The Al Yamamah series of arms deals with Saudi Arabia was, and remains, Britain’s biggest arms deal ever concluded, earning the prime contractor, BAE Systems , at least GBP 43 billion in revenue between 1985 and 2007, with further deals still ongoing. In 1985, the UK and Saudi governments signed an initial Memorandum of Understanding, that led to a series of contracts for combat aircraft and a variety of other military equipment and support services over the period 1985-93. A major follow-up deal, Al Salam, was concluded in 2003. Allegations of corruption surfaced almost immediately, but investigations were thwarted until a large cache of documents was leaked in the early 2000s. An investigation by the UK government’s Serious Fraud Office (SFO) uncovered ‘commission’ payments, or bribes, totaling as much as GBP 6 billion paid by BAE Systems to members of the Saudi royal family and others. A key recipient of these payments, including over GBP 1 billion, was Prince Bandar bin Sultan, son of the Saudi Crown Prince. However, the SFO investigation was shut down by the British government in 2006, under heavy pressure from the Saudis.
The Angolagate scandal rocked the French political world when it came to light in 1999. It revealed a plot to circumvent UN arms embargo, involving several senior French political figures to covertly supply arms to the Angolan government for use in its renewed war against UNITA rebels. Beyond the illegality of the arms sales themselves, the Angolagate deals involved both bribery of Angolan political and military figures, and reverse kickbacks allegedly in support of the Presidential Campaign French political campaign funds. A French court convicted 36 individuals in 2008 in connection with the scandal on a variety of charges, but some of these convictions were overturned on appeal in 2011.
Most corruption in arms procurement takes the form of bribes or kickbacks. In return for being awarded an arms contract, often as a result of having selection criteria manipulated in its favour, the supplier company pays bribes to officials involved in the decision-making process. Payments typically are channeled through an in-country middleman or agent.
The U.S. defense acquisition system’s “revolving door” is legendary, but few cases of officials performing favors in exchange for post-retirement jobs have been successfully prosecuted. In 2004, a senior U.S. Air Force procurement official was arrested in a textbook example of revolving door corruption, landing not only herself but also senior executives from contractor Boeing in jail. The case stemmed from a USD 23 billion contract for the lease of 100 tanker aircraft from Boeing, in return for a lucrative job at the company on retirement from the Department of Defense (DOD). The Air Force’s uniformed officials opposed the deal, and auditors warned that buying the aircraft outright would be cheaper than leasing, but Darleen Druyun, the senior-most civil service employee in charge of air force procurement, worked around. In emails made public by investigators, Druyun was shown to have exercised her influence to convince the Air Force to accept a higher price. In exchange, Boeing worked with her daughter, who had previously been given a job by the same company through her mother’s influence, to set Druyun up for a high-paying role in Boeing’s missile defense systems department.
Not all corruption investigations can uncover enough evidence to proceed to prosecution, and in the case of India’s Barak 1 missile acquisition in 2000, even the help of extensive undercover tape recordings failed to secure an indictment—although it did lead to several senior figures being removed from their positions, and the resignation of the Minister of Defence. The circumstantial evidence uncovered by India’s Central Bureau of Investigation (CBI) suggested strongly, however, that the acquisition program, which sought to equip India’s surface fleet with anti-air/anti-missile systems, was influenced at the selection stage to give an advantage to an Israeli consortium’s offering over an indigenously produced alternative. The links CBI drew between agents, officials, and bank accounts led to a seven year investigation that was terminated in 2013, after drawing in a former defense minister, former Navy chief, and minor party leader.
The practice of buying and selling military positions and ranks has a long history, even if today it is strictly forbidden in almost all armed forces. For example, from 1683 to 1871, most commissions in the British Army were paid for. This was not a matter of bribes and back-handers, rather it was the officially-sanctioned system, with established prices for each rank in each type of military unit. Rather than a form of corruption, it was seen as a guard against corruption, ensuring that officers were men of private means who would not need to engage in pillaging or profiteering. Of course, there was also widespread corruption in the system, with commissions frequently being sold to the highest bidder well above the official price. One can well imagine that monetary payments, now illegal, did not immediately disappear from the military promotion system when the practice of selling commissions was officially abolished in 1871, but let us leave this question to one side.
Shortly after joining NATO in 1999, both the Czech Republic and Hungary started procurement processes to acquire new major combat aircraft to replace ageing Russian planes. In each case, the Gripen, produced jointly by Saab (Sweden) and BAE (UK), was selected over rival contenders, including the US F-16, believed to have been the favourite in each case. Subsequent allegations of corruption centered around a network of agents employed by BAE Systems to bribe politicians in Central Europe to sway decisions in favour of the Gripen, in particular in the Czech Republic and Hungary.
In the decade following the late-1990s, a network of intrepid fraudsters sold fake bomb detectors worth tens of millions of dollars to security services around the world, most notably Iraq, Thailand and Mexico. The fake bomb detectors, variously marketed as the ADE 651, GT200, Alpha Six, and, earlier, the MOLE Programmable Detection System, Quadro Tracker, and Sniffex, were completely unfunctional and sold solely for the purpose of enriching its producers.
The Greek military has consistently enjoyed strong fiscal support from the central budget much to the envy of its NATO peers and the consternation of Athens’ creditors. Since the end of the Cold War, military expenditure has never dipped below 2.3% of GDP; in the 1990s it hovered between 3% and 4%. One of the major acquisition projects funded in the last two decades was a recapitalization of the Hellenic Navy’s submarine force, which operated eight German-built U-209 variants at the time the program was launched. Returning to the German shipyards, the Greek government signed a deal in 2000 with Howaldtswerke-Deutsche Werft (HDW) and Ferrostaal for three new U-214 submarines and later exercised an option to purchase another. The EUR 1.26 billion contract, however, was later found to have been made possible by EUR 100 million in bribes paid out to Greek defence officials and various consultants.
Corruption is a persistent problem in Indian arms procurement, on both a petty and a grand scale. In the case of the 12 VVIP (Very Very Important Person) transport helicopters bought from AgustaWestland in 2010, however, the result of the corruption was not just extra costs for the Indian taxpayer, but a helicopter unable to fly at the high altitudes required to traverse the Himalayas. Using a network of agents, AgustaWestland won the bid by bribing Indian officials to swing the deal, and probably in particular to manipulate the tender specifications in their favour.