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Arms trade plagued by corruption

Jan. 25, 2010 at 11:38 AM   |   Comments

BEIRUT, Lebanon, Jan. 25 (UPI) -- Four Israeli business executives were arrested in Las Vegas, along with 18 Americans, Britons and other nationals, on charges of trying to bribe someone they thought was an African defense minister to obtain a $15 million arms contract.

The swoop on Jan. 19 was the culmination of a two-and-a-half-year undercover sting operation by the U.S. Justice Department.

It was the largest single investigation under the 1977 U.S. Foreign Corrupt Practices Act, which prohibits bribing foreign government officials.

The arrests were made on the eve of an annual arms industry show in Las Vegas. Among those held were the vice president of Smith & Wesson, a leading U.S. gun maker, and two British executives of a U.K. company that sells armored vehicles.

The U.S. move comes amid new efforts by anti-arms-trade campaigners for a global treaty to regulate arms exports and crack down on wide-scale corruption and illegal dealings involving governments as well as arms dealers and gunrunners.

The Middle East, which has been in constant conflict for the last six decades, has been a major importer of arms, legal and illegal, since World War II.

Two campaigners, Rachel Stohl of Chatham House in London and Suzette Grillot of the University of Oklahoma, note in their new book, "The International Arms Trade," that in 2007 "the value of legal arms sales around the world amounted to approximately $60 billion."

They noted that the "black and gray market sales most likely account for another $5 billion."

All efforts to impose international regulations on the trade have foundered, largely because the five permanent members of the U.N. Security Council -- the United States, Britain, Russia, China and France -- are responsible for 85 percent of the world trade in small arms.

The recent arrest of several leading arms dealers by U.S. authorities indicates that things may be changing. In October U.S. Secretary of State Hillary Clinton announced that Washington would back new moves for a global treaty, the first time the Americans have made such a commitment.

Still, scandal and corruption continue to plague the arms business.

BAE Systems Plc, Britain's largest arms maker, is currently facing charges from the Serious Fraud Office in London that it paid out millions of dollars to win lucrative defense contracts for aircraft and warships in Africa and Eastern Europe.

In 2006 the SFO was ordered by Prime Minister Tony Blair to drop an investigation into allegations that BAE had paid bribes possibly totaling $1 billion to members of Saudi Arabia's royal family to secure deals worth $85 billion.

Riyadh, Britain's best arms customer, had put immense pressure on London to scrap the official inquiry.

Amid a storm of protests from anti-corruption campaigners and the British press, Blair claimed the probe would jeopardize intelligence links at a key point in the "war against terror."

However, a U.S. pension fund is seeking to sue BAE, which ranks sixth among U.S. defense contractors, on the ground that some of the slush-fund money went through an account at Riggs Bank, a now-defunct Washington financial institution.

In October international arms dealer Pierre Falcone, Russian-born Israeli tycoon Arkadi Gaydamak, along with Jean-Christophe Mitterrand -- son of the late President Francois Mitterrand -- and former Interior Minister Charles Pasqua were convicted in Paris of selling arms worth $500 million to Angola during its 1975-2002 civil war.

The convictions in a trial that involved many of France's elite exposed -- yet again -- the impunity with which governments and arms traffickers have been able to supply combatants involved in conflicts, sometimes arming both sides.

Angola's war was a product of the Cold War and it was sustained and prolonged by the West African country's mineral wealth. The Soviet-backed MPLA government in Luanda paid for its arms in oil, while its main rival, the Western-backed UNITA, did so with diamonds.

The war was not just a question of ideology, but a struggle for control of natural resources.

In the years ahead, as resources such as oil, water, timber and minerals dwindle through climate change or heedless human consumption, this will be the main cause of war with governments and gunrunners providing the weapons to wage them unless the international community finds the will to prevent them.

© 2010 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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