It is widely recognized that the defense industry has been and continues to be particularly sensitive to the issue of corruption. Today’s new regulatory environment forces those in this sector to demonstrate permanently that they are working with the utmost respect for and adherence to ethical standards. These standards, which are multiplying at an international level, shape companies’ risk management policies and play a determining role in their reputation and their processes of evaluation.
However, in order to guarantee their growth and long-term performance these same companies cannot tolerate competitors who act questionably or on the limits of legality. It is, therefore, imperative that the conditions for doing business remain equal amongst competitors in order to ensure a level playing field. In addition, in spite of the proliferation of legislation designed to fight active corruption it remains endemic. Companies are far too often held hostage by their clients. The idea that companies are the sole actors of corruption must be abandoned. Companies are, in fact, at the mercy of public decision-makers and civil servants who demand, with complete impunity, their part of the ‘bounty’ to which they feel entitled. It is necessary therefore to ask governments to vigorously fight the corruption referred to as ‘passive’ – and which is not that “passive” – and to increase transparency in public contracts and integrity in international project financing. At the same time, it is imperative that these same governments recognize and support companies who do business with integrity and who implement robust compliance programs. In order to encourage the companies that make these efforts calls for public tender should be reserved for those who have undertaken the commitment to do business with integrity and invest in sectoral compliance initiatives.
Have any specific initiatives been undertaken?
With the recognition of the strategic stakes raised by this issue in the early years of the 21st century, European companies in the Aeronautic and Defense industry decided it was necessary to share experiences and best practices in order to develop guidelines, recommendations and common norms for the entire sector and thus create conditions for fair competition. In order to accomplish this, a Business Ethics Committee was created in 2007 within the Aerospace and Defence Industries Association of Europe (ASD). After consultation of existing policies and procedures in the domain of corporate responsibility the Committee published a set of norms known as the Common Industry Standards (CIS).
What are the “Common Industry Standards” of the ASD?
The CIS approach the subject of corporate integrity in the widest sense, keeping in mind the specificities of the sector. They call for zero tolerance, detailed procedures and training for employees. Thirty national, professional associations, members of ASD and more than 400 European companies adhere to these norms. The procedures, which offer a “tool box” with prepared forms and games with questions and answers, are adapted particularly to small and medium sized companies. Needless to say the Common Industry Standards are constantly updated to reflect changes and additions to regulations and norms.
What are “The Global Principles of Business Ethics”?
Following the publication of the Common Industry Standards, the ASD and its American homologue, the Aerospace Industries Association of America (AIA), got together to establish international norms in the area of ethical commerce. From this collaboration came the Global Principles of Business Ethics, which the two associations signed in 2009. These non-binding principles reflect a strong commitment by the sector to engage in responsible commercial activities and are designed to help companies benefit from a competitive advantage with respect to those who do not operate with the same emphasis on integrity. The current document treats four fundamental questions:
- zero tolerance with respect to corruption;
- the use of consultants;
- management of conflicts of interest;
- respect for the confidentiality of information
How did the The International Forum on Business Ethical Conduct (IFBEC) come about?
In order to follow developments with these principles and to include other countries in their application, the ASD and the AIA launched the first International Forum on Business Ethical Conduct (IFBEC) in Berlin in 2010 with the objective of encouraging exchanges between members of the industry, their clients as well as civil society. This first forum brought together global industrial directors as well as directors from institutions including the OECD, NATO, the US Air Force, the EDA and Transparency International. In October of 2011, on the occasion of the second forum in Washington, IFBEC became an association with a governing body, a permanent steering committee and a budget which would allow for its proper operation. In addition, a charter was developed in order to clearly define the conditions of membership in the association. IFBEC’s mission is twofold: on the one hand to encourage and promote the development on a global scale of ethical norms for the totality of the aeronautic and defense sectors. On the other, to organize regular meetings in order to exchange information and to conceive best practices through constructive dialogue between the industry leaders and their stakeholders.
What were the outcomes of the IFBEC conference held in Madrid in October 2012?
Once again, more than 80 representatives of the aeronautic and defense industry gathered from around the world, to participate in the third manifestation of this forum which took place in Madrid in October 2012. This conference, whose aim was to promote international cooperation in the area of transparency and integrity in public markets, was opened by the Spanish deputy Minister of Defense. Presentations were made throughout the day by the presidents of large Spanish companies as well as representatives from the public and private sector. A round table was dedicated to dialogue among stakeholders and included the participation of Susan Pond, Senior Officer, Defense & Security Economics from NATO and Nicola Bonucci, Director of Legal Affairs of the OECD. A discussion was also opened on the issue of Human Rights and its inclusion into the Global Principles. This forum was particularly useful as an occasion to generate numerous exchanges between the directors of major American and European multi-nationals in the sector and representatives of non-governmental organizations, governmental agencies and international organizations. A delegation from Chinese industry was invited as an observer to participate in the discussions.
How do these initiatives contribute to more transparency in public governance?
These innovative initiatives in the aeronautic and defense sector are contributing to an authentic collective action between public authorities and the main economic actors. With these initiatives, companies demonstrate their willingness to participate in the development and success of a strategic intelligence policy calling for more transparency and aiming at building confidence between public and private decision makers committed to improve globally public governance.
Who are IFBEC members ?
* Steering Committee Member