The true cost of defence corruption

Leah Wawro is Project Officer with Transparency International’s Defence and Security Programme.

Corruption in the defence and security sectors comes at a high price. Secretive arms deals, rigged procurement, and the long, often unaccountable chain of subcontractors in conflicts, mean that corruption often goes undiscovered and unreported. It is only when scandals are uncovered that the true cost becomes evident.

So what exactly is the cost of defence corruption to individuals—to citizens and soldiers?

This article answers that question by considering three scandals, and looking at what the money lost could have been spent on. As three recent cases show, defence corruption is a waste of government funds that hurts the government, citizens, and defence establishments.

CASE 1: IRAQ

• $6.6 billion (alleged): full US training of Iraqi Police forces since 2003;
• $2.3 billion (official estimate): net official development assistance to Iraq in 2009

Up to 6.6 billion of these are allegedly missing in Iraq. Photo: CC Flickr/MoneyBlogNewz

Last week, it was reported that US defence officials are unable to account for billions of dollars intended for Iraqi reconstruction. Whilst the exact numbers are still disputed, they are indisputably high. Stuart Bowen, Special Inspector General for Iraq Reconstruction, argued that only $2.8 billion has not been properly accounted for from a programme allowing military commanders to spend money for reconstruction projects. The LA Times and the BBC put the figure at US $6.6 billion.

How else could this money—which is currently simply ‘missing’—have been spent? If the LA Times’ estimate of $6.6 billion is correct, it could almost have covered the entire sum that the US paid for training Iraqi police since 2003 ($7.3B). Even if the lower estimate of $2.8 is correct, that would have covered the net official development assistance given to Iraq in 2009—$2.791 billion.

This money belonged to Iraq—it was Iraqi funds that had been withheld during the Saddam Hussein era of sanctions and kept in a New York reserve bank. When Iraq needed to be rebuilt in 2003, the White House shipped in cash—shrink-wrapped in bricks of $100 bills—into Baghdad airport. As early as 2005, the House Government Reform Committee concluded that there was “evidence of substantial waste, fraud and abuse.” Iraqi officials have denied responsibility for safeguarding the funds, claiming that under an agreement signed in 2004, the US was ultimately responsible.

Read the rest of the article, including case studies from Uganda and Russia, on the new Transparency International Defence and Security Programme’s website.