Some quotes from Feinstein’s The Shadow World: Inside the Global Arms Trade.
The £75m Airbus, painted in the colours of the [Saudi] Prince’s beloved Dallas Cowboys, was a gift from the British arms company BAE Systems. It was a token of gratitude for the Prince’s role, as son of the country’s Defence Minister, in the biggest arms deal the world has seen. The Al Yamamah – ‘the dove’ – deal signed between the United Kingdom and Saudi Arabia in 1985 was worth over £40bn. It was also arguably the most corrupt transaction in trading history. Over £1bn was paid into accounts controlled by Bandar. The Airbus – maintained and operated by BAE at least until 2007 – was a little extra, presented to Bandar on his birthday in 1988.
A significant portion of the more than £1bn was paid into personal and Saudi embassy accounts at the venerable Riggs Bank opposite the White House on Pennsylvania Avenue, Washington DC. The bank of choice for Presidents, ambassadors and embassies had close ties to the CIA, with several bank officers holding full agency security clearance. Jonathan Bush, uncle of the President, was a senior executive of the bank at the time. But Riggs and the White House were stunned by the revelation that from 1999 money had inadvertently flowed from the account of Prince Bandar’s wife to two of the fifteen Saudis among the 9/11 hijackers.
In addition to the primary moral issue of the destruction caused by their products, there is the related concern of the ‘opportunity cost’ of the arms business. For while a weapons capability is clearly required in our unstable and aggressive world, the scale of defence spending in countries both under threat and peaceable results in the massive diversion of resources from crucial social and development needs, which in itself feeds instability.
A stark example of this cost could be seen in the early years of South Africa’s democracy. With the encouragement of international arms companies and foreign states, the government spent around £6bn on arms and weapons it didn’t require at a time when its President claimed the country could not afford to provide the antiretroviral drugs needed to keep alive the almost 6 million of its citizens living with HIV and Aids. Three hundred million dollars in commissions were paid to middlemen, agents, senior politicians, officials and the African National Congress (ANC – South Africa’s ruling party) itself. In the following five years more than 355,000 South Africans died avoidable deaths because they had no access to the life-saving medication…
Between the world wars, all the large arms companies, including Vickers-Armstrong, agitated against the prospect of a permanent peace. At the Geneva disarmament conference in 1927 an ebullient arms lobbyist, William G. Shearer – employed by three big American shipbuilding companies at huge cost – was instrumental in sabotaging any moves towards international agreements on disarmament by stoking fears and spreading propaganda to encourage the building of warships. Shearer’s lobbying, however, had an unintended consequence, leading to an unprecedented crusade against the arms companies: soon after the Geneva conference, he filed a suit against the three companies that had employed him for $258,000 in unpaid lobbying fees, thus making public not only the exorbitant cost of his employment but also the arms companies’ opposition to disarmament.
As part of the lobbying effort Bandar visited the former Republican Governor Ronald Reagan, then plotting his presidential bid. He had no idea who Reagan was, which highly amused Carter. They hoped Reagan might support the sale, persuading fellow Republicans on the basis of Saudi Arabia’s strong anti-communist credentials. Bandar contacted Thomas Jones, the chairman of the F-5’s maker, Northrop Grumman, and a close friend of Reagan’s, and was soon invited to see the Governor in California. As Bandar tells it: “I sat down with Governor Reagan, and we chatted a little bit. Then I explained why we needed the aircraft. He said to me at the end of it, ‘Prince, let me ask you this question. Does this country consider itself a friend of America?’ I said, ‘Yes, since King Abdulaziz, my grandfather, and President Roosevelt met. Until now, we are very close friends.’ Then Reagan asked a second question. ‘Are you anticommunist?’ I said, ‘Mr. Governor, we are the only country in the world that not only does not have relationships with communists, but when a communist comes in an airplane in transit, we don’t allow him to get out of the airplane at our airport.’”
Bandar says he was expecting a long discussion about the sale but “That was it. Two things were important. Are you friends of ours? Are you anticommunist? When I said yes to both, he said, ‘I will support it.'” Bandar then asked Reagan to voice his support to a reporter from the Los Angeles Times whom Dutton had tipped off. According to Bandar, the reporter asked: “Do you support the sale of the F-15s to Saudi Arabia that President Carter is proposing?” Reagan responded: “Oh yes, we support our friends and they should have the F-15s. But I disagree with him [Carter] on everything else.”
The strategy was further oiled by the Saudis’ legendary schmoozing. King Fahd, as confirmation of his support for the American cause, lavished Arabian horses and diamonds worth $2m on the President and First Lady. Bandar was inventive in ensuring that the gifts became the personal property of the first couple rather than, as protocol demanded, being accepted and registered on behalf of the American people. Bandar, who was particularly close to Nancy, helped the family in countless ways. When Nancy asked him to employ Michael Deaver, the powerful Deputy Chief of Staff to the President who was leaving the White House broke, with legal problems and drinking heavily, Bandar hired him as a consultant for $50,000 a month, even though he had absolutely no contact with him throughout the year that he was on the payroll.
BAE had attempted to reinvent itself as an ethical arms company before, and would continue to do so. In 2006, Deborah Allen, director of corporate responsibility, told the BBC that BAE was doing ‘Everything from looking at making a fighter jet more fuel-efficient and looking at the materials that munitions are made of and what their impact on the environment would be.’ The company had plans to manufacture ‘green’ lead-free bullets so that once in the environment they ‘do not cause any additional harm’. Additional, that is, to the harm they’ve caused to the injured or dead target.
BAE also spoke about making a quieter bomb so that the users’ exposure to fumes would be reduced. And the company was reported to be making landmines which would turn into manure over time. As Allen put it, they would ‘regenerate the environment that they had initially destroyed’.
She continued: ‘It is very ironic and very contradictory, but I do think, surely, if all the weapons were made in this manner it would be a good thing.’ This green initiative led only to much mirth at the absurd notion of the ethical arms company making weapons and ammunition that would be more caring. The plan to make green bullets was scrapped two years later after BAE discovered that tipping bullets with tungsten instead of lead resulted in higher production costs, making the venture unprofitable.
[There is] a distinct lack of political will to prosecute arms dealers on the part of many countries. The early history of Merex illustrates how dealers are often protected from prosecution by their links to state intelligence agencies or other quasi-state actors. In extreme cases dealers are integral components of organized crime networks that include political actors, while others are or have been useful to powerful politicians or officials, who explicitly or tacitly condone their actions. Their apprehension and prosecution could result in severe embarrassment and politico-legal difficulties for their abettors. With friends in high places some arms dealers have been able to evade arrest and prosecution throughout their illicit careers and beyond.
Viktor Bout’s evasion of justice for many years is an exemplar of how these issues have combined to bedevil the prosecution of arms dealers.
In February 2002, Belgian authorities issued an Interpol ‘red notice’* that they were seeking the arrest of Bout on charges of money laundering and arms dealing. In theory, if he was in a member state, local police authorities were obliged to arrest him and hand him over to Belgium.
…A plan was hatched to arrest him when he landed in Athens and bring him to justice in Belgium. Soon after Bout’s flight took off, British field agents sent an encrypted message to London informing them that ‘the asset’ was in the air. Minutes later the plane changed direction, abandoning its flight plan. It disappeared into mountainous territory out of reach of local radars. The plane re-emerged ninety minutes later and landed in Athens. When police boarded the aircraft it was empty except for the pilots. Twenty-four hours later Bout was spotted 3,000 miles away in the Democratic Republic of Congo. Bout’s crew had been informed of the plan to arrest him in Athens and had arranged to drop him off safely elsewhere. For a European investigator all signs pointed towards US complicity: ‘There were only two intelligence services that could have decrypted the British transmission in so short a time,’ he explained. ‘The Russians and the Americans. And we know for sure it was not the Russians.’
Shortly after Bout’s narrow escape he moved back into the safety of his ‘home territories’ in Russia. Russian officials were reluctant to see Bout prosecuted as he had close contacts within the Russian establishment through whom he had been able to source surplus matériel for years. In 2002, in response to a request to reveal his whereabouts, Russian authorities declared that Bout was definitely not in Russia.
As they were issuing this definitive denial Bout was giving a two-hour interview in the Moscow studios of one of the country’s largest radio stations. Shortly afterwards Russian authorities released a second clarifying statement. It was a thinly veiled message, in classic Orwellian doublespeak, that Bout was now untouchable. With this Russian protection – known locally as krisha – Bout was able to resume operations, albeit with a higher degree of caution. As a consequence, as recently as 2006, Bout was sending weapons to Islamist militants in Somalia and Hezbollah in Lebanon.
The key agent used by Lockheed in Japan was one Yoshio Kodama, aka ‘The Monster’. After spending three years in prison on war crimes charges after the Second World War, Kodama was set free by the US occupying forces on the grounds that he would make a good ally in the Cold War fight against communism. He then took his fortune – earned by supplying Japanese troops during the war and looting diamonds and platinum from areas conquered by Japan – and put it to work in his country’s politics. Variously described as an organized crime boss and a CIA asset, he helped found and fund the dominant Liberal Democratic Party.
In the late 1950s, Lockheed paid bribes of about $1.5m to $2m to various officials and a fee of $750,000 to Kodama to secure an order for 230 Starfighter planes. The details of the bribes were passed on to the CIA, which confirmed that every move made was approved by Washington. Lockheed was seen to be conducting a deep layer of Washington foreign policy.
This marked the high point of the Starfighter. It was sold to the German air force, and over a ten-year period crashed 178 times, killing a total of eighty-five German pilots. It earned the nickname ‘the Flying Coffin’, and a group of fifty widows of the pilots sued the company.
The SEC offered an amnesty for companies admitting to questionable or illegal payments; over 450 US companies admitted making such payments worth over $300m to government officials, politicians and political parties. Over 117 of the self-reporting entities were Fortune 500 companies. Many of the payments were justified as ‘facilitation payments’ or ‘commissions. Despite the lurid accounts of not only Lockheed’s activities around the world, but similar schemes by scores of other companies, there was no re-imagining of ethics in the violent, corrupt world of the arms dealers, but there was a dramatic recognition of the scale and damage of corruption in the US. The demand for stronger regulation and banning of bribery was resisted by corporate interests which argued that it would put the US at an economic disadvantage.
By the end of Reagan’s second term military spending doubled, marking the largest peacetime military build-up in US history. This was a massive windfall for the MICC, with, for instance, Lockheed’s Pentagon contracts doubling to $4bn a year from 1980 to 1983.
Resistance to this massive build-up was slow in coming, partly because of its popularity among ordinary Americans. But towards the end of Reagan’s first term, criticism was voiced of both the excessive size of the build-up at a time of growing deficits and social needs, and fear that the massive increase in nuclear weapons could exacerbate the risk of a superpower nuclear confrontation. The latter led to the nuclear freeze campaign, one of the most inspiring citizens’ movements of the twentieth century, while the former forced at least a slow-down in the military build-up.
Among the most effective tools of Reagan’s critics were two vastly overpriced items: a $600 toilet seat and a $7,662 coffeemaker. At a time when Caspar Weinberger was telling Congress that there wasn’t ‘an ounce of waste’ in the largest peacetime military budget in the nation’s history, the spare parts scandal opened the door to a more objective – and damning – assessment of what the tens of billions in new spending was actually paying for. It also opened up Weinberger to ridicule, symbolized most enduringly in a series of cartoons by the Washington Post cartoonist Herblock in which the Defense Secretary was routinely shown with a toilet seat around his neck. Appropriately enough, the coffeemaker was procured for Lockheed’s C-5A transport plane, the poster child for cost overruns and abject performance.
A young journalist, who had been mentored by the Pentagon whistle-blower Ernie Fitzgerald, was central to exposing the scandals. Dina Rasor fingered the aircraft engine makers Pratt & Whitney for thirty-four engine parts that had all increased in price by more than 300 per cent in a year. A procurement official noted in the memo which revealed the scam that ‘Pratt & Whitney has never had to control prices and it will be difficult for them to learn.’
This profiteering at the taxpayer’s expense was surpassed by the Gould Corporation, which provided the Navy with a simple claw hammer, sold in a hardware store for $7, at a price of $435. The Navy suggested the charges – $37 for engineering support, $93 for manufacturing support and a $56 fee that was clear profit – were acceptable. Further revelations included Lockheed charging the Pentagon $591 for a clock for the C-5A and $166,000 for a cowling door to cover the engines. The exorbitant coffeemakers were exposed as poorly made and needing frequent repairs. Lockheed was also billing the taxpayer over $670 for an armrest pad that the Air Force could make itself for between $5 and $25. Finally, it was discovered that a $181 flashlight was built with twenty-year-old technology and a better one could be bought off the shelf for a fraction of the cost.
Lockheed defended itself by pointing out that spare parts were only 1.6 per cent of the defence budget, suggesting that those uncovering the fraud, waste and abuse were the enemies of peace and freedom and should remain silent in the interests of national unity in the face of global adversaries. Ernie Fitzgerald again brought sanity to bear, by suggesting that an overcharge was an overcharge, and that the same procurement practices used with toilet covers and coffeemakers when applied to whole aircraft like the C-5A made the planes ‘a flying collection of spare parts’.
Rasor also revealed that the Air Force planned to pay Lockheed $1.5bn to fix severe problems with the wings on the C-5A that the company itself had created. The wing fix was little more than a multibillion-dollar bailout for Lockheed.
Despite this litany of disasters, the Air Force engaged in illegal lobbying to help Lockheed win the contract to build the next-generation transport plane. In August 1981, a McDonnell Douglas plane was selected for the project, with the Air Force concerned about Lockheed’s proposed C-5B. Two weeks later the Air Force reversed its decision. Rasor could not believe that the Air Force ‘would want to have an updated version of one of its most embarrassing procurements’.
Lockheed was responsible for, and benefited financially from, one of the myriad technologies that comprised the Strategic Defense Initiative (SDI). Its Homing Overlay Experiment – interceptor warheads that would unfurl umbrella-like spokes – was tested successfully in June 1984, after three failed tests had threatened the future of the initiative. To this day the company brags about the test which, it turns out, was rigged. A decade later the GAO reported that the mock warhead used in the test had been ‘enhanced’ to make it easier to hit. By that time $35bn had been spent on Star Wars. So, displaying its customary lack of ethics, the company cooperated with the Army to once again dupe the American taxpayer out of billions of dollars.
Under Augustine, Lockheed had set a goal of doubling its arms exports within five years. A real obstacle to achieving this was that few countries could afford the multibillion-dollar cost of the company’s sophisticated weaponry. As Chairman of the DPACT Augustine led the effort to create a new arms export subsidy; a $15bn fund that would provide low-rate US government-backed loans to potential arms-buying countries. With the arrival of Newt Gingrich’s conservative revolution in Congress the fund was approved and signed by President Clinton in December 1995.
Armed with this new ‘open chequebook for arms sales’, Augustine and Lockheed’s vice-president for International Operations, Bruce Jackson, determined that their best hope of new business lay in an extended NATO. New entrants to the military alliance would be required to replace their Soviet-era weapons with systems compatible with NATO’s dominant Western members. Augustine toured Eastern Europe. In Romania he pledged that if the country’s government bought a new radar system from Lockheed Martin, the company would use its considerable clout in Washington to promote Bucharest’s NATO candidacy. In other words, a major defence manufacturer made clear that it was willing to reshape American international security and foreign policy to secure an arms order.
The [Defense Policy Board], like a number of defence-related public bodies, blurs the distinction between the public and the private, resulting in the situation where activities undertaken with public money display minimal transparency and accountability. This is consistent with American capitalism, in which the activities of a corporation are seen as the province of that corporation, and neither the public nor Congress has a fundamental right to access information about them. Most notably, the US Freedom of Information Act doesn’t apply to private companies, leading a Democratic representative from Illinois to suggest that ‘it’s almost as if these private military contractors are involved in a secret war’.
By allocating so much public sector work to private companies, the Bush administration created a condition in which the nature and practice of government activities could be hidden under the cloak of corporate privacy. This severely limits both financial and political accountability. The financial activities of these companies are scrutinized primarily by its shareholders if it is a public company and occasionally by government auditors on a contract-by-contract basis. And of course, at a political level, it is not just feasible but common for the government to claim that a contractor had promised to do one thing but then did another, thus absolving government of responsibility.
This opaque operating environment, in addition to the secrecy afforded by national security, makes it extremely difficult to critically analyse and hold to account the massive military-industrial complex that drives the country’s predisposition to warfare and the increasing militarization of American society. What analysis there is tends to focus on the few corruption scandals that see the light of day.
In November 2001, the Air Force had drafted a document detailing what capabilities the new tankers needed. Colonel Mark Donohue, an official in the air mobility office, promptly sent it to Boeing for private comment, and the company sought and received concessions so the requirements matched what the 767 could do. Most importantly and extraordinarily, the Air Force agreed to drop a demand that the new tankers match or exceed the capabilities of the old ones.
In her plea agreement Druyun admitted that, in addition to the tanker case, she had awarded $100m to Boeing as part of a NATO contract in 2002. She admitted that the payment could have been lower, but favoured Boeing because her daughter and son-in-law worked there and she was considering working there as well. She also oversaw a $4bn award to Boeing to modernize the avionics on C-130J aircraft in 2001. In this instance, she favoured Boeing over four competitors because the company had just employed her son-in-law. And she agreed topay $412m to the company as settlement over a dispute in a C-17 aircraft contract in 2000, at the time when her son-in-law was seeking the job.
In September 2009, the bidding process was restarted once again, this time for 179 aircraft for $35bn over forty years. On this occasion Northrop withdrew in protest, claiming that the set-up of the competition favoured Boeing. Despite Northrop’s departure, EADS continued with the contest. Both sides accused the other of benefiting from illegal subsidies. The World Trade Organization (WTO) first ruled that Airbus had received illegal financial aid and then released an interim ruling that Boeing had also received illegal subsidies, though at a lower level than those received by Airbus.
The Air Force’s intention at this point was to buy 339 planes for a projected cost of over $62bn – up from an initial proposal to buy 750 planes for $25bn. That’s less than half as many planes for more than double the price. This absurd situation arose because initially Lockheed Martin put in a low bid, knowing that the planes would cost far more than their initial estimate. This practice of ‘buying in’ allows a company to get the contract first and then jack up the price later. Then the Air Force engaged in ‘gold plating’ – setting new and ever more difficult performance requirements once the plane is already in development. And finally Lockheed Martin messed up aspects of the plane’s production, while still demanding costs for overheads and spare parts from the Pentagon. As Hartung observes, this is a time-tested approach that virtually guarantees massive cost overruns.
From inside the Pentagon, Chuck Spinney described the process as follows:
“When you start a programme the prime management objective is to make it hard to cancel. The way to think about this is in terms of managing risk: you have performance risk and the bearers of the performance risk are the soldiers who are going to fight with the weapon. You have an economic risk, the bearers of which are the people paying for it, the tax payers. And then you have programmatic risk, that’s the risk that a programme would be cancelled for whatever reasons. Whether you are a private corporation or a public operation you always have those three risks. Now if you look at who bears the programmatic risks it’s the people who are associated with and benefit from the promotion and continuance of that programme. That would include the military and civilians whose careers are attached to its success, and the congressman whose district it may be made in, and of course the companies that make it. If you look at traditional engineering, you start by designing and testing prototypes. To reduce performance risk you test it and redesign it and test it, redesign it. In this way you evolve the most workable design, which in some circumstances may be very different from your original conception. This process also reduces the economic risk because you work bugs out of it beforehand and figure out how to make it efficiently. But the process increases the programmatic risk, or the likelihood of it being cancelled because it doesn’t work properly or is too expensive.
“But the name of the game in the Pentagon is to keep the money flowing to the programme’s constituents. So we bypass the classical prototyping phase and rush a new programme into engineering development before its implications are understood. The subcontractors and jobs are spread all over the country as early as possible to build the programme’s political safety net. But this madness increases performance and economic risk because you’re locking into a design before you understand the future consequences of your decision. It’s insane. If you are spending your own money you would never do it this way but we are spending other people’s money and because we won’t be the ones to use the weapon – so we are risking other people’s blood. So protecting the programme and the money flow takes priority over reducing risk. That’s why we don’t do prototyping and why we lie about costs and why soldiers in the field end up with weapons that do not perform as promised.
“In the US government money is power. The way you preserve that power is to eliminate decision points that might threaten the flow of money. So with the F-22 we should have built a combat capable prototype. But the Cold War was ending, and the Air Force wanted that cow out of the barn door before the door closed.”
Significant amounts of money continue to be made available to countries buying weapons from the US. So, in addition to the record levels of defence spending and foreign military cooperation funding (that is often used to buy US weapons and totalled around $5bn in 2003), the State Department and Pentagon spend an average of over $15bn per year in security assistance funding, a large share of which goes to finance purchases of US weapons and training. In addition, low-rate, US government-backed loans are made available to potential arms-purchasing nations. Such a loans programme existed in the 1970s and 1980s but was closed down after loans worth $10bn were either forgiven or never repaid, i.e. the programme became a further giveaway for US contractors and their foreign clients. Despite this history, in 1995 another $15bn loan guarantee fund was signed into law by President Clinton. This followed six years of lobbying by the arms industry, led by Lockheed Martin’s CEO, Norm Augustine.
Direct pressure from the Pentagon and the White House is often used to close a sale. For instance, in 2002 the US government demanded that South Korea award a $4.5bn contract to Boeing rather than a French company. Leaks from the South Korean defence ministry indicate that the French plane outperformed its American rival in every area and was $350m cheaper. But the Deputy Defense Secretary, Paul Wolfowitz, told the Koreans that they risked not only losing US political support but the American military would refuse to provide them with cryptographic systems that allow aircraft to identify one another or to supply the American-made air-to-air missiles that the plane uses. Boeing was awarded the contract.
When Colombia considered buying light attack aircraft from Brazil rather than a US manufacturer, the senior American commander in the region wrote to Bogotá that the purchase would have a negative impact on Congressional support for future military aid to Colombia. The deal with Brazil fell through.
The winners of the Deepwater competition were Lockheed Martin and Northrop Grumman. The companies were to work in partnership not only to build their own aspects of the contract but to supervise the work of every other company involved in the programme. This ‘innovative’ approach was touted as a way to reduce bureaucracy and increase efficiency compared with a system in which the Coast Guard itself would retain primary control. What it ended up proving was that contractors can be far less efficient than the government at running major programmes. Anthony D’Armiento, an engineer who worked for both the Coast Guard and Northrop Grumman on the project, called it ‘the fleecing of America. It’s the worst contract I’ve seen in my 20-plus years in naval engineering.’
Initially eight ships were produced for $100m. They were unusable: the hulls cracked and the engines didn’t work properly. The second-largest boat couldn’t even pass a simple water tank test and was put on hold. The largest ship, produced at a cost of over half a billion dollars, was also plagued by cracks in the hull, leading to fears of the hull’s complete collapse.
In May 2005, Congress cut the project’s budget in half, leading to the usual battery of letter writing, lobbying and campaign contributions that resulted in not only the avoidance of cuts to the disastrous programme but an increase to the budget of about $1bn a year, bringing the total project budget to $24bn. Finally, in April 2007, the Coast Guard took back the management of the project from the defence contractors. The first boats are expected to be ready for launch sometime in 2011, ten years after the 9/11 attacks that prompted the modernization effort in the first place.
Meaningful Congressional oversight of the Defense Department and defence contractors is severely undermined by the combination of cronyism, executive pressure on foreign purchasers, the revolving door and elected representatives’ desperate desire for defence companies in their states. In addition, national security is invoked to limit public scrutiny of the relationship between government and the arms industry. The result is an almost total loss of accountability for public money spent on military projects of any sort. As Insight magazine has reported, in 2001 the Deputy Inspector General at the Pentagon ‘admitted that $4.4 trillion in adjustments to the Pentagon’s books had to be cooked to compile required financial statements and that $1.1 trillion was simply gone and no one can be sure of when, where and to whom the money went.’ This exceeds the total amount of money raised in tax revenue in the US for that year.
Remarkably, the Pentagon hasn’t been audited for over twenty years and recently announced that it hopes to be audit-ready by 2017, a claim that a bipartisan group of Senators thought unlikely.
A study by government auditors in 2008 found that dozens of the Pentagon’s weapons systems are billions of dollars over budget and years behind schedule. In fact ninety-five systems have exceeded their budgets by a total of $259bn and are delivered on average two years late.
A defence industry insider with close links to the Pentagon put it to me that ‘the procurement system in the US is a fucking joke. Every administration says we need procurement reform and it never happens.’ Robert Gates on his reappointment as Secretary of Defense stated to Congress: ‘We need to take a very hard look at the way we go about acquisition and procurement.’ However, this is the same official who in June 2008 endorsed a Bush administration proid=l to develop a treaty with the UK and Australia that would allow unlicensed trade in arms and services between the US and these countries. The proposal is procedurally scandalous and would lead to even less oversight but has generated little media coverage. In September 2010, with Robert Gates in office, the agreement was passed.
While there has been an increase in prosecutions of individuals – in 2009 there were three trials of four individuals in FCPA cases, equalling the number of trials in the preceding seven years – this still unimpressive figure does not include anyone from the large defence companies, suggesting that bribery and corruption are still more tolerated when it comes to the commanding heights of the weapons business.
The closest a company has come to debarment was the temporary suspension of BAE’s US export privileges while the State Department considered the matter. Specific measures seem to be taken to avoid applying debarment rules to major arms companies, in particular by charging companies with non-FCPA charges as in the case of BAE. A legislative effort was undertaken to debar Blackwater (Xe) from government contracts due to its FCPA violations. Legislation was introduced in May 2010 to debar any company that violates the FCPA, though with a waiver system in place that would require any federal agency to justify the use of a debarred company in a report submitted to Congress.
The mutual dependence between the government, Congress and defence companies means that, in practice, even serial corrupters are ‘too important’ to fail. For example, the US could not practically debar KBR, a company to which it has outsourced billions of dollars of its military functions. Similarly, debarring BAE would threaten its work on new arms projects and the maintenance of BAE products that the US military already uses.
Chuck Spinney probably echoes the views of many who are critical of the MICC, on the subject of Obama: ‘I have been very disappointed. He has been a total disappointment on defense. He is continuing his predecessor’s war-centric foreign policy… he is continuing the establishment’s business-as-usual practices including the grotesque diversion of scarce resources to a bloated defense budget that is leading the United States into ruin.’
I asked Chuck what he thought of the Pentagon now. ‘It’s worse now. Things are worse today than they’ve ever been.’
In March 2009, the International Criminal Court (ICC) issued an arrest warrant against President Omar al-Bashir for crimes against humanity and war crimes. In mid-2010, after initially rejecting the request, the ICC added three counts of genocide to al-Bashir’s list of charges stating that there ‘are reasonable grounds to believe [al-Bashir is] responsible’ for orchestrating a wave of rapes, murders and torture. Al-Bashir, despite travelling widely in the region, has not been arrested as the ICC has no independent enforcement mechanism, relying instead on the prerogative of member states, who baulk at the diplomatic fallout of such an action. In August 2010, al-Bashir controversially attended the signing of the new Kenyan constitution. Kenya, as a signatory to the ICC, was obliged to arrest al-Bashir. Nothing was done.
After numerous stories of British arms being used to repress Arab Spring revolutions the UK government suspended arms exports to several countries. These moves, while very late, considering the weapons were already in the hands of repressive governments, were welcome. However, despite de facto arms embargoes on states such as Bahrain, Saudi Arabia was conspicuously not embargoed, in spite of its National Guard’s intervention in Bahrain, which also utilized BAE Tactica armoured vehicles.
It was the criminal corruption and negligence of the Albanian government, the systemic incompetence of the US Department of Defense procurement process, and the naked greed of the American and global arms trade that caused the deaths of Erison Durdaj and twenty-five other entirely innocent people. There has been no attempt by the US to assist the people of Gerdec to gain justice. No one in the US government has been charged in the case, ‘even though’ as Rolling Stone magazine has suggested, ‘officials in both the Pentagon and the State Department knew that AEY was shipping Chinese-made ammunition to Afghanistan. The Bush administration’s push to outsource its wars had sent companies like AEY into the world of illegal arms dealing – but when things turned nasty, the government reacted with righteous indignation.’
No legal action has been permitted in Albania against any of the senior politicians involved in the events that led to the deaths of the villagers.
On conclusion of this book I set about passing on the hundreds of thousands of pages of documents, archives and other source materials I have collected over the past ten years on the arms trade, to the relevant investigative and prosecuting authorities around the world. I don’t hold out much hope that they will be acted on, having witnessed, at first hand, the South African arms deal investigation stymied, the SFO capitulate on BAE, and the closure of investigations into the illicit trade in Italy, Sweden, Germany, India and Albania. Israel, Angola, Russia and China barely, if ever, investigate arms trade corruption.
The arms industry receives unique treatment from government. Many companies were, and some still are, state-owned. Even those that have been privatized continue to be treated, in many ways, as if they were still in the public fold. Physical access to and enormous influence on departments of defence is commonplace. Government officials and ministers act as salespeople for private arms contractors as enthusiastically as they do for state-owned entities. Partly this is because they are seen as contributing to national security and foreign policy, as well as often playing substantial roles in the national economy. In many, if not all, countries of the world, arms companies and dealers play an important role in intelligence gathering and are involved in ‘black’ or secret operations.
The constant movement of staff between government, arms companies, the intelligence agencies and lobbying firms the world over only entrenches this special treatment. As do the contributions of money and support to political parties in both selling and purchasing countries. This also results in the companies and individuals in this industry exercising a disproportionate and usually bellicose influence on all manner of policymaking, be it on economic, foreign or national security issues.
It is for these reasons that arms companies and individuals involved in the trade very seldom face justice, even for transgressions that are wholly unrelated to their strategic contributions to the state. Political interventions, often justified in the name of national security, ensure that the arms trade operates in its own privileged shadow world, largely immune to the legal and economic vagaries experienced by other companies. Even when a brave prosecutor attempts to investigate and bring charges against an arms company or dealer, the matter is invariably settled with little or no public disclosure and seldom any admission of wrongdoing. And the investigator, whistle-blower or prosecutor inevitably finds their career prospects significantly diminished.
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