Loading...
Defence offsets
Magahy, Ben Cunha, Francisco Vilhena da Pyman, Mark
Magahy, Ben
Cunha, Francisco Vilhena da
Pyman, Mark
Author(s) (Additional)
Illustrator(s)
Producer(s)
Contributor(s)
Contributor(s) (Other)
Editor(s)
Advisor(s)
Contact(s)
Data Collector(s)
Keywords
GE Subjects
Collections
Files
Research Projects
Organizational Units
Journal Issue
Online Access
Abstract
This report addresses one particular area of concern in the defence sector: offsets. Defence offsets are arrangements in which the purchasing government of the importing country obliges the supplying company of the exporting country to reinvest some proportion of the contract in the importing country. Offsets are big business, and yet they are very opaque and receive much less transparency and attention than they should, given their susceptibility to high corruption risk. Many government and defence industry professionals share our view that the integrity around offsets transactions needs to be improved significantly. This report explores the issue in depth, looking at current industry and government practices, and exploring the nature of the corruption risks associated with offset arrangements. We also look at the economic arguments in favour of and against offsets: it is important for importing governments, in particular, to recognise that the supposed industrial and economic benefits stemming from offsets are far from certain. We make recommendations for governments, for companies and for defence industry associations on ways to raise integrity and transparency of the contracts, and to reduce the corruption risk. This report is intended, above all, for ministers and officials in the defence and economics ministries of purchasing governments, as well as their advisers. It is strongly in their interest to improve the integrity of offset contracts. Increasing transparency is crucial for economic reasons – offset arrangements carry substantial hidden costs – and because corruption in these deals leads to significant embarrassment and loss of reputation not only for the relevant ministries, but for the country as a whole. It is also due to such significant risks that defence and security companies should make similar efforts in raising transparency and integrity. I would like to thank Ben Magahy and Francisco Vilhena da Cunha for all the effort they have put in as principal authors. I would also like to thank Anne-Christine Wegener and Julia Muravska of the DAC team for all their editorial and supporting effort. In addition, I would like to thank the many people in the industry and in a wide range of governments who have engaged energetically in the discussion of corruption risks in offsets with us and contributed hugely to our knowledge of the subject. Many of the suggestions have come out of these discussions. However, the responsibility for the report and all the recommendations is ours. We very much hope that this report will lead to defence institutions incorporating many of these proposals into their national practices and procedures, in collaboration with defence companies, parliaments and civil society.
Note(s)
Topic
Type
Book
Date
2010-04
Identifier
ISBN
9783935711494
DOI
Copyright/License
With permission of the license/copyright holder