Watchdog: Israeli Defense Firms Don't Root Out Rot

Ora Coren
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Ora Coren

Israel's defense Industries don't do much to fight corruption, claims Transparency International, based mainly on its review of documentation on the public record, such as financial statements and media reports – and on inside information that the companies agreed to provide.

The entire global armaments industry is riddled with corruption: big defense deals can be contingent on equally big bribes of relevant officials.

In its anti-corruption index for 2011, Transparency International ranked the companies from A (the cleanest, companies that take active anti-corruption measures) to F (companies that do little to nothing).

The organization's index of 129 defense companies with revenues exceeding $100 million a year included four Israeli companies: Elbit Systems, Rafael (both ranked D), the Israel Aerospace Industries and Israel Military Industries (both among the bottom-crawlers with a rank of F).

The keenest anti-corruption fighter is the American company Fluor Corporation. Among the top companies are also Hewlett Packard, BAE, Fujitsu, Thales, and Northrop Grumman.

Two-thirds of the big defense companies in the world, including American, Russian, German, French, British and Chinese companies, provide little evidence in the public domain of anti-corruption practices, the organization says. Yet the industry is enormous. The combined value of the companies that Transparency International gauged is $10 trillion, and their combined annual revenues top $500 billion a year.

Transparency International estimates that the global cost of corruption in the defense industry is around $20 billion a year, if not more. That is based on figures from the World Bank and the Stockholm International Peace Research Institute.

To put things into proportion, the total estimated sum paid in bribes each year is about the same that the G8 nations earmarked for fighting world hunger in 2009.

Naturally, everybody pays the price for corruption, from taxpayers to soldiers. Good companies can lose deals to bad ones that forked over candy under the table, Transparency International points out.

Only about 10% of the companies the review covered actually report on anti-corruption measures, while 85% of the heads of the companies don't say much on the public record about the issue, the report says.

An Israel Aerospace Expo, featuring the anti-ballistic missile the Arrow.Credit: Ariel Shalit