By Robert Wall
LONDON--Major U.S. and European weapons makers are among a large
majority of big defense companies that lack adequate public
evidence of anticorruption practices, according to a new survey by
antifraud advocacy group Transparency International U.K.
Out of 163 companies surveyed in 47 countries, 107 fell in the
bottom half of Transparency International's latest ranking, with 57
garnering an "F" rating that suggests almost a complete absence of
evidence of having openly available information on their
anticorruption activities. Companies such as French combat jet
maker Dassault Aviation SA (AM.FR) and U.S. drone producer General
Atomics are in the bottom ranking, according to Transparency
International U.K.
When the index was introduced in 2012, two-thirds of companies,
the same as this year, did poorly. Still, Mark Pyman, director of
the defense and security program at Transparency International U.K.
said there are signs companies are looking to improve.
The number of weapons makers in the top two categories rose to
26 from 10. "I'm astonished by the level of progress," Mr. Pyman
said. The high percentage of failing grades partly reflects the
addition of the number of companies under review and tougher
criteria, he said.
Defense companies have often been the subject of corruption
probes. Executives of Boeing Co. (BA) have gone to prison over
illegal business dealings. Britain's Serious Fraud Office is
looking into illegal business activities at an Airbus Group NV
(AIR.FR, EADSY) unit, and Finmeccanica SpA (FNC.MI) last year
entered a settlement with Italian prosecutors over a helicopter
deal to India, without admitting wrongdoing.
"Corruption is a cancer and if we don't chip away at it we are
going to pay a very heavy price," George Robertson, the former NATO
secretary general that has backed the effort said in an interview.
The index is starting to influence the thinking of government
buyers, he said
Mr. Pyman said the arms-sales sector, once ranked among the most
prone to corruption, has shed that status in recent years as
antibribery measures in many countries have taken hold. Still,
Transparency International recommended governments consider a
firm's anticorruption measures as they decide from whom to buy
equipment.
The advocacy group builds its index both on publicly available
information and what companies are willing to share about their
internal processes. Mr. Pyman said that since the last survey was
undertaken, companies have become far more open to discussing the
topic.
"The index did influence our decision to make more information
available," said Timothy Schultz, vice president for ethics and
business conduct at Raytheon Co. (RTN) The company, which felt it
had strong anticorruption practices already in place made more of
its internal processes public, he said. As a result, Raytheon
jumped to an "A" rating in this year's index from a "C" grade in
2012.
Transparency International, which also ranks governments'
anticorruption practices in arms deals, plans to update that index
before year end.
Write to Robert Wall at robert.wall@wsj.com
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