Lord Robertson was secretary general of NATO, and before that Defence Secretary of the UK. He is currently Chairman of Cable & Wireless International, and is working with international defence industry and TI (UK) to create an international defence industry anti-corruption consortium.

John Githongo left his position of Permanent Secretary for Governance and Ethics of Kenya in 2005 after his attempts to root out grand corruption in the Kibaki government were obstructed and were met with increasing hostility. He currently resides at Oxford University.

Lord Robertson regards corruption and bribery in the international defence procurement as “a real issue... a lot of contracts are huge and are conducted behind a veil of secrecy, margins are big, and there is plenty of room for brown envelopes”. This can be extremely damaging as “a bad corruption reputation will stop foreign direct investment in its tracks”.

However, he is positive that there is at last a real appetite for change: “a lot of companies want to clean up their act. Bribery makes it more expensive for a company to bid in a competition. If the company has a good product, it has an interest in transparency.”

“Western companies are increasingly interested in the competition from and behaviour of Russian, Chinese, Israeli and other companies... In this regard a global anti-corruption framework developed by industry would be a great help.” Indeed, Lord Robertson is already working with international defence industry, Transparency International (UK) and others to create an international defence industry anti-corruption consortium. It is hoped that such a consortium will be up and running within the next year or so. Lord Robertson observes that the leaders of defence companies are genuinely enthusiastic about this work.

As an example of the industry being a driver for change, he cites the current case of a firm taking the government of a European country to court over a defence competition which the company feels was tainted. “This is quite something for a firm to do, as they are bringing their own customers to court.”

On the buying side, governments and officials feel tainted by corruption and want stronger procedures and enhanced transparency to guard against it. He notes for instance that a European Prime Minister he met recently was “very open” to the idea of a standardised procedure that would require enhanced transparency in defence procurement. Indeed they recently published all the bids for a large defence procurement, much to the surprise of the competing firms. This displays a real commitment by a significant defence importer to enhanced transparency.

“Defence and security must be opened up as much as possible. Areas where a model procedure should be implemented can be identified, internal audits can be conducted, and key secrets can still be maintained where necessary.” Prosecutions for corruption are also crucial: “when one prominent person is caught, this sends shock waves that are felt throughout the system.”

Another significant concern is agents. This is a “difficult area, particularly in Africa and the Middle East, where all business is done through middle men”. He points to agents as an “area where companies need to be under more pressure”, noting that “it is unseemly when companies leave agents to carry out work on their behalf but wash their hands of any distasteful activities carried out by them.”

As an example of how an agent can damage the reputation of a company, Lord Robertson refers to the experience of a company recently identified in the UN Oil for Food scandal. “This came as quite a shock to management, because when higher prices for oil were requested, a practice which is forbidden under the Oil for Food program, the company refused. At first therefore, the management denied it, but after the chairman conducted a thorough investigation into agents and other spheres, it transpired an agent working for the company had arranged for a commission.”

On how to tackle the issue of agents, Robertson refers to the positive response by the company implicated in the Oil for Fund scandal, in particular its current efforts to rationalise the practice, through limiting payments, and using fewer agents. Annual reports should display information on agents and company policy regarding agents. FTSE 4 Good and other indices could contain strong disclosure requirements on agents, as well as require limits on commissions (though he notes the aerospace and defence sector is not eligible for inclusion in the FTSE 4 Good).

On promulgating the anti-corruption consortium, he notes that codes of practice and anti-corruption laws are a fundamental precondition for countries to become members of clubs like NATO and the EU, and pressure can be exerted on Eastern European countries that want to accede to the EU or join NATO to abide by strong anti-corruption codes.