption risk. EMBARGOED UNTIL 16/09/2013

9. WATCHDOGS: OVERALL FINDINGS (2)

10. WATCHDOGS FOCUS AREAS: KEY RESULTS Focus Area% countries high / critical corr. risk Good Practice Secret budgets oversight 70%Parliamentary committees are provided with line item information / audits on secret spending Budget oversight65%Independent, well-resourced defence committee with explicit statutory power over defence budget Budget transparency 55%Publication of defence budget to public and parliament with line-item detail. Procurement oversight 55%Legislation covers all types of purchases; formalised oversight; transparent cycle and purchases Policy oversight55%Legislature can veto and amend proposals, and scrutinises arms exports and natural resource links Intelligence services oversight 50%Legislatures can access sensitive information to properly scrutinise intelligence service policy, budget External audit35%Independent audit office provides clear and transparent reports and advice to parliament EMBARGOED UNTIL 16/09/2013

11. WATCHDOGS: RECOMMENDATIONS PARLIAMENTARIANS: Establish a well-resourced, cross-party Parliamentary Defence Committee (PDC) and establish a closed PDC for secret items. Demand legal authority to scrutinise all matters in defence, including secret budgets. Consult experts for support when carrying out scrutiny of defence spending. THE EXECUTIVE Allocate legislatures and audit bodies the financial resources and evidence to do their job properly. Empower legislatures with veto power over the defence budget and defence policy. Ensure laws define when secrecy and classification is justifiable. AUDIT OFFICES Produce transparent, clear, and detailed audit reports on defence. Consult the legislature on where parliamentarians require additional technical support. Attend PDC meetings on request to offer opinions and explain audit reports. CIVIL SOCIETY AND MEDIA Lobby the government to introduce laws providing for an effective legislature. Act as a source of expertise to provide support to parliamentarians. Initiate public debate and discussion surrounding oversight of defence.

12. WATCHDOGS: POTENTIAL TOOLS 1. DEFENCE EXPERT CONSULTING GROUP Convene a group of technical experts from diverse backgrounds. The group can be a source of expertise, assist parliamentarians and push for change. The group should be independent of the military (though may include retired military personnel). Well-respected group member will help raise public awareness and support. 2. BIPARTISAN BODY OR COMMITTEE Create an independent, cross-party committee, possibly headed by the Auditor General. Receive reports on corruption in defence from legislators and the public. Facilitates anonymous reporting. Empower it with the ability to investigate reports. Report to parliament on findings annually. EMBARGOED UNTIL 16/09/2013

13. WATCHDOGS FOCUS AREA 1: BUDGET OVERSIGHT AND DEBATE 65% of countries’ legislatures are awarded marks reflecting inadequate oversight of the defence budget and limited debate surrounding it, indicative of high to critical corruption risk. TOP PERFORMERS: Possess a defence committee with strong powers of scrutiny over the defence budget, which is independent and adequately resourced. Exhibit legislative mechanisms of scrutiny relating to acquisition planning, and budget projections. Have the facility for robust parliamentary scrutiny of the defence budget’s internal audit procedures and outcomes. EXAMPLES OF GOOD PRACTICE: POLAND TAIWAN INDIA

14. WATCHDOGS FOCUS AREA 2: BUDGET TRANSPARENCY In this area, 55% of countries are awarded scores reflecting a high to critical risk of corruption, due to the budget not being disclosed to the public or parliament. Yet 30% of countries obtain marks reflecting low or very low corruption risk, so there are good examples to learn from. TOP PERFORMERS: Publish defence budget documents that are fully transparent, detailed, and accessible to parliament in full. Make both the approved and proposed defence budget publicly available, for example on government websites. EXAMPLES OF GOOD PRACTICE: SOUTH KOREA NORWAY

15. WATCHDOGS FOCUS AREA 3: EXTERNAL AUDIT TOP PERFORMERS: Countries in this group produce independent audit reports that are fully transparent and publicly available. They provide these audit reports to parliament to aid the institution’s scrutiny of government defence spending. Of the seven parliamentary areas, this one displays the best overall results. 65% of countries’ external audit processes reflect low or moderate corruption risk. Yet many countries nonetheless lack external audits, especially those in Africa and the Middle East. EXAMPLES OF GOOD PRACTICE: JAPAN LATVIA

16. WATCHDOGS FOCUS AREA 4: POLICY OVERSIGHT AND DEBATE 55% of countries are awarded marks relating to legislative oversight and debate about defence policy that indicate high to critical corruption risk. In most countries there is very limited oversight of the laws, strategies, and approaches used by governments to decide on the scope and activities of the military. TOP PERFORMERS: Have independent legislatures with formal rights to scrutinise and debate defence policy. They can veto, amend and approve proposals, including arms exports. Possess a well-resourced defence committee with extensive powers to oversee both defence policy and institutions. Legislate to prohibit defence institutions from having financial interests in the country’s natural resource exploitation. EXAMPLES OF GOOD PRACTICE: UNITED KINGDOM THE PHILIPPINES CYPRUS

17. WATCHDOGS FOCUS AREA 5: SECRET BUDGETS OVERSIGHT TOP PERFORMERS: Parliamentary committees are provided with extensive information on spending on secret items, including detailed, line-item descriptions of expenditures. Provide parliamentarians with detailed audit reports of the security sector and secret programs. These audits are subject to parliamentary consideration and debate. These countries regulate the classification of information through transparent legal requirements that are subject to parliamentary scrutiny. Countries’ performance in this area is the weakest of the seven parliamentary area s: the clear majority of secret budgets are immune from parliamentary oversight. European countries tend to display better performance than other regions. EXAMPLES OF GOOD PRACTICE: GERMANY BULGARIA SOUTH AFRICA

18. WATCHDOGS FOCUS AREA 6: INTELLIGENCE SERVICES OVERSIGHT TOP PERFORMERS: Have independent parliaments or legislatures with formal powers to oversee the intelligence services. Provide parliaments and legislatures with the necessary resources and access to sensitive information to properly scrutinise all aspects of the intelligence services—including policy, budgets and administration. EXAMPLES OF GOOD PRACTICE: BRAZIL ITALY CROATIA There is significant variation in performance in this area, with 8 countries receiving full marks—but 18 countries scoring zero marks. In some countries intelligence services are subject to parliamentary controls; in other countries this is entirely absent.

19. WATCHDOGS FOCUS AREA 7: PROCUREMENT OVERSIGHT 55% of countries obtain marks in this area reflecting high to critical corruption risk, which is a huge concern in an area associated with corruption scandals of such severity. No country scores perfectly in this area. TOP PERFORMERS: Have long-standing and well-tried legislation covering defence and security procurement. No items are exempt from these laws, and they include specific anti-corruption clauses. Have formalised procurement oversight processes in place that are transparent and highly active. Disclose past and future purchases, which tightly match audits of procurement expenditure. EXAMPLES OF GOOD PRACTICE: AUSTRALIA USA COLOMBIA

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