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12 February, 2021
Defence Companies Index: Transparency International Calls for Ukroboronprom to Continue its Move to Anti-Corruption
On Friday, February 12, the findings of the global Defence Companies Index by Transparency International Defence and Security were publicly presented in Kyiv at information agency Ukrinform. The Defence Companies Index on Anti-Corruption and Corporate Transparency (DCI) is the only global index that measures the commitment to transparency and anti-corruption of the world’s leading defence companies. The Index assesses 134 world’s leading defence companies across 38 countries. The companies are measured on a scale from A to F where A demonstrates a high level of commitment to anti-corruption and F indicates a low level of transparency. Nearly three-quarters of the world’s largest defence companies show little to no commitment to tackling corruption, new research from Transparency International reveals.
DCI has revealed that just 12% of the world’s largest defence companies assessed to receive a top ‘A’ or ‘B’ ranking, demonstrating a high level of commitment to anti-corruption. The best performer (‘A’ ranking) is the Italian company Leonardo, a globally operating high-technology company which is among the top ten world players in the aerospace, defence and security fields and is Italy’s leading industrial company. It scored 103 out of a possible 112. 73% of the companies assessed received a ‘D’ or lower, indicating little commitment to transparency and anti-corruption. The worst performer (receiving a grade of ‘F’) is the Australian CEA Technology, which scored only 2 out of 112 points. Natalie Hogg, Director of Transparency International’s Defence & Security Programme, said: “These results reveal the defence sector remains mired in secrecy with companies often displaying inadequate policies and procedures to safeguard against corruption. With nearly three-quarters of companies failing to achieve a ‘C’ grade, clearly much more needs to be done. Given the well-established link between corruption and conflict, failure to do this will cost lives. Ukroboronrpom, the only Ukrainian company represented in DCI, earned a grade of E and scored 28 out of 110. The other companies on band E include, among others, such ones as the Japanese Toshiba Infrastructure Systems and Solutions Corporation, Mitsubishi Electric Corporation, Mitsubishi Electric Industries, and the Russian enterprises Rostech and Russian Helicopters.  ‘The reasons why Ukroboronprom managed to essentially upgrade its score is a stable commitment of its management to increase its transparency over the recent years and a constructive dialogue with the rating’s authors’, said NAKO’s Executive Director Olena Tregub. ‘In particular, the management of the enterprise has respected the concrete recommendations as for anti-corruption procedures, the Code of Ethics, transparent procedures of nominating directors of Ukroboronprom’s member companies. All this taken together has helped to enhance the overall result of the enterprise’, said Tregub.   It’s noteworthy to draw attention to the progress achieved by Ukraine within the Index. When the companies were last assessed in 2015, the state aviation enterprise Antonov was the sole company representing Ukraine in the corporate index (then known as the Defence Companies Anti-Corruption Index).
Later on, Antonov became a part of the state defence conglomerate Ukroboronprom. In 2020, Ukroboronprom became the only Ukrainian company represented in the Index, and compared to Antonov’s rating, Ukroboronprom scored much better. Since 2017, NAKO has advocated for the corporate governance reform of Ukroboronprom and provided recommendations on how to reduce corruption risks and increase the transparency of the enterprise. For example, NAKO helped Ukroboronprom to develop the Code of Ethics, a new compliance function and a series of policies which include anti-corruption policies and those related to anti-bribery, conflict of interest, etc. Also, NAKO helped Ukroboronprom to develop internal procedures to increase the transparency of Ukroboronprom’s procurement procedures. 
NAKO’s team hopes that Ukroboronprom’s management will remain committed to transparency during the current transformation process. This will help build Ukraine’s state defence industry which will be more effective and less prone to corruption.   NAKO expresses its sincere gratitude to the UK Foreign and Commonwealth Office for its systemic support of transparency and good governance in the defence sector in the world and in Ukraine, in particular regarding support of the Defence Companies Index. 
Note to the Editor About the Defence Companies Index on Anti-Corruption and Transparency (DCI): The DCI analyses the commitment to transparency and anti-corruption in the world’s 134 largest defence companies. It analyses publicly available information to assess the quality, extent and availability of anti-bribery and corruption policies and procedures in 10 key areas where increased commitment to anti-corruption and transparency of information could reduce corruption risks in the defence industry.
About Transparency International – Defence & Security:  The Defence & Security Programme is part of the global Transparency International movement and works towards a world where governments, the armed forces, and arms transfers are transparent, accountable, and free from corruption.
About the Independent Defence Anti-Corruption Committee (NAKO): NAKO is an independent civil society organization which is a partner of Transparency International Defence and Security in Ukraine. Enhanced cooperation between NAKO and TI-DS is based on the common goal of reducing corruption in Ukraine’s defence and security sector.