Dassault rapped for poor ethical and anti-corruption monitoring

By Ajai Shukla

Business Standard, April 28th, 2015

Widely respected anti-corruption watchdog, Transparency International, has ranked French company Dassault Aviation amongst the world’s least transparent defence companies, with the lowest monitoring of ethical violations and corruption.

India is set to buy 36 Rafale fighters from this company, on a single-vendor basis, with no price transparency, after an unexpected request from Prime Minister Narendra Modi, on his visit to France this month.

Defence Minister Manohar Parrikar told Doordarshan on April 13 that Mr Modi made this request to bypass the reservations of a defence ministry committee, which remains unconvinced that Dassault Aviation quoted lower than its rival Eurofighter GmbH in a bid to supply India with 126 medium multi-role fighters.

Transparency International has ranked Dassault Aviation in “Band F”, the lowest grading, alongside 56 other companies like Pakistan Ordnance Factories, King Abdullah II Design and Development, and a raft of Chinese and Russian arms companies.

Transparency International says it evaluated each company based on 41 indicators, using “publicly available information relating to [companies’] ethics and anti-corruption programmes.” Companies with “Little or no” programme are placed in “Band F”.

Dassault Aviation has not responded to a request for comments.

Also with Dassault in “Band F” are two Indian companies --- Ordnance Factor Board (OFB) and Tatra Trucks. Both face on-going corruption investigations by the Central Bureau of Investigation (CBI).

Transparency International also evaluated three other Indian defence companies. Hindustan Aeronautics Ltd (HAL) is ranked in “Band D”, which means it only has “Limited” ethics and anti-corruption mechanisms.

Bharat Earth Movers Limited (BEML) and Bharat Electronics Limited (BEL) are ranked even lower in “Band E”, which indicates they have “Very limited” ethics and anti-corruption programmes.

Just four defence companies out of the 163 evaluated by Transparency International are ranked in “Band A”, or those with “Extensive evidence” of ethics and anti-corruption programmes. All are American corporates: Lockheed Martin; Raytheon; Bechtel, and Fluor Corporation.

Interestingly, Finmeccanica --- which the CBI is investigating in India after Italian prosecutors arrested its chief executive in 2013 for allegedly paying bribes to sell the Indian Air Force (IAF) twelve AW 101 VVIP helicopters --- ranks highly in “Band B” as a company with “Good” ethics and anti-corruption mechanisms. The Italian courts have cleared Finmeccanica of wrongdoing; the CBI is continuing its probe but has failed to file a charge sheet so far.

Transparency International is a Berlin-based non-profit organisation that aims to “combat corruption and prevent criminal activities arising from corruption”.

Its latest report, released on Monday, “assesses the ethics and anti-corruption programmes of 163 defence companies from 47 countries using publicly available information.” Of these, 63 companies provided detailed internal information this year, almost double the number that did so in the last report in 2012.

Overall, Transparency International finds that “most large defence companies still show little evidence of ethics and anti-corruption programmes… However, many defence companies are increasingly addressing corruption risks.”