Transparency international, 2020 index on “defense sector” companies on anti-corruption and corporate transparency

A comparison between OpenCorporation ranking and civil society observatories

Gabriele Guglielmi, Filcams CGIL Coordinator for International Policies and the OpenCorporation project

Foreword

Transparency international’s “defense sector” corporate anti-corruption and transparency index (DCI) assesses the levels of public engagement, reputation, towards anti-corruption and transparency in the corporate policies and procedures of 134 of the world’s largest defense companies. Transparency international analyzes what companies publicly commit to in terms of openness, policies and procedures by ranking their behavior in six bands:

According to Transparency international ” the DCI seeks to inspire reform in the defense sector, thereby reducing corruption and its impact.”

In order to develop the comparison with OpenCorporation (OC) rankings and civil society observatories, we took the cue from Virginia Piccolillo’s article on the CORRIERE DELLA SERA of February 09, 2021, “DEFENSE, Transparency international: the Italian Leonardo is at the top of the list of the most virtuous companies”(Editor’s note: the links are to OC’s corporate web sheets).

In the “Group A” (for more stringent anti-corruption policies and levels of transparency) out of a total of six levels in the ranking. Scrolling through the list, and comparing it with that of “Defence news” on the top 100 defense companies in the world in terms of related activities, there are many surprises.

In ” Group B ” we find the first two giants of world industry, namely the American Lockheed Martin and Boeing, but also the British BAE Systems (in seventh place of the top 100) and Rolls Royce (27th).

In “Group C” – which for Transparency International is equivalent to a “moderate” level in the anti-corruption ranking – we find the Franco-German Airbus (12th in the top 100 defense industries), Fincantieri, Saab A B and Naval Group.

While in “Group D”, “moderate” level, we can find a big name of the caliber of Thales (the French company is 16th in the top 100 of “Defense News“) and Israel Aerospace Industries (IAI), Safran S.A and Embraer S. A.

In “Group E”, the one with lowest anti-corruption measures taken, there are two other giants: the American General Dynamics Corporation (third in the world for turnover) and the French Dassault Aviation (22nd).

Finally, in the lowest tier, “Group F,” a large group of Chinese, Indonesian, Turkish, and Serbian companies, but also Germany’s Krauss-Maffei Wegmann, manufacturer of the Leopard.”

Comparison

The OC team compared the 134 companies in the DCI with the same companies in the OpenCorporation observatory. The following analyses refer to a sample of 27 companies, or 20% of those included the DCI (134); of these, 19 are ranked in OpenCorporationRanking.

In Tab. 1 the order is alphabetical, the empty box in the columns OC_Ranking and OC_Rating belong to companies that are present in the OpenCorporation Observatory (9,620 companies), while the boxes with a figure in the same columns are also subject to comparison in the OpenCorporationRanking (currently 568), for both types in the table there is a link to the OC survey form.

Accenture PLCAirbus GroupBAE Systems PLCBall Aerospace & Technologies CorporationBharat ElectronicsBoeingDaewoo Shipbuilding & Marine EngineeringDassault AviationEmbraer S.AFujitsu Ltd.GE AviationHewlett-Packard Enterprise CompanyHoneywell InternationalKawasaki Heavy Industries Ltd.Komatsu Ltd.Leonardo S.p.ALockheed Martin CorporationMitsubishi Electric CorporationMitsubishi Heavy IndustriesNEC CorporationRaytheon TechnologiesRheinmetall A.GRolls Royce PLCSaab ABSafran S.AThales GroupThyssenKrupp AG

Tab.1 Alphabetical order

Table 2 is sorted according to the DCI evaluation criterion.

It should be noted that the two companies in the highest tier “A – VERY HIGH”, Leonardo and Raytheon do not reach “sufficiency” in the OpenCorporation Rating (60/100), only one exceeds it with 61.39 Airbus that for DCI is in the “C – MODERATE” band.

The companies “not rated” in OC are mainly in the low DCI “E LOW” and “F VERY LOW” bands. The OC methodology excludes from the companies being evaluated those that do not provide sufficient data to be “weighed” and compared, and are therefore considered scarcely “transparent” in line with DCI. BAE System and GE Aviation are exceptions, at least for the latter it should be noted that multinational companies are also multi-sector and the comparison, sometimes as in this case, does not take place on the parent company.

Tab.2 sorted according to the DCI evaluation criterion.

Table 3 is sorted by OC Rating and shows the different evaluation between OC and DCI. This derives from the fact that the OC Rating is also determined by transparency, but not only that, it also takes into consideration 8 topics: Accessibility, Environment, Diversity and Inclusion, Sustainable Finance, Taxation and Fiscal Impact, Social Responsibility, Social Dialogue and Working Conditions.

Tab.3 sorted by OC Rating

As far as the countries are concerned, in Tab. 4, ordered by country, apart from the only Italian company that is in the first group, we find a generally low positioning of the Japanese, “harlequin” for the US, averagely good for the German and GB, on average low for the French.

Tab.4 Order by country

Conclusions, expansion of comparisons, and next steps

The data

The supply chain related to arms production/marketing has a turnover of 1,973,732,340 (thousands of euros) and employs over seven million people (Source: OC processing of BvD data).

Reputation

OC stands ethically for peace and the overcoming of conflicts and against the proliferation of weapons, as a signal, not only symbolic, it implements a penalization in the rating of companies involved in the production and trade of weapons starting from, and taking into account the assessment of Transparency International, from those listed in the DCI

The comparison

In the following tables we highlight

• an excellent Spanish experience that provides a global interactive picture of the interconnections between the financial system and the arms industry/trade (Box. 1)
• some of the main Italian initiatives with also the annual updates of the Observatory of the Ministry of Economy and Finance (Box. 2)
• some international examples (Box. 3).

OpenCorporation , in addition to the data and possible comparisons of the observatory on multinational companies, provides the space for discussion and comparisons of the blog https://blog.opencorporation.org/

Box.1

Delàs Center for Peace Studies In the database of the “military economic cycle of Spain of the Delàs Center for Peace Studies” it is possible to consult data on military spending, arms transfers, arms financing, military industry and organs of the armed forces. http://database.centredelas.org/?lang=en http://www.centredelas.org/ https://petjada-en-armes.setemcv.org/publicaciones/ http://www.bancaarmada.org/en/about-us http://www.stopinversionesexplosivas.org/

Box.2

https://www.banchearmate.org/    Armed Banks 2019 (Rel. 2020) Ministry of Economy and Finance (Italy) https://www.banchearmate.org/banche-armate-2019-rel-2020/    Publications by FISAC-CGIL and IRES Toscana Boom Economy: Banks, Arms and Countries in Conflict October 29, 2014 | Documents https://www.banchearmate.org/boom-economy-banks-arms-and-countries-in-conflict/ Boom Economy: Banks, Arms and Countries in Conflict 21 May 2013 | Materials https://www.banchearmate.org/boom-economy-banche-armi-e-paesi-in-conflitto/ The weight of weapons in the Italian economy1 July 2011 | Materials https://www.banchearmate.org/il-peso-delle-armi-nelleconomia-italiana/  https://www.banchearmate.org/wp-content/uploads/2020/10/MosaicoPace_Dossier_luglio2011.pdf https://www.peacelink.it/index.html

Box.3

European Network Against Arms Trade (ENAAT) STOCKHOLM INTERNATIONAL PEACE RESEARCH INSTITUTE