22 Executives and Employees in the private military industry were recently arrested under charges of attempting to pay bribes to secure foreign contracts, in a joint US and UK operation. The FBI claims that the accused attempted to pay a sizeable “commission” to an agent posing as the defence minister of an un-named African country. The various executives were each seeking to win a portion of a lucrative $15m contract to arm the country’s “presidential guard”. The arrests, with the exemption of one, were all made in Las Vegas where the accused were attending the Shooting, Hunting, Outdoor Trade Show and Conference (S.H.O.T. show), billed as “the world’s premier exposition of combined firearms, ammunition, archery, cutlery, outdoor apparel, optics, camping and related products and services.”
Comprising the end of a two-year investigation, the sting itself began just over 6 months earlier on 13th May at the Mandarin Oriental Hotel in Miami. A former executive in the military equipment industry acted as the contact through his previous business relations with all the accused. He introduced each of them to FBI agents posing as the foreign minister for an African country, and his sales procurement officer. According to the FBI, all the defendants agreed to pay a 20% commission on a shopping list which included grenade launchers, rifles and ammunition,, despite being told that half of it would go directly to the ‘foreign minister’ .
The 22 individuals were charged in the Department of Justice’s (DoJ) largest investigation and prosecution in history in enforcement of the 1977 Foreign Corrupt Practices Act. The law, “prohibits U.S. persons and companies, and foreign persons and companies acting in the United States, from bribing foreign government officials for the purpose of obtaining or retaining business.”
American pro-gun groups and lobbyists have attacked the move, claiming that it represents an offensive against gun owners. The anti-government website Prison Planet features an article titled “Obama Justice Department Decapitates Gun Industry” which laments, “Since the election of Obama the main question for gun owners has been, ‘when will Obama come after the guns’? It looks like that question has been answered!” Despite the fact that the action focused on foreign trade, rather than domestic transactions, some believe that this is simply a further attempt by the Obama administration to stifle the US gun industry. That the embarrassment caused by the arrests was as a direct result of alleged illegal corrupt practices may not be enough to satisfy some.
The investigation has been lauded as one of the first of its kind in involving international co-operation to target corporate bribery. However, although the investigation did involve one executive from Smith & Wesson, and one sales-agent from the UK, the prosecutions were largely confined to smaller US firms. The investigation significantly did not involve the bigger international defense giants such as Lockheed, Boeing and BAE who have previously been embroiled in sizeable corruption scandals, and who are all involved in military supply contracts to Iraq and Afghanistan.
The FBI investigation comes at a time of business expansion in both these regions, with international figures such as the UK’s Lord Mandelson urging, “companies to ‘seize the opportunity’ of investing in Iraq.” The British Business Secretary recently embarked on a trade mission to the country with representatives of 23 British companies, including Rolls Royce, BP and Shell and encouraged UK defense firms to bid harder for contracts (some of which have already been as large as $300m). With competition between firms in this lucrative market growing, together with the notorious corruption records of both countries, the DoJ should not relax after its success.