Rafale affair fits a global pattern of corruption in arms deals

Scandals surrounding the Rafale deal, including lack of transparency over details about Dassault’s choice of an inexperienced partner, will fuel international concern over corruption in arms deals

Photo by Frederic Stevens/Getty Images
Photo by Frederic Stevens/Getty Images

Hasan Suroor

The stench of scandal surrounding the controversial Rafale deal—from the inexplicable escalation of its cost and lack of transparency over details to questions about Dassault Aviation’s choice of a fledgling and inexperienced partner for an estimated ₹59,000-crore deal—will fuel growing international concern over corruption in arms deals, especially those between western companies and developing countries.

Several leading British, French and other European companies have been involved in a series of scandals, mostly in Asia and Africa, and some are still being investigated. In Britain, more than 44 cases of alleged corruption in arms deals, including bribing foreign public officials to win contracts, have been referred to law enforcement agencies by the Ministry of Defence in the past five years.

A case that will particularly resonate in Delhi as the controversy over the Rafale deal gains momentum, is that of former South African President Jacob Zuma, whose alleged links with—yes—a French arms firm were behind his downfall. He was ousted from office earlier this year and is facing more than a dozen charges in relation to a 1999 arms deal with this French company.

Research shows that corruption in arms deals accounts for as much as 40% of overall corruption in international trade. It has become so rampant and “ubiquitous”

Corruption watchdogs like Transparency International have cited the arms trade—estimated to be worth nearly four billion US dollars and growing—as a minefield of corruption involving politicians and influential businessmen accused of benefiting from eye-watering contracts. Apart from their ethical and moral aspects, corrupt arms deals are also seen as a threat to democratic institutions and rule of law, which end up being cynically compromised for the benefit of top political leaders—and the military industrial complex in seller countries, experts warn.

In a withering assessment, Transparency International said, “We estimate at least US $20 billion is lost to corruption in the sector every year. And that is only a modest estimation of the costs incurred when national security concerns become a veil to hide corrupt activity. Single source contracts, unaccountable and overpaid agents, obscure defence budgets, unfair appointments and promotions, and many more forms of corruption in this secretive sector waste taxpayer funds and put citizens’ and soldiers’ lives at risk.”

The scale of corruption has assumed alarming proportions. “The global arms business—especially the international arms trade, but also domestic military procurement—is widely seen as one of the areas of legal business that is most subject to corruption,” according to US campaign group World Peace Foundation.

Research shows that corruption in arms deals accounts for as much as 40% of overall corruption in international trade. It has become so rampant and “ubiquitous”, according to one study, that it has been normalised.

Arms trade is said to be “hardwired for corruption” and more vulnerable to scams than any other business principally because of the high value of individual deals offering enormous scope for “personal enrichment” to politicians and their cronies who negotiate them. Another reason is a lack of transparency as governments are quick to invoke “national security” as grounds for refusing to disclose deals: a tactic also being used by the Modi Government even to reveal basic information about the Rafale contract.

“The ‘national security exception’ throws a veil of secrecy around arms deals. There’s a tendency for the military sector in many countries to be exempt from scrutiny by Parliament, civil society and investigative and judicial institutions. Finally, the status of the arms industry in producer countries as key instruments of state policy often afford them protection from the consequences of corrupt actions, or may even lead to governments condoning corruption as a means of securing deals,” wrote Dr Samuel Perlo-Freeman, who heads WPF’s programme on Global Arms Trade and Corruption, in an introduction to its dossier of dodgy deals.

Transparency International: “We estimate at least US $20 billion is lost to corruption in the sector every year. And that is only a modest estimation of the costs incurred when national security concerns become a veil to hide corrupt activity”

Last year, WPF published details of 33 high-profile cases of corruption in the international arms trade. A common thread running through these cases is the nexus between senior politicians, bureaucrats and businesses close to the ruling elite. There’s also a common pattern of denials, obfuscations and attempts at a cover-up—a pattern that fits the Modi Government’s response to the Rafale case. There’s an English expression for its desperately evasive tactics: dancing on the head of a pin. And what a clumsy dancer it’s proving to be!

The extent of corruption and how it works has been documented in former South African politician Andrew Feinstein’s The Shadow World, which was also made into a film; Nick Gilby’s Deception in High Places; and Jean Guisnel’s Armes de Corruption Massive.

Feinstein wrote The Shadow World after resigning his parliamentary seat in 2001 in protest against the ruling African National Congress (ANC)’s refusal to hold an inquiry into a dodgy multi-billion-dollar arms deal. During the research for his book, he was shocked to discover the “level of collusion between very senior politicians, who are ultimately the biggest arms dealers of all”.

Yet, observers say, the majority of governments do little to prevent it beyond seeming to go through the motions—raising questions about a lack of political will to do so for obvious reasons. “Why would they like to do it? Turkeys don’t wish for early Christmas,” said one anti-corruption campaigner. Very often, investigations are halted mid-way citing unspecified “threat” to national security. In Britain, Tony Blair called off an investigation into a multi-million-pound 1990’s arms deal with Saudi Arabia after the Saudis threatened not to do business with Britain again. Hypothetically India can make similar threats to a seller country to prevent it from investigating any suspicious deal.

Whatever the outcome of the Rafale affair, it has already damaged Narendra Modi’s credibility, who came to power vowing to rid the country of corruption. The international gallery of rogue arms deals has just acquired another exhibit.

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