Military-owned businesses: corruption & risk reform
-
Upload
transparency-international-defence-security-ti-dsp -
Category
Documents
-
view
214 -
download
0
description
Transcript of Military-owned businesses: corruption & risk reform
www.ti-defence.org
www.transparency.org.uk
Background papers | Risk review
Military-owned businesses:
corruption & risk reform
An initial review, with emphasis on exploitation of natural resource assets
Transparency International (TI) is the civil society organisation leading the global fight against corruption. Through more than 90 chapters worldwide and an international secretariat in Berlin, Germany, TI raises awareness of the damaging effects of corruption, and works with partners in government, business and civil society to develop and implement effective measures to tackle it.
For more information, please visit www.transparency.org
The Defence and Security Programme works with governments, defence companies, multilateral organisations and civil society to build integrity and reduce corruption in defence establishments worldwide. The London-based Defence and Security Programme is led by Transparency International UK. Information on Transparency International’s work in the defence and security sector to date, including background, overviews of current and past projects, and publications, is available at the TI-UK Defence and Security Programme website: www.ti-defence.org
While acknowledging the debt TI-UK owes to all those who have contributed to and collaborated in the preparation of this publication, we wish to make it clear that Transparency International UK alone is responsible for its content. Although believed to be accurate at this time, this publication should not be relied on as a full or detailed statement of the subject matter.
This publication was made possible thanks to generous support from the UK Department for International Development (DFID).
Transparency International UK
Defence and Security Programme
32-36 Loman Street
London
SE1 0EH
+44 (0)20 7922 7969
First published in January 2012.
Author: Kevin Goh, Julia MuravskaEditor: Saad Mustafa
Reproduction in whole or in parts is permitted, providing that full credit is given to Transparency International
(UK) and provided that any such reproduction, whether in whole or in parts, is not sold unless incorporated in
other works.
Report printed on FSC certified paper.
© 2011 Transparency International UK. All rights reserved.
ISBN: 978-0-9569445-1-1
Publisher: Transparency International UK
Design: Maria Gili
© Cover illustration: Luisa Rivera
Military-owned businesses:
corruption & risk reform
An initial review, with emphasis on exploitation of natural resource assets
Preface
• Corruptionwastesscarceresources.
• Corruptionreducesoperationaleffectiveness.
• Corruptionreducespublictrustinthearmedforcesandthesecurityservices.
• Defencebudgets,duetotheirsecrecy,areaneasytargetforpoliticiansseekingfunds.
• Internationalcompaniesshuncorrupteconomies.
TransparencyInternationalUK’sDefenceandSecurity
Programmehasbeeninplacesince2004,committed
toincreasingintegrityandreducingcorruptionin
defenceandsecurityestablishmentsaroundtheworld.
Weworkwithgovernments,thedefenceindustry,
andcivilsocietyorganisationstodeveloppractical
measurestocombatcorruption.
Officialsandseniorofficerstellusdirectlywhythey
caresomuchaboutcorruptionriskindefenceand
security.Intheirownwords,thisisbecause:
Thesecuritylandscapetodayisfundamentallydifferent
fromthewayitwasduringtheColdWar.Particularlyat
atimeofeconomiccrisis,governmentsaremuchless
readytoacceptthewastethatcomeswithcorruption.
Oneoftheareasofcorruptionriskweareoftenasked
aboutiscommercialbusinessesthatareownedbythe
military.Thisisasurprisinglycommonphenomenon
andisopentoawiderangeofpotentialabuses.
Asthereisextremelylimitedinformationonsuch
businesses,wehavetakenafirststeptoprovidean
overviewofinformationthatisinthepublicdomainon
thistopic,throughthisinitialreviewbyKevinGohand
JuliaMuravska.
Theyhavefocusedonafewverydifferentcountries
withextensivemilitary-ownedbusinesses—China,
Turkey,PakistanandIndonesia—andlookedat
nationaleffortsofreform.
Inaddition,theyhavelookedatoneofthemajorareas
ofabuse—exploitationofnaturalresourceassets
bythemilitary—inoil,mineral,forestry,agriculture,
fisheriesandland.
Thisstudywillbesupplementedbyanother,more
in-depthlookatmilitary-ownedbusinessesworldwide.
Weaimtoreleasethisinearly2013.
Thepaperlooksattheoperationsofsomemilitary-
ownedbusinesses,andthesuccessorotherwiseof
someofthereformeffortsthathavebeeninitiated.It
looksparticularlyintotheinteractionbetweenthese
businessesandthenaturalresourceandextractive
industries.
Wehopeyoufindthisreporttobeuseful,andwe
welcomeallfeedbackanddiscussionofourfindings.
MarkPyman
Director,InternationalDefenceandSecurityProgram
TransparencyInternationalUK
January2012
Contents
Preface 1
Introduction 4WHY CARE? 4METHODOLOGY 5
Categorisation of military businesses 6FORMAL AND INFORMAL MILITARY BUSINESSES 7
Military businesses examples 9CHINA AND THE PLA 9TURKEY 10PAKISTAN 10INDONESIA 11
Military business by sector 12OIL 12MINERAL EXTRACTION 13FORESTRY 15AGRICULTURE, FISHERIES AND LAND 17
Reform exercises 19CHINA AND PLA DIVESTITURE – RELATIVELY SUCCESSFUL 19CAMBODIA – RELATIVELY UNSUCCESSFUL 21INDONESIA – PARTIALLY SUCCESSFUL 21
Lessons learnt 23
Conclusion 24
Bibliography 25
LIST OF ABBREVIATIONS
CCP–ChineseCommunistParty
CMC–CentralMilitaryCommission
FAA–ArmedForcesofAngola
FMB–FormalMilitaryBusiness
GLD–GeneralLogisticsDepartment
IDF–IsraeliDefenceForce
IMB–InformalMilitaryBusiness
MoD–MinistryofDefence
NGO–Non-governmentalOrganisation
OYAK–OrduYardımlasmaKurumu’nun(Armed
ForcesPensionFund)
PLA–People’sLiberationArmy(China)
RCAF–RoyalCambodianArmedForces
TNI–TentaraNasionalIndonesia
TSKGV–TürkSilahlıKuvvetleriniGüçlendirmeVakfı
(TurkishArmedForcesFoundation)
UN–UnitedNations
UPDF–UgandanPeople’sDefenceForce
TransparencyInternationalUK’sDefence&SecurityProgramme 5
Corruptioninthedefenceandsecuritysectors
hasfrequentlybeenaproblemforgovernments
throughouttheworld.Thetypesofcorruptionthat
occurwithinthemilitaryrangefromsmall-scalepetty
corruption,wherebyindividualsoldiersareguiltyof
extortionistpracticesoracceptingbribes,togrand-
scalecorruptioninwhichofficialsarefoundguiltyof
embezzlementofmilitaryfundsorprofiteeringfrom
procurement.
Militarycorruptionisproblematicbecauseofits
detrimentaleffectsonthearmedforcesthemselves
andonthecivil-militaryrelationship.Byengagingin
corruption,themilitaryalsocontributestowardsthe
erosionofpublicsupportandtowardstheoverall
integrityofstatestructures.
However,whilstthesemaybethemorecommon
formsofmilitarycorruption,somedefenceforcesare
alsoengagingincommercialenterprises,oftenwith
insufficientoversightandcontrol.Suchmilitary-owned
businessesareprevalentinthenaturalresource
sectorsandintheextractiveindustries.Themilitary’s
privilegedpositioninsocietyenablesittocapitaliseon
itspowerandpatronagenetworks.Wheretheyare
alsoresponsibleforbordersecurity,thispowergives
themthecapabilitytoeasilyimportandexportgoods
withoutbeingsubjecttostatecustomsorinspections.
Althoughincidencesofthisarefarmoreprevalent
amongstdevelopingcountries,thisphenomenon
canalsobeobservedamongstnationswithmore
advancedeconomies.1Someofthesecountriesalso
includetheNewlyIndustrialisedCountries(NICs).
Thisliteraturereviewbeginsbyexamininghowthe
militaryhasengagedinbusinessactivities,soas
toestablishthespecificcorruptionrisks.Next,we
explorethemilitary’sinvolvementinthissectorby
resourcetype.
1 Foradefinitionandcomprehensivelistofdevelopingcountries,pleaseseeIMF’sWorldEconomicOutlookReportfor2010.
Indoingso,wehopetoprovideaninitialsurveyofthe
scaleofthemilitary’sinvolvementinthesesectorsand
thescaleofcorruptionthere.Thelastsectionlooksat
nationaleffortstoreformsuchmilitaryownership,and
toseewhat,ifany,lessonscanbedrawn.
WHY CARE?
Theintroductionofprofitandcommercialincentives
intoanon-profitdrivenorganisationisfirstlya
distractionfromofficialduties.Thecreationofmilitary
entrepreneurshipalsocompromisestheprofessional
integrityandcohesionofthemilitaryasaninstitution.
Basedonthevariouscasesofmilitarybusinesses
providedinthefollowingchapters,corruptionishighly
likelytooccureitherataninstitutionaloranindividual
level.Inmostcases,militaryentrepreneurship,once
started,takesonalifeofitsown.Theinitialintentions
tocreateself-sufficiencyprogramsoftenriskthe
developmentofaprofit-driveninternaleconomy.
Themilitary’seconomicparticipationisalsodamaging
foritsrelationshipwithsociety.Itselevatedsocial
positiongainsitcertainconcessionsandspecial
accesstostateresourceswhichcivilianpopulation
wouldnotbeentitledto.Thisscenarioofspecial
privilegeshasbeenreplayedthroughoutcountries
whichhaveamilitary-businesscomplexnexus.
Suchpracticesharmtheeconomicprospectsfora
countrysincetheyreduceinvestmentattractivenessto
externalfirms.Inaddition,thisunderminestheability
ofnon-militarylinkedcompaniestocompeteonafair
footingwithmilitarybusinesses.
Thedevelopmentofmilitaryentrepreneurshipisalso
damagingforthestateandfortheexerciseofcivilian
authorityoverthearmedforces.AscasesinChinaand
Indonesiawillhighlight,attemptstodevelopmilitary
programmesforself-sufficiencyoftenhavesevere
consequencesforthemilitary’srelationshipwiththe
government.Thelevelofsecrecythatmilitariesenjoy
limitstheeffectivenessofanyformofcivilianoversight
mechanismsanditsaccountabilitytogovernments.
Introduction
6 Military-ownedbusinesses:corruptionrisks&reforms
Fromacorruptionperspective,thenaturalresources
sectorisavulnerablebusinessarea.Thelinkwith
inappropriateexploitationofanation’snatural
resourceshaslongbeenaweaknessofmilitarieswith
pooraccountabilityinsuchcountries.
Thelargerevenuepotentialofnaturalresources
andminerals—andthepotentialfortheeconomic
developmentofthenation—makeitclearwhythe
militaryandsecurityorganisationsshouldnotbeable
toexertunduecontrolovertheseassets.
METHODOLOGY
Muchoftheavailablescholarlyliteraturerevolves
aroundtheissueofcivil-militaryrelations,ratherthan
specificallytacklingthefieldofmilitarycorruption.
Furthermore,mostsourcespertainingtothisfield
focusmainlyoncorruptioninprocurement,asset
disposalsorissuesofcivilianoversight.
Researchforthisreviewwasprimarilydrawnfrom
scholarlyjournalarticlesandbooks.Inadditionto
thesesources,evidencehasalsobeengathered
fromNGOssuchasHumanRightsWatchandGlobal
Integrity.Furtherdataonmilitarybusinessesinthese
sectorswasalsoobtainedfrominternationalinitiatives
suchastheExtractiveIndustryTransparencyInitiative
(EITI).Wherepossible,contacthasalsobeenmade
withacademicsandjournalistswhohavehelped
withtheprovisionoffurtherinformationonthetopic.
Informationonspecificcompaniesandorganisations
wasdrawnfromvarioussources,butmostly
fromreviewingthepublicationsofknownmilitary
foundationsandcompaniesinordertogainafuller
understandingoftheiroperationsandnetworks.
COVERAGE AND OMISSIONS
Asmentionedabove,thescopeofthisreviewis
dependentupontheavailabilityofopensource
material.Wehavealsohadtoomitseveralother
countriesfromthisreport.Theseareasfollows:
Military Regimes:Militaryregimesormilitary
dictatorshipshavebeendeliberatelyexcludedfrom
thisreport,principallyBurma(Myanmar),Libya,Niger,
GuineaandFiji.
Post-Conflict States: Stateswhichhaverecently
recoveredfromviolentconflictorinwhichinternational
peacekeepersarestillpresenthavealsobeen
excludedfromthisreport.
The large revenue potential of natural resources and minerals—and the potential for the economic development of the nation—make it clear why the military and security organisations should not be able to exert undue control over these assets. Credit: Flickr/Storm Crypt.
TransparencyInternationalUK’sDefence&SecurityProgramme 7
Inthisreview,wehavefollowedacategorisation
schemedevelopedbyMani,wheremilitary
businessesdevelopaseitherformalorinformal
businessstructures.2Aformalmodelofmilitary
entrepreneurshipreferstoonewherebymilitary
businessesareconsideredandrecognisedaskey
economicactorsandarefullyintegratedintothe
economy.Aninformalmodelreferstoasituation
wherebymilitaryentrepreneurshipisconsideredtobe
illegalinnatureandinbusinessconduct.
2 KMani,‘MilitariesinBusiness:State-MakingandEntre-preneurshipintheDevelopingWorld’,Armed Forces & Society,vol.33,no.4,2007,p.185.
Table1(below)showsthetypeofbusinessstructure
thatcanemerge.AsManiargues,thestrongerastate
is,thelowerthechancesarethatmilitarybusinesses
willemerge.3Conversely,whenthemilitary’sgrowth
outpacesthatofthestate,militaryentrepreneurship
becomesmorelikely.Anexampleofthiscanbedrawn
fromthecaseoftheTentaraNasionalIndonesia(TNI)
whichhasbeenanintegralaspectofIndonesia’s
historysincethedaysoftheindependencemovement.
Suchscenarioswouldoftenfavourthemilitary,
especiallygivenitsexistingposition.
3 Mani,p.595.
Categor isat ion o f mi l i ta r y bus inesses
MILITARY ORGANISATION STATE CAPACITY
Weak Strong
PROFESSIONALINSTITUTIONAL STATIST-INSTITUTIONAL
• Entrepreneurship likely • Entrepreneurship unlikely, unless encouraged by the state
• For institutional benefit • For institutional benefit
PAROCHIALSPOILS STATIST-SPOILS
• Entrepreneurship likely • Entrepreneurship unlikely, unless encouraged by the state
• For individual benefit • For individual benefit
TABLE 1: TYPES OF MILITARY ENTREPRENEURSHIP
Source: K Mani, ‘Militaries in Business: State-Making and Entrepreneurship in the Developing World’, Armed Forces & Society, vol. 33, no. 4, 2007, p. 595.
8 Military-ownedbusinesses:corruptionrisks&reforms
AccordingtoMani,thedevelopmentofmilitary
businessishighlydependentupontwokeyfactors:
state capacityandmilitary organisation.4State
capacityreferstothestate’sabilitytosetthe
parameterswhichhelptoconstraininstitutionbehavior
throughthedevelopmentofrulesandnorms.5The
strongerthestateis,thebetteritisabletomanage
thedemandsofthemilitary.Strongstateshavethe
capabilitytodisciplineandpunishmilitarieswhich
breaktherulesdefinedbythestateeitherthroughthe
judiciaryorthroughinternalpurges.Sincetherisks
involvedinsuchengagementswouldbefarhigherto
themilitary,itwouldthusbeadisincentivetoaction.
Incountrieswherebythestateisweakerthanthe
military,governmentsaremorelikelytorelyupontheir
militarytohelpstabilisethecountry.Inthisrespect,
statecapacityisdeterminantofthetypeofcivil-military
relationshipthatemergesandthelikelihoodofmilitary-
businessesdeveloping.
Asecondvariableisthetypeofmilitaryorganisation
thatthestatehas.Manistatesthatthelevelof
professionalismwithintheinstitutionhelpsdetermine
thetypeofentrepreneurshipthatwouldemerge.To
putitsimply,whetherthemilitaryengagesinbusiness
activitiesforindividualorinstitutionalbenefitis
thereforedependentuponthelevelofprofessionalism
thatisinstilledwithintheinstitution.Asdemonstrated
byTable1,highlevelsofprofessionalismamongst
themilitarywouldlikelyresultincommercialactivities
undertakenforinstitutionalbenefit.Theexamplesof
theRoyalCambodianArmedForces(RCAF)provided
inthefollowingchapter,demonstratehowthelack
ofcohesionwithinthearmedforceshasresultedin
businessenterprisesbeingundertakenforindividual
profit.
FORMAL AND INFORMAL MILITARY BUSINESSES
Byengaginginbusinessactivities,themilitary
inevitablyintroducesprofitincentivesintoitsdaily
operations.Thedangerofthisisthatitcompromises
thekeyethosandnon-profitelementcentraltoa
professionalmilitary.Evenwhenahighlyprofessional
militaryisgrantedpermissionbythestatetoengage
4 ibid.5 ibid.
ineconomicenterprises,corruptionstillremainsan
inevitablerisk.
Formal military businesses
Formalmilitarybusinessescanbeclassifiedas
instanceswherebymilitaryenterprisesdoindeedhave
someformofcorporatebureaucracy.6Inexamining
thesecompanies,itwasobservedthattheyhavea
professionalcorporatestructureandoftenaformal
committeeandaboardofdirectorsaswell.Although
theindependenceofthecorporatebureaucracy
itselfcanbequestioned,thesecompaniesnodoubt
exhibitarelativelyprofessionalstructureandbusiness
operation.Anotherkeyfeaturewhichhelpsto
distinguishFMBsisitsrecognitionasformaleconomic
actorsanditsincorporationintotheformaleconomy.
Inaddition,manyofthesemilitary-ownedcompanies
arelistedonthestockexchangeandhaveformal
shareholderstructuresandprofit-sharingschemes.
FMBcompaniesareoftenoperatedforinstitutional
benefitratherthanindividualprofits.
Informal military businesses
Informalmilitarybusinessesstructuresontheother
hand,canbedefinedastheoppositesofFMBs.
Theyarecharacterisedbytheirlackofcoordination,
organisationandtheirlackoftransparencyin
business.Thelackoftransparencyinbusiness
dealingscreatesahugevulnerabilityforindividual
soldierstoengageincorruption.Thesestructures
areoftennotrecognisedbythestateasaformal
economicactor.Infact,ithasbeenwidelyreported
thatthemajorityofthesecompaniesareengagedin
theinformaleconomicsectorandinillegalactivities
aswell.IncountrieslikeIndonesiaandCambodia,
therehavebeenreportsthatindividualsoldiershave
engagedinillicitactivitiessuchasprostitutionrings
andevenmoneylaundering.7IMBsareoftenrun
byindividualsoldierswhouseprofitsfortheirown
personalbenefitratherthanforinstitutionalgain.These
businessesareoftenrunthroughafrontoraholding
companywhichisownedbynon-militarypersonnel.In
thenaturalresourcesector,suchcompaniesareoften
engagedinillegalminingandillegallogging.
6 ibid.,pp.184-185.7 UnitedStatesDepartmentofState,Trafficking in persons report 2010 - Cambodia,retrievedAugust2011,http://www.unhcr.org/refworld/country,,USDOS,,KHM,,4c18840232,0.html.
TransparencyInternationalUK’sDefence&SecurityProgramme 9
Central or regional control
AsshowninTable2(below),mostFMBcasesare
oftencoordinatedbytheoverallmilitarycommandor
bytherespectiveservices.
Businessesoperatedbythe‘OverallCommand’are
oftenorganiseddirectlybythemilitaryleadership.
Althoughbusinessoperationsaremostlikelytobe
controlledeitherbyregionalcommandersorby
individualhigh-rankingofficers,allprofitsearnedby
thesebusinessesarerequiredtobechanneledback
totheoverallmilitarycommand.Profitsareusedto
enhancethewelfareandbenefitsthatsoldiersreceive
throughthecreationofgenerouspensionfunds.
However,thereareindicatorsthatthesegainsarenot
spreadevenlythroughoutthemilitary.Instead,benefits
areoftentargetedattheofficercorpsorthemilitary
elites.
Thiscreatesasignificantpotentialforcorruption,as
theunevendistributionofwealthmightencouragethe
lowerechelonofsoldierstoengageinillegaleconomic
activitiestosupportthemselves.IMBstructures
presentamuchclearerpotentiallinkbetweenmilitary
businessandcorruption.Sincetheyarerunfor
individualprofit,thiscanbeconsideredacaseof
corruptionastheseprovideasecondarysourceof
income.
TABLE 2: FORMAL AND INFORMAL MILITARY BUSINESSES
MILITARY
OVERALL COMMAND
INFORMAL MILITARY BUSINESS
FORMAL MILITARYBUSINESS
INDIVIDUALSSERVICE/REGIONAL
COMMAND
Source: K Mani, ‘Militaries in Business: State-Making and Entrepreneurship in the Developing World’, Armed Forces & Society, vol. 33, no. 4, 2007.
10 Military-ownedbusinesses:corruptionrisks&reforms
Mil i tary businesses examples
Thecasesbelowprovideexamplesofthescaleof
militarybusinessesanddetailtheiroperations.
CHINA AND THE PLA
In1994,thePeople’sLiberationArmy(PLA)operated
over10,000enterprises.Themainlogisticsand
constrictionconsiderationsweretaskedtotheGeneral
LogisticsDepartment(GLD),achieforganofthe
CentralMilitaryCommission.Intheseenterprises,
profit-makingisconsideredtobethemostimportant
internalgoal.TheexpectationwasthatthePLA’sown
militaryeconomywouldbeabletogeneratesufficient
revenuetomakeupfortheinabilityofthedefence
budgettofunditsoperations.
TheearlyrationaleforthePLA’sengagementin
commercialenterpriseswastocreateaprogrammeof
self-sufficiency.8Theimportanceofthissupplementary
rolebecamecrucialduringthe1980swhencutsto
thedefencebudgetforcedanincreasingdependence
upontheseextra-budgetaryincomesources.9
Enterprisesaresubordinatedtomilitaryunitsandare
forbiddenfromusingbudgetfundstofinancetheir
businessoperations.10
TheGLDismainlyrepresentedbytheconglomerate
XinxingCorporation,whichexportsmilitarylogistical
equipmentaswellanumberofothergoodsproduced
bytheGLD’svariousenterprises.TheXinxing
Corporationwasexpectedtoturnover70percent
ofitsannualprofitstotheGLD.TheGLDwasalso
knowntohaveseveraljointventuresinthehoteland
8 CBFrancis,‘TheDefenseSectorasaWindowintoChina’sNationalSystemofInnovcation,’PeaceStudiesProgrammeOccasionalPapers,InternationalRelationsandSecurityNetwork,2000,pp.168-193.9 JMulvenon,‘StrainingagainsttheYoke?Civil-MilitaryRelationsinChina after the Seventeenth Party Congress’, in China’s Changing Political Landscape: Prospects for Democracy,BrookingsInstitute,2007.10 TJBickford,‘TheChineseMilitaryanditsBusinessOperations:ThePLAasEntrepreneur’,Asian Survey,vol.34,no.5,1994.
guesthouseindustrythroughoutthe1990s.Infact,
accordingtothe‘GuidetoCompletePracticalGuide
toChineseMilitaryFinance’,hotelsandguesthouses
weretotransfer20percentoftheirprofitstotheGLD,
whilethedistributionoftheremainingsumisdecided
bythePLAthatcontrolsthebusinesses.11
ThePLAalsoestablishedPolytechnologiesand
SanjiuEnterpriseGroupwhichdealsprimarilyin
pharmaceuticalgoods.Sanjiuownsapproximately
34military-affiliatedenterprisesandotherforeign
subsidiariesacrosstheworld.In1992,thePLAalso
begantoinvolveitselfextensivelyinjointventures
whichresultedinforeigncapitalrisingtoapproximately
230percent.MilitaryunitsintheXinjiangProvince
werealsoallegedtobeheavilyengagedinforeign
tradewithvariousformerSovietrepublics.In1994,
itwasestimatedthatthePLA’sbusinessenterprises
ownedapproximately30percentoftheservice
sector.12
Despitetheimpositionofstrictrulesgoverningthe
operationofPLAbusinessoperations,numerous
allegationsofcorruptionhaveneverthelessarisenin
thepastfewyearsamongstthearmedforces.The
PLA’sprivilegedpositioninsocietyenabledittoexploit
thenationaltransportationnetwork.Upuntildivestiture
in1998,itwaswidelyreportedthatseveralPLAunits
hadoftendivertedmilitaryvehiclestotransportlegal
andillegalgoods.Asmilitarylicenseplateswerenot
subjectedtobordercheckpointsandcustoms,this
providedastrongincentiveforcorruptactivities.This
wasreportedtobeamajorproblem,particularly
amongstborderunitswhofrequentlyexploitedmilitary
vehiclestotransportnarcotics.Theseverityofthis
problemgrewfurtherwhenitwasreportedthatmilitary
gangswereforgingsuchlicenseplates.13
11 CBFrancis,op.cit.,pp.168-193.12 Bickford,op.cit.,p.468.13 JMulvenon,Soldiers of Fortune, the rise and fall of the Chinese military-business Complex, 1978-98,M.E.Sharpeinc,NewYork,2001.
TransparencyInternationalUK’sDefence&SecurityProgramme 11
Infact,itwaslargelyduetoitsroleinfueling
corruption,thatprivatemilitarybusinessownership
felloutoffavourwiththeChineseleadershipatthe
beginningofthetwenty-firstcentury.14
AlthoughthestructureofthePLA’sFMBempire
mayhaveappeareddisjointed,itshouldbenoted
thattheestablishmentoftheseholdingcompanies
wasdependentuponinstructionfromtheCentral
MilitaryCommission(CMC).Profitsgeneratedby
thesebusinesseswereusedtofundthePLA’soverall
operations.Thisdemonstratesthatevenamongsta
highlyprofessionalmilitarysuchasthePLA,thetask
ofensuringthatmilitarybusinessesdonotresultin
corruptionisextremelydifficult.
TURKEY
Asimilarmodus operandicanbenotedinTurkey
whereitsFMBiswholly-controlledbythearmed
forces’twofoundations.OYAK(ArmedForcesPension
Fund)andTSKGV(TurkishArmedForcesFoundation)
arethetwoholdingcompanieswhicheffectivelyrun
thecommercialenterprisesofthearmedforces.The
foundationsalsoownvariouspropertieswhichhelp
toprovideincomeforthearmedforces.Together,
theyoperateseveralcompaniesandlikethePLA,
contributeasizableamounttowardsthenational
economy.15
OYAKwasestablishedin1961bytheNationalUnity
Committeeandwasintendedasawelfarefund
toprovideforretiredmilitaryofficers.Theholding
companyhasseveralcurrentseniormilitaryofficers
whoserveonitsboardofdirectorsandinother
seniormanagerialroles.OYAKfunctionsasaholding
companywhichownsatotalofsixtycompanies.Since
OYAKisofficiallyconsideredawelfarefund,thefund
itselfisexemptfromtaxationwhilstthecompaniesit
ownsarenot.Someofitsmorenotablejointventures
includethatwithRenault.In2009,thecompanyOyak
RenaultOtomobilFabrikalarıA.SreportedthatOYAK
itselfownedUSD8billioninassets.Ontheother
hand,itscombinedgroupassetsamountedtoUSD
18.8billion.16
14 TheEconomist,‘TheLongMarchtoBeaSuperpower’,2August2007,retrievedJuly2011,http://www.economist.com/node/9581310.15 IAkça,‘Military-EconomicStructureinTurkey:PresentSituation,Problems,andSolutions’,TESEV,Istanbul,2010.16 OYAK,2009 Annual Report,Ankara,2009,retrieved
TSKGVoperatesatotalofeighteencompaniesall
ofwhichareinvolvedinthedefenceindustry.The
foundationreceivespropertydonationswhicharethen
usedtoprovideincomethroughrent.Furthermore,
sincethe1980s,theTurkishNavyhasbeenrenting
outitsfacilitiesatthreelocationswhichaccountsfor
30percentofthefoundation’srentalincome.The
foundationalsohasseveralcompaniesinthefieldof
dual-usetechnology,includingajoint-venturewith
Daimler-BenzAG.Thefoundationalsosponsorsthe
bi-annualinternationaldefenceindustryfair.17Aswith
OYAK,theprofitsearnedbyTSKGVaretax-free.
Therehavenotbeenanyclearcasesofmilitary
corruptionasaresultofthesebusinessenterprises;
however,businessinvolvementultimatelyentails
potentialimplicationsforthearmedforcesofany
country.Inthiscase,asthepensionfundonlybenefits
theofficercorps,theunequaldistributionofbenefits
hasthepotentialtobecomeaproblematicissuefor
themilitary.Itmayresultinthenon-commissioned
ranksengaginginprivateenterprisesorillegalactivities
tosupplementtheirownincome.
PAKISTAN
SiddiqadetailshowthemilitaryeconomyofPakistan
revolvesaroundfourwelfarefoundationswhichare
runbytheindividualservices.18Whatdistinguishes
thePakistanimilitarybusinesscomplexisitslevel
ofindependenceandautonomyfromanyformof
overarchingcontrol.TheFaujiFoundation(General
Staff),ArmyWelfareTrust(Army),ShaheenFoundation
(AirForce)andtheBahriaFoundation(Navy),areeach
runbytheirrespectiveservices,andtheMinistryof
Defencehasnocontrolovertheirbusinessoperations.
Profitsareusedtofundtherespectiveservicesdirectly
anddonotcontributeinanywaytotheoverallmilitary
organisation.Theoperationsofthesefoundationsare
extremelydiverseinrangestartingfromsmall-scale
localoperationssuchasbakeriestomajorcorporate
enterpriseslikebanks.
July2011,http://www.oyak.com.tr/EN/corporate/annual-reports/annual-report-2009.html.17 InternationalDefenceExhibitionConference’swebsite,re-trievedJuly2011,http://www.idexuae.ae/page.cfm/Action=Exhib/ExhibID=1818.18 ASiddiqa-Agha,Military Inc: Inside Pakistan’s Military Economy,PlutoPress,London,2007.
12 Military-ownedbusinesses:corruptionrisks&reforms
Thefourfoundationsarecontrolledbytheservice
headquartersandrunbyretiredmilitarypersonnel.
Althoughmostjobsinthesebusinessesaretakenup
byex-militarypersonnel,anumberofservingofficers
andciviliansarealsoemployed.TheNationalLogistics
Cell(NLC),agoodstransportationcompany,isstaffed
byover2,500servingarmyofficers.19
Similarly,theFrontiersWorksOrganisation(FWO),
whichisthecountry’slargestconstructioncompany
employsarmyengineers.AccordingtoSiddiqa,the
bulkofpilotsforthenationalcommercialairlinesare
providedbytheAirForce.20
AsimilarsituationwasuncoveredwithintheArmy,with
AskariAviation,whichisrunbytheArmyWelfareTrust,
usingtheArmyAviationWingtomeetitscommercial
demands.Inessence,militarybusinessenterprisesare
usedtoplacepeoplewhoareconsideredunsuitable
forfurtheradvancementwithintheestablishmentitself.
Thismaybeconsideredagrossmisappropriationof
resourcesandmayleadsomepeopletoquestionthe
levelofprofessionalismwithintheinstitution.
Thefoundationsarealsoreportedtohavereceiveda
fargreaterportionofgovernmentsubsidiesthanthe
privatesector.Siddiqaestimatesthatbetween2004
and2006theFaujiFoundationreceivedanestimated
USD65millioninsubsidies,asumwhichnoprivate-
sectorbusinessgrouphaseverreceived.21The
influencethatthemilitarymaywieldovertheeconomy
hasallowedittorequestthatthegovernmentbails
outthefoundationsintimesoffinancialcrisis.Siddiqa
notesonesuchexample.In2001,theArmyWelfare
TrustsoughtgovernmentbailouttothetuneofUSD
93million,tofinanceanoveralldeficitwhichreached
USD259million.
INDONESIA
However,thestructureofmilitarybusinessesisnot
strictlylimitedtothosestipulatedinTable2.The
military’seconomicactivitiesmayalsotaketheform
ofahybridstructurewhichmayseeanintegrationof
FMBandIMB.Anexamplecanbeseeninthecase
ofIndonesiawherebyinformalbusinesspracticesrun
19 ASiddiqa-Agha,Military Inc: Inside Pakistan’s Military Economy,PlutoPress,London,2007,p.115.20 ibid.,p.116.21 ibid.,p.153.
alongsidetheformal.InIndonesia,themilitaryiswidely
recognisedasaneconomicactor,owningmultiple
companiesthroughvariousfoundations.However,
ithasalsobeenreportedthatseveralmilitaryunits
andregionalcommandershaveengagedinprivate
businessenterprises(oftenillegal)asameansof
supplementingtheirpersonalincomeandamassing
wealth.22
Theexamplespresented
abovedemonstrate
thedangersinvolved
inmilitarybusinesses.
Thisisnottosaythat
corruptionisaninevitable
consequenceofmilitary
business.Rather,the
military’sparticipation
intheeconomycreates
majorvulnerabilitieswhich
compromisethedegree
ofprofessionalismofthe
armedforces.Thelure
ofprofitisthusamajor
incentiveforcorruption.Casesofinformalmilitary
businesshavenotbeenmentionedinthischapter
forseveralreasons.Inmostcases,IMB’snormally
developonanad-hocbasisandarerunbyindividual
soldiersforself-profit.Hence,thelackofaclear
andformalmodesofoperationmakesitdifficultto
dedicatesufficientdiscussiontohowthesebusinesses
arerun.Thefollowingdiscussionofmilitarybusiness
byresourcetypewillprovidesomeexamplesofIMBs.
22 JFBradford,‘TheIndonesianMilitaryasaProfessionalOrganisation:CriteriaandRamificationsforReform,’Explorations in Southeast Asian Studies,vol5,no2,2004,retrievedJuly2011,http://www.hawaii.edu/cseas/pubs/explore/bradford.html.
The examples presented demonstrate the dangers involved in military businesses. This is not to say that corruption is an inevitable consequence of military business. Rather, the military’s participation in the economy creates major vulnerabilities which compromise the degree of professionalism of the armed forces.
TransparencyInternationalUK’sDefence&SecurityProgramme 13
Thischapterexploresthescaleofthemilitary’s
involvementinthenaturalresourceandminerals
sectors.Thecasestudiesinthischapterprovide
examplesofinformalmilitarybusinessesandtheir
operations,whichillustratethesomewhatchaoticand
un-coordinatednatureofthesebusinesses.Evenin
countrieswithformalmilitarybusinessstructures,the
lureofindividualprofitsremainsastrongincentivefor
IMBstoemerge.
OIL
Angola
TheAngolanoilindustryisprimarilydominatedby
theoilcorporationSONANGOL.Oilincomehasbeen
largelyusedtofundtheadministrationandthemilitary,
andrarelyextendsbeyondthegovernmentsector.In
particular,oilrenthasbeenusedbythegovernment
tohelpfundthestate’sextensivemilitaryapparatus
throughavarietyofmeans.Thishashelpedtosituate
theArmedForcesofAngola(FAA)atthecentreof
thenation’spoliticaleconomywhichhasresultedin
wide-spreadreportsofcorruptionamongstitsmilitary
forces.23
AccordingtoPhillippeLeBillon,theFAA’smilitary
expenditureisprimarilyfundedbytheoilindustry
through“oil-collateralshort-termcommercial
loanspasseddirectlyfromSONANGOL,and
signaturebonusesfromforeigncompaniesforoil
concessions”.24Theredistributionoftheoilwealthhas
largelybenefitedthepresidentialcircleanditsown
patronagenetworks.
SeveralmembersoftheFAA’selitehavealso
beenabletoparticipateinvarioushighlyprofitable
privatisationschemes,andothershavebeenknown
23 RDeMorais,‘Angola:ThePresidency-theEpicentreofCorruption’,Pambazuka News,5August2010,retrievedJuly2011,http://allafrica.com/stories/printable/201008060882.html.24 PLeBillion,‘Angola’sPoliticalEconomyofWar:TheRoleofOilandDiamonds,1975-2000’, African Affairs,vol.100,2001,p.64.
to“receivepersonalised‘annualbonuses’thatdwarf
theirofficialearnings”.25FrynasandWoodhavealso
notedthattheFAAhasbeenusedtoprotectvarious
oilinstallations.26
Pakistan
ThemilitaryofPakistanalsohasaconsiderable
presenceinthecountry’soilindustrywithitsbiggest
military-businessconglomerate,theFaujiFoundation.
In1983,thefoundationboughta51percentstakein
thePakStanvacPetroleumProject(nowunderMari
GasCompanyLimited),givingthefoundationboth
profitandmanagementrightsoverthecompany.In
1984,thissharewasreducedto40percent,although
theFaujiFoundationcontinuestoownamajoritystake
inthecompany.27
Inaddition,thefoundationhasalsoplacedseveral
ex-militarypersonnelonitsboardofdirectorsincluding
anexLieutenantGeneralasitschairman.28Itshould
benotedthatthisoperationisextremelylucrative
especiallysincethecompanyownsthecountry’s
secondlargestnaturalgasfield.
AsidefromitsownershipofMariGas,thefoundation
runsitsownLiquifiedPetroleumGas(LPG)marketing
anddistributioncompany,FoundationGas.Italso
operatesthecountry’slargestpetroleum-handling
facility,FaujiOilTerminalandDistributionCompany
Limited(FOTCO),whichiscapableofhandlingnine
milliontonnesofoilperannum.Inlinewiththegeneral
trend,FOTCO’sBoardofDirectorsandgeneral
managementispopulatedbyformermilitaryofficers
whoworktowardstheorganisation’sprofitability,
whichin2008reachedUSD3.75million.
25 MEFerreira,‘Larecoversioneconomiquedelanomen-klaturapetroliere’,Politique Africaine,vol.57,1995,pp.11-26.26 JGFrynas&GWood,‘Oil&WarinAngola’,Review of African Political Economy,vol.28,no.90,2001,pp.587-606.27 ASiddiqa-Agha,op.cit.28 ASiddiqa-Agha,op.cit.,p.146.
Military business by sector
14 Military-ownedbusinesses:corruptionrisks&reforms
MINERAL EXTRACTION
Cambodia
TheCambodianmineralextractionsectorhas
witnessedhighlevelsofparticipationbytheRCAF
(RoyalCambodianArmedForces).TheRCAF’s
involvementistwo-pronged.Firstly,severalmembers
oftheRCAFeliteownseveralkeymines.Inaddition,
RCAFsoldiershavebeenemployedassecurityguards
fortheseminingsites.A2009GlobalWitnessreport
statedthatseveralmembersoftheCambodianelite
ortheirrelativeshadbeengrantedfavorablemining
licensesandconcessions.
Theseinclude:
• HeadofRCAF,MilitaryDevelopmentZones
• CommanderRCAFInfantryForces
• CommanderinChief,RoyalCambodianArmyand
ChiefofJointStaff
OneofthemaincompaniesintheCambodianmining
sector,RattanakStoneCambodiaDevelopment
CompanyLtdisbeneficiallyownedbyahigh-ranking
general.Since2005,thecompanyhasbeeninvolved
invariousjointventureswithseveralforeignfirms.
TheseincludedPheapimex(aChinesestate-owned
company)andKenertec(aKoreancompany).
Together,thesecompanieshavebeenabletoexploit
theironmineinthePreahVihearProvince.29
Similarly,Rattanak’sinvolvementwithKenertechas
resultedinajointventuretoexploittheRovieng
ironminebypurchasingan85percentstakeand
reportedlymakinganupfrontpaymentofUSD1
million.GlobalWitnessfurtherreportedthatKenertec
hademployedthesecurityservicesofthedistrictarmy
unitbypayingUSD1,000tothedistrictarmychief
whowouldinturndistributethemoneyamongsthis
soldiers.30
TheRCAF’sparticipationalsoextendsintothefield
ofchromiumexploration.TheSouthernMining
Company,whichisownedbyanothergeneral,holds
anexploratorylicenseinPhnomSamkosWildlife
Sanctuary.Approximatelyonehundredsoldiersfrom
anRCAFbattalionwereusedtoguardtheminingsite.
29 GlobalWitness,Country for Sale—How Cambodia’s Elite has Captured the Country’s Extractive Industries,GlobalWitnessLimited,London,2009,p.24.30 ibid.,p.23.
GlobalWitnessreportedthatthelegalstatusofthe
mineishighlycontroversialsincetheSanctuaryfalls
underthejurisdictionoftheMinistryofEnvironment.31
SinceAugust2008,theminehasbeenunderthe
operationofGeosimco,abranchofVietnamCoal
andMineralIndustriesGroup(Vinacomin).Thenew
managementnowpaystheRCAFsoldiersamonthly
sumofUSD150plusmedicalinsurance.Global
Witnessfurtherreportedthatunderthisnewdeal,
Vinacominboughta70percentshareoftheSouthern
MiningCompany,withtheremaining30percentinthe
handsofitsbeneficialowner.
InMay2011Vietnamesegovernmentinspectors
foundthatseveralVinacominsubsidiarieslacked
operatinglicensesandcorporateoversightstructures,
resultinginemployer-customercollusion,and
environmentalprotectionsystemssuchaswastewater
treatment.32
Indonesia
TheTNI’sparticipationintheminingsectorprimarily
revolvesarounditsroleasasecurityprovider.In2005,
GlobalWitnessreportedontherelationshipthatthe
TNIhadwithFreeportMcMoRanCopper&GoldInc.
Accordingtotheorganisation’sreport,Freeport’s
operationsinPapuahavebeenguardedbytheTNI
sincethe1970s.33
In2003,thecompanydisclosedthatitsIndonesian
subsidiaryhadpaidUSD4.7millionin2001andUSD
5.6millionin2002forgovernmentsecurityservices.
Inaddition,between2001and2003,approximately
USD250,000werepaidbythecompanydirectlytoan
Indonesiangeneral.34
Thegeneraldenieshavingreceivedanysuch
paymentsanddeclaredthatthesefundshavegone
directlytowardsimprovingthewelfareofthesoldiers.
31 ibid.,p.25.32 AKhan,“PanelTargetsMiningCorruption,”Look at Viet-nam,1June2011,retrievedJuly2011,http://www.lookatvietnam.com/2011/06/panel-targets-mining-corruption.html.33 GlobalWitness,Paying for Protection: The Freeport mine and the Indonesian security forces,GlobalWitnessPublishing,Washington,2005,p.3.34 ibid.,p.4.
TransparencyInternationalUK’sDefence&SecurityProgramme 15
Inadditiontothesepayments,FreeportIndonesia
hasbeenreportedtohavemadesimilarpaymentsto
multipleindividualsintheTNIandinthepoliceforce,
rangingfromUSD200toUSD3,000,butattimes
thesewouldbeaslargeasUSD60,000.35
Theseinformalpaymentshadbegunsincethe1970s
andwereformalisedina1996agreement.According
toLesleyMcCulloch,duringthe1996negotiations
theTNIreachedaUSD35millionsettlementforthe
constructionofanewbaseandannualpayments
ofUSD11millionthereafter.36Therelationshipalso
extendedtovariousmilitarycommandsspreadacross
Papuaandnotjusttroopsguardingthemine.Itwas
reportedthatFreeporthasalsohelpedtopayforany
thirdpartycostsincurredbytheTNI,suchasairfares,
vehiclemaintenanceandevenhotelbills.Freeport
alsomadepaymentsforcostsincurredbythewives
andfamiliesofseveralTNIofficers.Since2003,the
companyhasavoidedmakingdirectpaymentsto
individualsandinsteadmadethesepaymentsvia
themilitaryheadquarters.Nevertheless,inMarch
2009widespreadreportssurfacedthatsuggested
continuingpayments.Inparticular,itwasclaimedthat
Freeport’ssubsidiary,PTFreeportIndonesiahaspaid
a‘monthlyallowance’tomilitaryandpoliceofficers
ostensiblyguardingtheGrasbergmine,whichalso
witnesseddeadlyattacksonitsemployeesinJuly.
BoththeTNIandFreeportIndonesiahavedenied
makingandreceivinganysuchpayments.37
Reportshavealsoclaimedthatinlate2004a
coalminingcompanyhadrecruitedalocalmilitary
cooperativetocombattheillegalactivityofsome
small-scaleminers.However,HumanRightsWatch
reportedthatinsteadofassistingthecompany,
TNIresortedtointimidationandviolencetocompel
theminerstominecoalillegally,profitingfromthis
activity.38
35 ibid,p.5.36 ibid.,pp.10-11.37 NOsman,‘TNIDeniesReceivingFreeportMoneytoProvideSecuritytoGrasbergMine’,Jakarta Globe,13July2009,retrievedJuly2011,http://www.thejakartaglobe.com/news/tni-de-nies-receiving-freeport-money-to-provide-security-to-grasberg-mine/317712.38 HumanRightsWatch,Unkept Promise: Failure to End Military Business Activity in Indonesia,2010,retrievedJuly2011, http://www.hrw.org/sites/default/files/reports/indonesia0110web-wcover.pdf.
Israel
Accordingtomediaaccounts,severalIsraelimilitary
officialshavebeenindirectlyinvolvedwithvarious
commercialenterprises.ItwasreportedthatanIsraeli
internationaldiamonddealer(whosecompanyhad
receivedaconcessiontomineironore),hadreceived
furtherconcessionsfromGuinea’smilitaryleadership
inreturnforbringinginIsraelimilitaryexperts.39As
partofthisarrangement,thedealerhelpedsecurea
USD10millioncontractforasecuritycompanyrunby
severalseniorIDFofficers(uptotherankofMajor-
General)totrainandsupplyGuinea’sarmywithout
requisitepermitsorprocedures.
Suchreportshavebeenvehementlydeniedbythe
dealer,particularlysinceGuineaisundersanctionsby
theEUandAfricanstates,andiftrue,suchactions
wouldviolateIsraelilawonmilitaryexports,aswell.
ThismatterwasbroughtunderinvestigationbyIsrael’s
MinistryofDefence,althoughthecompanycontends
thatitismerelyatechnicalclarificationanditis
cooperatingwiththeprocedure.40
Uganda
Sincethelate1990s,theUPDF(UgandanPeople’s
DefenceForce)hasbeenextensivelyinvolvedin
thenaturalresourcesectors.Thishastroublesome
roots,namely,UPDF’sinvolvementinsmuggling
andplunderoftimber,coffee,goldanddiamonds
outofDRCduringthefive-yearwarthatendedin
2002.41Moreover,a2001reportbytheUNaccused
theUgandanmilitaryofplunderingandsmuggling
timber,coffee,diamondsandgold.42Partoftheillegal
transportationprocessinvolvedexploitingmilitary
privileges.TheUPDFhasprofitedextensivelyfrom
theseillegalactivitiesandprofitopportunitiesinthe
Congowouldindeedappearasakeymotivatorforthe
UPDFexpandingitsoperationsintoEasternCongo.
39 YMelman,‘InsideIntel/BloodyBusinessinAfrica’,Haaretz,31December2009,retrievedJuly2011,http://www.haaretz.com/print-edition/features/inside-intel-bloody-business-in-africa-1.1024.40 ibid.41 RTangri&AMMwenda,‘MilitaryCorruptionandUgandanPoliticssincetheLate1990s’,Review of African Political Economy,vol.30,no.98,2003,pp539-552.42 UNSecurityCouncil,Security Council Condemns Illegal Explioitation of Democratic Republic of Congo’s Natural Resources,retrievedJuly2011,http://www.un.org/News/Press/docs/2001/sc7057.doc.htm.
16 Military-ownedbusinesses:corruptionrisks&reforms
Accordingtosomereports,theoverallcommander
ofUPDF’smilitarymissiontotheDRCandaformer
Major-General,(nowGeneralandthePresident’s
militaryadvisor)wereheavilyinvolvedinthe
transportationofillegallyminedgoldfromEastern
CongotoUganda,includingclassifyingthegoldas
militarycargotoavoidpayingcustomduties.43
TheUgandanarmyhasdenieditsinvolvementin
resourcelootingandsmugglingwhileitwasinvolvedin
theDRC.However,suspicionsthatUgandaisserving
asatransitcountryforgoldsmugglingoutoftheDRC
persist.44
Inaddition,severalUPDFofficershavebeen
connectedtothecompanyTrinityInvestments
Limited.Thecompanywasinvolvedintheexport
ofgold,timberandcoffeewithoutpayingtaxes.
UPDF’sparticipationintheextractiveindustrywas
soextensivethatbothGeneralsresortedtofinancing
theirbusinessactivitieswithfundsmeantforUPDF
salaries.45Consequently,thebankaccountofthe4th
DivisionoftheUPDFwasalmostemptywhilstthe
Commander’spersonalaccountwasprofitingfromthe
division’sfundsbeingpaidintoit.
FORESTRY
Cambodia
Accordingtoliteratureandreports,Cambodia
todaycontinuestowitnesshighlevelsofmilitary
controlintheillegalloggingindustrythroughout
thecountry.46Thisisconductedeitheronbehalf
ofvariousconcessionairesorasindividualprivate
ventures.Soldierswhichhavebeenknowntoengage
intheseactivitiesreceiveafarbetterpayfromthese
concessionairesthantheirofficialsalaries.Theirony
ofthissituationisthatitisthemilitarywhichhasbeen
taskedwiththeresponsibilityofcombatingillegal
logging.AlmostallelementsoftheRCAFarecomplicit
intheillegalforestrytrade.
Asa2001reportbyGlobalWitnessstates,RCAF
43 RTangri&AMMwenda,op.cit.,p.539-552.44 BBCWorld,‘UgandaOpensRefineryforCongoGold’,5May2010,retrievedJuly2011,http://news.bbc.co.uk/1/hi/world/africa/8662680.stm.45 RTangri&AMMwenda,op.cit.,p.545.46 Pleaseseehttp://www.illegal-logging.info/approach.php?a_id=83.
soldiersthemselvesareoftenusedtoprovidesecurity
fortimbercompanies.InKompongChhang,RCAF
soldierswerereportedtobeguardingthetimberat
trainstations.Moreover,theprotectionofthetimber
fellundertheauspicesofthelocalbattalion,opening
thedoorforpotentialabuseoftheresourcesentrusted
tothem.47Soldiershavealsobeenemployedbythe
MinistryofEnvironmenttoactassanctuaryrangersfor
asupplementarysalaryofUSD13.50permonth.
Inaddition,millsinKompongSpeualsofallunder
theprotectionofMilitaryDivision1andRegiment2,48
andinMilitaryRegion4thesawmillseachpaidUSD
180permonthtoaunitoftheprovincialmilitaryto
guardandtooperatethemills.49InMilitaryRegion
3,theillegalsawmillactivityinBoengTrachvillageis
supportedbythemilitaryandRCAFunitsinthisregion
alsocontrolthetransportationofillegaltimber.This
includestheuseofmilitaryvehiclestotransporttimber
usingRCAFsoldierstoguardtheconvoys.
Insomeregions,soldiersthemselvesareusedtocarry
outtheloggingandoperationofsawmills.InMilitary
Region1,itwasreportedthatthenightlyoperations
ofthelocalsawmillswereprimarilytoprocesslogs
flowingfromvariousmilitaryofficialsintheregion.The
landintheKingwoodconcessionwasalsoclaimed
byRCAFsoldiersintheregion.LikewiseintheKirirom
NationalParkofRegion3,landencroachmentwas
perpetratedbysoldiers.Governmentofficialsreported
thatinMilitaryRegion5,themilitaryitselfranfourto
fiveillegalsawmills.Inmostcasesthepricesforillegal
timberrangedfromUSD148–158permetriccube.50
47 GlobalWitness,The Credibility Gap - and the Need to Bridge it,GlobalWitnessLimited,London,2001,pp.17.48 ibid.,p.29.49 ibid.,p.34.50 ibid.,p.38.
According to some reports, the overall commander of UPDF’s military mission to the DRC were heavily involved in the transportation of illegally mined gold from Eastern Congo to Uganda, including classifying the gold as military cargo to avoid paying custom duties. Photo credit: Flickr/Grassroots Group.
TransparencyInternationalUK’sDefence&SecurityProgramme 17
In2007,GlobalWitnessagainpublishedareport
linkinghigh-rankingmembersofthemilitaryaswellas
politiciansandbusinessmenwithillegallogging.51The
government,whichvehementlydeniedthereport’s
findings,reactedbybanningtheorganisationinthe
country.
ThereportarguesthattheRCAFwasheavilyinvolved
inthisaspectofthenaturalresourcesector.Inreturn
foritsparticipationintheCambodianeconomy,the
RCAFisostensiblyexpectedtohandoverpartof
itsrevenuestothecentralgovernment,provincial
authoritiesandmilitaryofficials.Itshouldbenoted
thatregionalmilitarycommandersoftenenter
intotheseindustriestogetherwiththerespective
provincialofficials:inreturnforsharingprofits,various
commandersaregrantedtherighttoextractresources
fromtheprovincestheycontrol.
Indonesia
Accordingtoreports,theTNIhasbeenactively
involvedintheillegalloggingsectorinIndonesia.52
Duringthe1990s,itwasestimatedthatillegaltimber
accountedforasmuchas70percentofIndonesia’s
timberproduction.Itwasalsoestimatedthatnearly
51 GlobalWitness,Cambodia’s Family Trees: Illegal logging and the stripping of public assets by Cambodia’s elites,2007.52 ibid.
80percentofIndonesia’stimberconcessionholders
werenotheldincompliancewithforestlaws.Avast
shareofthisillegaltimbertradeiscontrolledbythe
TNIanditsvariouscompanies.53A2005EIAreport
statedthattheaveragebribethatcompaniespayto
havetheiroperationsunhinderedbylocalauthoritiesis
approximatelyUSD200,000.Thissumwouldthenbe
splitamongsttheTNI,policeandforestryauthorities.54
Furthermore,militarypersonnelarefrequently
employedtoprovidesecurityforthelogging
operationsthroughoutthecountry,inordertogain
greaterforestconcessionsortointimidatelocal
communitieswhoareopposedtologgingoperations
ontheirlands.
TheTNIholdsforestryconcessionswhichgrantit
therighttoexploittheresourcesforitself.TheEIA
reportedthatinPapua,severaloftheseconcessions
werelinkedtomilitaryfoundationsthrough
thecompanyHanurata.Hanuratacontrolsfive
concessionsandalsohousesadetachmentofSpecial
Forces.55ItwasalsonotedthattheNavywasused
bypowerfultimberbossestodisruptthesmuggling
operationsoftheirrivals.InGunung,reportsstate
thatthemilitaryoftenbacksillegallogginggangsas
well.Feesfromforestconcessionsareoftenpocketed
byseniormilitaryofficialsandpoliticians.Duetothe
territorialstructureoftheTNI,individualunitsoperate
andmanagetheirowncompanies.56
Asidefromthis,themilitaryhasbeeninvolvedin
variousreforestationprojectsthroughout.TheTNI’s
presenceintheforestrysectorcanalsobefeltin
KalimantanandAceh.Despiteattemptstodissolve
themilitary’sinvolvementinKalimantanfollowing
thecollapseoftheSuhartoregime,themilitaryhas
managedtofindnewwaystore-engageitselfinthe
forestrysector.
53 BBCWorld,‘UgandaOpensRefineryforCongoGold’,5May2010,retrievedJuly2011,http://news.bbc.co.uk/1/hi/world/africa/8662680.stm.54 EnvironmentalInvestigationAgency,The Last Frontier: Illegal logging in Papua and China’s Massive Timber Theft,2005,p.9,retrievedJuly2011,http://www.eia-global.org/PDF/reports--lastfrontier--forests--feb05.pdf.55 ibid.,p.9.56 RABrown,‘IndonesianCorporations,Cronyism,andCorruption’,Modern Asian Studies,vol.40,no.4,2006,pp.953-992.
A vast share of this illegal timber trade is controlled by the TNI and its various companies. A 2005 EIA report stated that the average bribe that companies pay to have their operations unhindered by local authorities is approximately USD 200,000. This sum would then be split amongst the TNI, police and forestry authorities. Photo credit: Sofi Mardiah/CIFOR
18 Military-ownedbusinesses:corruptionrisks&reforms
Thenewconcessionholder,Perhutani,wasreported
tohavepartneredwiththeInkopadarmycooperative
whichhadloggingoperationsinEastKalimantan.57
TNIsoldiersarealsousedtoprovidesecurityfor
Perhutani’soperations.Ratherthanengagingin
loggingoperationsdirectly,themilitaryhassought
foreigninvestorsfromMalaysiatoconductthisonits
behalf.58
Whena2010reportbytheCenterforEastAsia
CooperationStudiesattheUniversityofIndonesia
documentedtheextensiveinvolvementofthe
country’smilitaryineveryaspectofillegalloggingon
theislandofBorneoduringtheperiod1999–2006,
IndonesianmilitaryspokesmanSagomTamboen
deniedreportsofanycurrentinvolvement,but
acknowledgedthatsuchinstancesmayhaveexisted
inthepast.RearAdmiralT.H.Soesetyoofthe
DirectorateGeneralofDefenceStrategywasmore
forthcoming,statingthatsomeofficersdidindeed
compensateforthe“difficultyoftheirlivesatthe
borderareas”throughillegaltimber.59Inaddition,
PresidentSusiloBambangYudhoyono,aformerarmy
general,statedin2009thattheIndonesiamilitary
wouldnolongerparticipateinactivitiesbeyond
securityprovision.Thestudy’sauthors,however,
believethatmilitaryandpoliceremainedactiveuntilat
leastwellinto2009.60
AGRICULTURE, FISHERIES AND LAND
Documentedevidenceofmilitaryparticipationin
thesesectorsislimited.Inmostcases,themilitaryis
engagedeitherthroughtheownershipandleasing
oflandforthesepurposesorbyextortingcivilians
engagedinthesesectors.Inotherscenarios,the
militaryhasbeenknowntoengageexternalpartners
toconducttheseoperationsonitsbehalfinreturnfor
aportionoftheprofitsorforastakeinthecompany.
57 HumanRightsWatch,Too High a Price: The Human Rights Cost of the Indonesian Military’s Economic Activities,2006,retrievedJuly2011,http://www.hrw.org/reports/2006/06/20/too-high-price.58 ibid.59 France24,‘IndonesianMilitarybehindIllegalLogging:Study’,29January2010,retrievedJuly2011,http://www.france24.com/en/20100129-indonesian-military-behind-illegal-logging-study-0#.60 ASukarsono,‘IndonesianSoldiersareActiveinIllegalLogging,ReportSays’,Bloomberg,29January2010,retrievedJuly2011,http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a81zsQKitveA.
Althoughthisamountstoindirectinvolvement,itisstill
significantsinceitimpliesanabuseofthemilitary’s
privilegestoengageinprofit-makingenterprises.
Ecuador
In2001,anEcuadorianfishingvesselwasdetained
intheGalapagosNationalParkundersuspicionsthat
ithadbeenillegallyfishingforsharks.Asitturned
out,theCaptain’slawyerwasdiningwiththeHigh
AdmiraloftheEcuadorianMerchantMarineswho
subsequentlyorderedtheNavytoreleasethevessel
withoutanyformalinvestigations.61
Indonesia
TheTNIhasbeenaccussedofillegallyexpropriating
landandofsub-leasinggovernmentpropertyfor
profit-makingpurposes.IntheEastJavanesedistrict
ofPasuruan,theNavywasfoundtohaveexpropriated
landfromseverallocalvillages.By2007,theillegally
obtainedlandwasthenleasedtoastate-owned
companytooperateaplantation.62Infact,itwas
reportedthatthemilitaryoftenleasesgovernment
buildingsandlandtoprivatecompaniesforprofit.
Iftrue,suchactivitieswouldconstituteamisuseof
publicassets.
IntheprovinceofKalimantan,theTNIcooperative
Inkopad,enteredintoajointventurewithaMalaysian
firmtoestablishapalmoilplantationandprocessing
factoryonwhatwasreportedtobeillegallyclaimed
land.Despitefierceobjectionstothisprojectbythe
localcommunitywhodependedonthisland,the
projectwentaheadin2001.However,by2004,it
becameevidentthatneithercompanyeverhadany
intentiontobuildaplantationbutinsteadwerelooking
foraquickwaytosecureillegaltimber.63
InawrittenresponsetotheHumanRightsWatch
report,Inkopaddeniedinvolvementinthepalmoil
plantationcontroversy,buthasnotaddresseditswider
roleinsystematiclanddisputesorillegallogging.64
61 URSumaila&JJacquet,When Bad Gets Worse: Cor-ruption and Fisheries,InternationalUnionforConservationofNature,p.4,retrievedJuly2011, http://cmsdata.iucn.org/downloads/su-maila_jacquet_corruption.pdf.62 HumanRightsWatch,2010,op.cit.,p.2.63 HumanRightsWatch,2006,op.cit.,p.43.64 HumanRightsWatch,2006,op.cit.,p.43.
TransparencyInternationalUK’sDefence&SecurityProgramme 19
Pakistan
ThePakistaniArmedForcesarereportedtobeoneof
thecountry’sbiggestlandownersandcontrolnearly
12millionacresorapproximately12percentofstate
land.65Throughtheyears,theforceshaveused
theseholdingstoestablishamultitudeofcommercial
activities,suchascattlemarketsandicefactories.
Indeed,thispracticehasprovedcontentiousevenin
Pakistan,withtheAuditorGeneraldemandingthat
theMinistryofDefencetransfertheprofitsfromits
landholdingstothenationalexchequer.66
Themilitaryalsopossessespermissiontousestate
landforcommercialandprivatepurposes.Thearmy
itselfownsapproximately70,000acresanduses
theselandsforcommercialfarmingpurposes.These
areheldundertheArmyWelfareTrustwhichmanages
theselands.ThePakistaniRangersarealsoinvolved
inthefisheriesbusiness.AccordingtoSiddiqa,this
hasbeenon-goingsince1977whentheRangers
tookcontroloffishingoperationsintheSindhregion.67
Sincethen,theyhavegoneontoacquireanadditional
20lakes,whichhavebeenleasedouttoprivate
contractors.Themilitaryisalsoamajorplayerinthe
realestatebusiness.Ithasbeenreportedthatland
andpropertiesundermilitarycontroltendtoseetheir
valuesappreciatefarhigherthanothers.
65 Siddiqa,op.cit.,p.174.66 KGhumman,‘MilitaryLandIncomeIssueStaysUn-settled’,Dawn,21January2011,retrievedJuly2011,http://www.dawn.com/2011/01/21/military-land-income-issue-stays-unset-tled.html.67 Siddiqa,op.cit.,p.193.
Theseexamplesprovideathoroughpictureofhow
themilitaryisabletoparticipateinnaturalresources
sectors.
Militaryinvolvementinthenaturalresourcesector
isnotlimitedtoasingleresourcetypebutrather
isspreadacrosstheentirespectrumofresources.
Theproblemsofmonitoringtheextractionofnatural
resourcesthusincreasethevulnerabilitytocorruption.
Thecountrycasestudiesarenotanexhaustivelist
ofexamples.However,basedonthisinformation,
twogeneralconclusionscanbemade.Firstly,where
militarybusinessesexistthescaleoftheiroperations
tendtobequiteextensiveandarenotrestrictedto
asingleresourcearea.Secondly,wherethemilitary
engagesinbusinessactivities,reportsofcorruption
havebeenafrequentoccurrence.Inmostcasesof
militarybusinesses,privatecompanieshavepartnered
withthemilitarytoexploitthemilitary’sprivileged
accesstotheseresourcesinthesector.
The Pakistani Armed Forces are reported to be one of the country’s biggest land owners and control nearly 12 million acres or approximately 12 per cent of state land. The military also possesses permission to use state land for commercial and private purposes. The army itself owns approximately 70,000 acres and uses these lands for commercial farming purposes. Photo credit: Flickr/ bennylin0724.
20 Military-ownedbusinesses:corruptionrisks&reforms
Thissectiondiscussesreformexercisesbyseveral
countrieswhichhaverecognisedtheproblemsand
challengespresentedbyhavingarmedforcesengage
inbusiness.Thereformeffortshaveyieldedmixed
results.
CHINA AND PLA DIVESTITURE – RELATIVELY SUCCESSFUL
PriortoPresidentJiangZemin’sannouncementof
thePLA’sdivestiturein1998,themilitary’seconomy
hadbecomeamajorcontributortowardsthenational
economy.In1993,theEconomistestimatedthatPLA
enterprisesproducedapproximatelyUSD6billion
ayearinrevenues.68By1997,itwasestimatedthat
thePLA’sbusinessescontributedasmuchas3per
centofChina’sGDPorapproximatelyUSD3billiona
year.Althoughthiswasareductionascomparedto
previousyears,thiscanmainlybeaccountedforby
theremovalofbusinessprivileges.In1995,anauditof
morethan9,000enterprisesrevealedsomeUSD700
millioninundeclaredprofits.Revenueswerealsobeing
channeledtowardsfinancespeculationinthestock
marketandintheforeignexchangemarkets.The
scaleofthePPA’sbusinessempirewascertainlyquite
significant.Whatwasmoreworryinghowever,wasthe
levelofcorruptionwithinit.
Oneofthekeyreasonsforthegrowthofcorruption
inthePLAwasthelackofcivilianoversightover
itsbusinessoperations.Becausetheseoperations
wereconductedbythePLA,thisexemptedthem
fromborderchecksandgrantedimmunityfrom
civilianmonitoringandprosecution.69Inaddition,the
militaryhadaverylaxsetofrulesandenforcement
mechanismsregardingthemanagementofbusiness
funds.Furthermore,thePLA’sprivilegedaccessto
infrastructure,transportationandnaturalresources
madeprofiteeringthroughcorruptionaratherlucrative
trade.Onseveraloccasions,militaryunitshavetaken
68 Bickford,op.cit.,p.467.69 Mulvenon,2001,op.cit.,p.146.
advantageofthisandreapedprofitsbyengagingin
theillegaltradeofscarcerawmaterials.Mulvenon
citesoneexamplewhere93militarypersonnelwere
reportedtohavebought858tonsofpetroleumata
reducedmilitaryrateandthenproceededtoresellit
atmarketprices.Another
caseinvolvedmorethan
100tonsofcopper.70
Forthecivilian
leadership,thebest
wayofcombating
militarycorruptionwas
toeliminateitsroots.To
Jiang,thismeantthat
thePLA’slegalbusiness
enterpriseshadtobe
eradicated.Thescaleof
militarycorruptionwas
notonlydetrimentaltothepublicimageofthePLA
butalsounderminedtheChineseCommunistparty’s
(CCP)supremacy.AsScobellputsit,“corruption
threatenedtoweakenthemilitary’sloyaltyand
obediencetotheCCP.”71Thus,onJuly1998,ata
meetingoftheCentralMilitaryCommission(CMC),
JiangofficiallyannouncedthatthePLAwastodissolve
itscommercialenterprisesandtransferthemtocivilian
control.Theultimategoalofthisprogramwasto
ensurethatthePLAwouldbecomeentirelydependent
onstatefundstooperate.
However,severalkeyreformingmeasureshadbeen
inplacebeforeofficialdivestiture,sinceJiangtook
controloftheCMCin1989.Bickfordnotesthatthe
firststepstowardsdivestiturehadbegunin1989,
whentheCMCbannedindividualunitsfromengaging
inpurebusinessoperations.72
70 Mulvenon,2001,op.cit.,p.147.71 AScobell,‘China’sEvolvingCivil-MilitaryRelations:CreepingGuojiahua’,Armed Forces & Society,vol.31,no.2,2005,p.235.72 Bickford,op.cit.,p.470.
Reform exercises
The scale of military corruption was not only detrimental to the public image of the PLA but also undermined the Chinese Communist party’s (CCP) supremacy. As Scobell puts it, “corruption threatened to weaken the military’s loyalty and obedience to the CCP.”
TransparencyInternationalUK’sDefence&SecurityProgramme 21
In1992abanwasimposedonPLApersonnelfrom
participatinginthecountry’sstockmarket.Totackle
theproblemofthePLA’scommercialexploitationof
itsprivilegedaccesstothecountry’stransportation
infrastructure,theCMCmandatedthetransferof
nonessentialtransportfacilitiestociviliancontrol.
Oneotherkeypreparatorymeasurewasthe
withdrawalofpreferentialtaxratesfromallPLA
businessenterprises.However,thesechangeswere
somewhatlimitedintheirscopeandrequiredfurther
complementarychangestobeimplemented.Aspart
ofthisoverallprogramtotransformthePLAintoa
modernisedmilitaryforce,Jiangalsoinstitutedother
criticalchangeswhichhelpedincreasethescopeof
thePLA’sdivestitureprogram.
PriortotheannouncementofthePLA’sdivestiture,
Jianghadalsoensuredthatthemilitaryleadership
itselfwouldbewillingtoacceptthedemandsfor
change.Thisnecessitatedreplacingtheoldguard,so
astoguaranteethattherewouldbelittleobjections
totheideasofdivestiture.Thisincludedapurgeof
theYangShangkun-YangBaibingnetwork,which
constitutedanallianceofofficersloyaltotheoldguard
oftheCCPthatwouldhavestronglyresistedJiang’s
attempttoremovethePLA’scommercialenterprises.
Thisnetworkhadpreviouslyattemptedtoremove
JiangfromhispositionasCMCPresident.Thus,for
divestituretosucceed,anewsetofsympatheticand
loyalmilitaryofficerswereneeded.73
Between1996–1999,Jiangpersonallyundertookthe
taskofreintroducingnewpersonneltothePLAhigh
command.Itwasreportedthatthetopthirtypositions
ofthePLA’scommandwouldreceivenewleadership
duringthoseyears.Thisincluded“allcommanders,
deputycommandersandpoliticalcommissarsin
allsevenmilitaryregioncommands;thedirectors
anddeputiesoftheGeneralStaff,Logisticsand
PoliticalDepartments;thecommandersoftheair,
navalandgroundforces;thecommandantsofthe
NationalDefenceUniversityandAcademyofMilitary
Sciences”.74Thisseemsinstrumentalinensuringthat
divestiturewouldgothroughwithoutmuchopposition.
73 DLee,‘ChineseCivil-MilitaryRelations:TheDivestitureofPeople’sLiberationArmyBusinessHoldings’,Armed Forces & Society,vol.32,no.3,2006,pp.437-453.74 DShambaugh,‘ThePeople’sLiberationArmyandthePeople’sRepublicat50:ReformatLast’,The China Quarterly,no.159,1999,p.666.
Moreimportantly,thechangeoverrepresentedan
attemptbyJiangtore-introduceciviliancontrolover
themilitary.
Thesuccessofdivestiturecanalsobeattributed
totheabilityofJiangtowieldhispoliticalpower
effectively.Politicalreformswereintroducedaspartof
thismilitaryprogramoftransformation.In1997,Jiang
introducedtheNationalDefenceLawwhicheffectively
transferredcontrolofthemilitarytohim.Partofthe
Lawstipulatesthatthestateshallbethesoleprovider
forspendingonnationaldefence.Thisremovedthe
needforthePLA’sprogramofself-sufficiencyandthe
needforthePLAtocontinuerunningitscommercial
enterprises.Anotherclauseinthelawalsodeclared
thatthePLAmustacceptthesupervisionoftheCCP.
Althoughitmayhavebeeneasytodiscountthenew
constitutionallawasrhetoric,thiscoupledwithmore
effectivejudicialcontrolsandJiang’sownnetwork
installedinthePLA’shighcommand,ensuredthat
divestiturewouldbemetwithdecreasedopposition.
TheintroductionoftheNationalDefenceLawwas
designedtofunctionasasafetycontrolmechanismto
ensurethatthepolicyofdivestiturewouldbepushed
throughsuccessfully.
TheimpactofJiang’s
divestitureprogramand
his“crackdown”on
militarycorruptionhadfar-
reachingconsequences.
Somesourcesreport
thatonemajorresultof
divestiturewasmorethan
twentyseniorofficers
(rankedMajor-Generalor
above)fleeingthecountry.
Since1998,thePLA’s
businessempirehasbeen
reducedbyapproximately
80percent.Major
conglomeratesthatwereownedbythePLAwerealso
placedunderdirectgovernmentcontrol.
However,thePLAcontinuestoretainseveral
businesseswhichitclaimsserveitslogistical
demands.Furthermore,thePLAcontinuestomaintain
businessesinkeystrategicindustriessuchasthe
The impact of Jiang’s divestiture program and his “crackdown” on military corruption had far-reaching consequences. Some sources report that one major result of divestiture was more than twenty senior officers fleeing the country. Since 1998, the PLA’s business empire has been reduced by approximately 80 per cent.
22 Military-ownedbusinesses:corruptionrisks&reforms
telecommunicationssector.75Whilstseveralmajor
companiescontinuetobepartiallystaffedby
prominentex-militaryofficers,increasesinstate
financinghaveenabledthePLAtosignificantly
eliminateitsdependencyuponbusinessactivitiesfor
funding.
CAMBODIA – RELATIVELY UNSUCCESSFUL
Corruptionamongsttherankandfileofthe
Cambodianmilitaryhasbeenamajorproblemfor
thenation.TheRCAFwasactivelyengagedinthe
loggingandminingsectorofthecountry.Thebulk
ofitscommercialoperationswereillegalandoften
violatedgovernmentlawsontheextractionofnatural
resources.Inanattempttoreigninthemilitary’s
economicactivities,thegovernmentclamped
downontheseactivities.AccordingtoGlobal
Witness,in2002,PMHunSenissuedamoratorium
onconcessionlogginginCambodia.76Thiswas
undertakeninresponsetointernationalpressurefrom
donorcountriestocombatillegallogginginCambodia.
Alongwiththesemeasures,HunSenconducteda
crackdownonmilitaryofficialsengagedincommercial
enterprisesbyarrestingseveralprominentmilitary
officers.However,theywereallsubsequentlyreleased
withouttrial.77Thiswas,nodoubt,damagingtothe
alreadytarnishedreputationoftheRCAF.However,
theinabilityandunwillingnesstoprosecutemilitary
officersguiltyofengaginginillegaltradewasheavily
damaging.Therefore,thisrepresentedasomewhat
half-heartedattempttotackletheproblem.
InFebruary2010,HunSenofficiallyannounced
aneconomicsponsorshipdealfortheRCAF.This
wouldenablethemilitarytoparticipateinthenational
economy.AnewsreportstatedthatHunSenhad
madeaformalstatementwhichlinkedmilitaryunits
toCambodiancompaniesaspartofa“sponsorship”
deal.78Itwasclaimedthatthissponsorshipwasto
supportthemilitarywithitslogisticaldemandssuch
as:food,medication,constructionandtransport.
75 Mulvenon,2001,op.cit,p.116.76 GlobalWitness,2009,op.cit.77 GlobalWitness,2001,op.cit.78 LHunt,‘Cambodia’smilitaryfiredupbycorporatespon-sorshipdeals’,Bangkok Post,4April2010,retrievedJuly2011,http://www.bangkokpost.com/news/investigation/35589/cambo-dia-s-military-fired-up-by-corporate-sponsorship-deals.
However,therealitywasthatthisreinforcedthe
military’spositionanditsbusinessnetworkswhilst
strengtheningHunSen’sownpersonalpower.The
listofsponsorsincludesMetfone,aVietnamese
military-ownedmobilephonecompany,Sokimex,an
oilcompany,Honda,severalbanks,casinos,shopping
centresandevenseveralrubberplantations.79
Anothermajorcompanythatwasnamedaspart
ofthissponsorshipwasANZRoyal,ajointventure
betweenAustralia’sANZBankandTheRoyalGroup,
oneofCambodia’sbiggestcompanies.Thiscomes
intandemwithagovernmentannouncementthatit
intendstoboostmilitaryspending.Theregression
ishighlydetrimentaltocivil-militaryrelationswhich
remainextremelytenuousespeciallygiventheyearsof
civilwarinthecountry.Furthermore,theformalisation
ofamilitaryeconomyplacesthearmedforcesatrisk
ofactuallyreducingtheinvestmentattractivenessof
thecountry.
INDONESIA – PARTIALLY SUCCESSFUL
TheTNI’sinvolvementinvariouscommercial
enterpriseshadlongbeentoleratedasameansof
promotingself-sufficiencyforthearmedforces.By
2007,thegovernmentreportedthattheTNIowned
grossassetsofUSD350millionandthatits‘legal
business’activitiesrakedinprofitsofapproximately
USD30million.
InSeptember2004,severallawswerepassedby
parliamentwhichofficiallyrequiredtheIndonesian
governmenttoshutdownortakeoverallTNI
businessesbyOctober16,2009.80Thenewlaw
createdafiveyeartimeframeforthegovernments
totakeoverdirectlyandindirectlyownedmilitary
businesses.Thelawalsoexplicitlyforbadesoldiersto
engageinbusinessactivities.Subsequently,asecond
pieceofofficiallegislationtotackletheproblem
ofmilitarybusinesswasintroduced.Priortothe
officialtakeoverdate,thePresidentissuedadecree
regardingthetakeoverofTNIbusinesses.Thedecree
establishedanewinter-ministerialteam,whichwould
functionasanOversightTeamforthetransferofTNI
businesses.
79 Hunt,op.cit.80 HumanRightsWatch,2010,op.cit.,p.1.
TransparencyInternationalUK’sDefence&SecurityProgramme 23
TheOversightTeamhadbothmonitoringand
supervisoryfunctionsovermilitarycooperativesand
foundations.Boththelawsanddecreesthusdeclared
thatTNIfoundationsthatfailedtoconformtothe
legalstandardswouldthusbesubjecttoliquidation
ormerger.Furthermore,thedecreesrequiredincome
earnedfromtheexploitationofstateassetstobe
handedovertothestatetreasury.
Theintroductionofthesemeasurestoendthe
military’sbusiness,resultedinthesell-offsand
closuresofvariousbusinessenterprises.However,
thelackofclearrulesregardingdivestitureandlimited
oversightovertheseproceduresresultedintheTNI
profitingfromthesaleofsomeassets.In2005,itwas
reportedthattheArmysoldoffitsstakeinBankArtha
Graha,whichitheldsharesworthUSD12.1million.
However,evenafterthesedivestitures,bylate2007,
HumanRightsWatchnotedthattheTNIcontinuedto
operate23foundationsandover1,000cooperatives.81
Alongwiththesebusinesses,theTNIoperates
variouscompaniesandmaintainsleasesonseveral
governmentpropertiesandbuildings.Initsreport,
HumanRightsWatchstatedthatonlybusinesses
directlyownedandmanagedbytheTNIhavebeen
takenoverbythegovernment.82Furtherinvestigations
revealedthatsuchdirectlyownedbusinesseshavenot
existedformanyyears.
Why,then,hasreformonlybeenmetwith
limitedsuccess?Oneofthekeyproblemsofthe
government’sdivestitureplanswasthatthelaws
lackedclarityandonlyprovidedabroadstatement
ofintention.Further,thePresidentialDecreealso
doesnotexplicitlyrequirethemilitarytosurrender
itsbusinesses.However,itsentitiesarerequired
toundergoapartialrestructuringtoensuretheir
conformitytonationallaws.Thismadeitclear
thattheTNI’sfoundations,throughwhichitowns
severalholdingcompanies,wouldnotbesubjectto
governmenttakeover.Thisalsomeantthatthevarious
businesseswhichTNIhaspartialownershipof,would
onlybesubjecttoasimplerestructuring.Anotherkey
problemwiththegovernmentreformprogrampertains
totheroleoftheOversightTeam.Theteam,which
wasdesignedtomonitorandsupervisethedivestiture
81 HumanRightsWatch,2010,op.cit.,p.6.82 ibid.p.10.
ofTNIbusinesses,lackedthepowerstodoso.83
Furthermore,thereluctanceoftheTNIhierarchytohalt
itscommercialenterpriseswasanotherimpediment.
Anothermajorproblemwiththereformshasbeenthe
lackofpoliticalwilltoenforceitsplans.Successful
governmentreformsarealwayshighlydependent
uponthedeterminationofthegovernmentitself.
Withoutsufficientpoliticalclout,anyattempted
divestiturewillnodoubt
runintosevereobjections
andproblemsaswell.
Thiswasdemonstrated
bytheunwillingness
ofthethenMinisterof
Defence.Accordingto
HumanRightsWatch,
hewentasfarasto
supporttherightofthe
TNItoengageinbusiness
untilthegovernment
wasabletofullysupportthemilitary’soperational
cost.84Inaddition,thegovernmenthasalsobeen
unwillingtoarrestmilitarypersonnelguiltyofcharges
ofcorruption.Evidently,despitethegoodintentions
ofthegovernment’sreformagenda,ithasfailedto
seeitthrough.Nonetheless,theyhavemanagedto
eliminateavastproportionofthemilitary’scommercial
enterprises.ThecasestudyofChinaandthePLA’s
divestitureshowsthatthetaskofendingmilitary
businessesisnotimpossible.Therearehowever
severalessentialpre-conditionsthatneedtobein
placeforsuchreformstosuccessful.
83 ibid.,p11.84 DOleh,‘TNIBusiness[Reform]CannotbeCompletedby2009’,Bisnis Indonesia (Indonesia Business),retrievedJuly2011,http://idsps.org/idsps-news/berita-idsps/bisnis-tni/.
Why, then, has reform only been met with limited success in Indonesia? One of the key problems of the government’s divestiture plans was that the laws lacked clarity and only provided a broad statement of intention.
24 Military-ownedbusinesses:corruptionrisks&reforms
Oneofthekeylessonsthatcanbedrawnfromthe
successofthePLA’sdivestitureprogramisthat
preparatorystepswereintegraltoitssuccess.Prior
toJiang’sofficialannouncementofdivestiture,several
measureshadbeenintroducedwhichultimately
helpedtosoftentheblowofthePLA’slossofits
economicempire:
1. Withdrawalofpreferentialtaxrates.
2. Removalofprivilegedaccesstonational
infrastructure.
3. Installationofanewmilitaryleadership.
4. Introductionoffocusedandtargetedlegislations
tocurbthescaleofmilitaryenterprises.
5. Strengtheningthejudiciarysystemanditsability
toprosecutemilitaryofficials.
Thesemeasuresarenotlistedinanyparticularorder,
aseachplayedavitalroleinensuringthesuccess
ofJiang’sreforms.Itshouldbenotedthatthese
measureswereallintroducedoveraperiodoftimeto
helpreduceanypotentialdiscontentthatmayarise.
InthecaseofthePLA,thefoundationsfordivestiture
beganasearlyas1989andwereonlycompleted
by1999.Byeffectingthesereforms,Jiangnotonly
ensuredthatanewleadershipsympathetictohis
causewouldbeinplace,butalsoensuredminimal
oppositiontohisproposedchanges.Furthermore,
theearlyremovalofpreferentialtreatmentformilitary
businesseshelpedtoimprovecompetitioninthe
economyandensuredthatPLAenterpriseswere
forcedtocompeteonanequalfooting.Thisalso
helpedtoreducethePLA’sprivilegedstatusinsociety
thusreducingthestrengthofthepraetorianarmy
model.
Moreover,theintroductionofanewleadershipwas
alsoinstrumentalinhelpingtoensurethesuccess
ofdivestiture.ByremovingtheoldguardofthePLA,
Jianginstalledanewbatchofelites,favorabletowards
hisdivestitureprogram.Thislimitedthepotentialfallout
createdbydivestituretoasmallsectionofthemilitary.
ThecasestudyofthePLA’sdivestitureprogramalso
demonstratesthatastrongjudicialsystemisvitaltoits
success.
Theabilitytoenforcelegalandoversightmechanisms
wascrucialasitensuredthatthecivilianleadership
wasabletoprosecuteindividualsguiltyofcorruption.
However,thisisnottosaythatChinahasbeenableto
completelyeradicatecorruptionwithinthePLA.Critics
suggestthatnepotismremainsamajorproblemwithin
theinstitution.Nonethelessithasbeensuccessfulin
reducingthesizeoftheproblem.
WhencomparedtotheIndonesianattemptstoend
theTNI’sinvolvementincommercialenterprises,the
differencesbetweenthetwocasestudiesisevident.
InthecaseofIndonesia,thegovernmentdidindeed
startonapositivetrackbypromulgatinglegislation
aimedatendingthemilitarybusinesscomplex.
However,thisprogramhadshortcomings.Therewas
anunrealistictimelineoffiveyearsforthemilitary
toenditsbusinessdealings.Moreover,thiscame
withoutanypreparatorymeasuresbeinginplace.
Thelegislationwhichwassupposedtoassistwith
divestiture,failedtospecificallytargetthevarious
indirectlyownedTNIbusinesses.Thiseffectively
limitedthescopeofdivestitureandthusitsoverall
abilitytoeliminateTNIbusinesses.Thepresenceof
aleadershipunwillingtotackletheproblemanda
MinisterofDefencewhosympathisedwiththemilitary
leadershipwasdamagingtotheentireprogram.
Withoutthepresenceofaleadershipcapableorwilling
tosupportthedivestitureprogram,itspotentialfor
successwasgroundedfromthestart.
AlthoughacivilianOversightTeamwascreatedto
assistwiththeprocess,itcameastoolittletoolate.
Thevaguenesssurroundingtheofficialroleofthis
teamseemstohavebeenoneofthekeyproblems.
Theinabilityofthejudicialsystemtoprosecutemilitary
officialscaughtviolatingthelawsalsoremoveda
majorincentivefortheTNItoenditsbusinessempire.
Lessons learnt
TransparencyInternationalUK’sDefence&SecurityProgramme 25
Military-ownedbusinessesareinherentlyrisky
venturesforanycountrybecauseofthepotential
consequences.Businessengagementsare
detrimentaltotheprofessionalismofthearmedforces,
asitservesasamajordistractionfromitscoreduties.
Oneofthemostharmfulconsequencesofsuch
practicesisthattheelementofprofit-makingbreeds
corruptionwithinthemilitary.Asevidencedfromthe
casestudiesintheliterature,thescaleandtypeof
corruptionvaries.Inmoreextremecases,corruption
encompassesembezzlementofstatefunds,taxfraud
andevenbrutalcoercivepracticesonworkers.Once
themilitarybeginstoengageineconomicactivities,
itisoftendifficulttoendsuchpractices.Inmost
situations,corruption
becomesrampantand
amajorproblemwhich
harmsthestateandthe
nationaleconomyas
well.Corruptionlowers
theattractivenessof
thecountrytopotential
foreigninvestors.
Furthermore,theunfair
advantagesthatmilitary
businessesenjoy
areboundtohave
repercussionsforcivil-
militaryrelations.
Theexamplesofreformeffortsandtheirvaried
successratesdemonstratetheapplicabilityofthefive
keylessonsforaneffectivedivestitureprogram.Itis
possibletoapplythesepracticestoothercountries.
ThemeasuresbeingimplementedbyChinaarenot
uniquetoitssituation.Theprospectsforthesuccess
ofchangeimplementationarehighlydependentupon
thedeterminationoftheindividualnationtoeradicate
suchpractices.
Oneofthekeycriterionsisastrong,independent
judicialsystemthatiscapableofprosecutingmilitary
officialsguiltyofcorruption.Withoutthepowersof
prosecution,anycountryattemptingsuchreform
effortswilllackenforcementmechanismswhichare
vitaltoitssuccess.Theinabilityofanygovernmentto
punishindividualsguiltyofcorruptionprovideslittleor
noincentiveforthemilitarytocleanupitsact.The
taskofendingmilitarybusinessesisselfevidently
noteasyandrequiresasignificanttimeperiod.
Preparatorystepsareessential“groundsoftening”
measureswhichhelpwiththetransitionstages.
Militarybusinessesmustendinordertorestoreahigh
levelofprofessionalismandthepublic’sfaithinthe
military.Withoutthis,corruptionamongstthemilitary
willremainamajorproblemforbuildingupstrong
nationalgovernmentsandforhealthycivil-military
relations.
Therehavebeenmultipledocumentedcaseswhereby
themilitaryhasengagedinthenaturalresource
sectoreitherdirectlyorindirectly.Inbothsituations,
themilitaryhasbenefittedsubstantiallyfromits
participationinthissector.Theseengagements
haveresultedinthemilitaryoftenundertakingillegal
activitiessuchasillegalloggingandoilsmuggling.
Insomecases,ithasevenresultedinthemilitary
forcefullyevictinglocalcommunitiestogaingreater,
unrestrictedaccesstosuchresources.Inmany
countries,themilitarytendstobetheonlyinstitution
capableofmonitoringandenforcinggovernment
regulationsregardingtheexploitationofnatural
resources.Thisroleisunderminedbyitsparticipation
inprofit-drivenenterprises.
Conclusion
Business engagements are detrimental to the professionalism of the armed forces, as it serves as a major distraction from its core duties. One of the most harmful consequences of such practices is that the element of profit-making breeds corruption within the military.
26 Military-ownedbusinesses:corruptionrisks&reforms
AkçaI,‘Military-EconomicStructureinTurkey:Present
Situation,Problems,andSolutions’, TESEV,Istanbul,
2010.
BBCWorld,‘UgandaOpensRefineryforCongoGold’,
5May2010,retrievedJuly2011,http://news.bbc.
co.uk/1/hi/world/africa/8662680.stm.
BeesonM,‘Civil-MilitaryRelationsinIndonesiaandthe
Philippines:WilltheThaiCoupProveContagious?’,
Armed Forces & Society,vol.34,no.3,2004.
BickfordTJ,‘TheChineseMilitaryanditsBusiness
Operations:ThePLAasEntrepreneur’,Asian Survey,
vol.34,no.5,1994.
BickfordTJ,‘RegularizationandtheChinesePeople’s
LiberationArmy:AnAssessmentofChange’,Asian
Survey,vol.40,no.3,2000.
BradfordJF,‘TheIndonesianMilitaryasaProfessional
Organisation:CriteriaandRamificationsforReform,’
Explorations in Southeast Asian Studies,vol.5,no.2,
2004,retrievedJuly2011, http://www.hawaii.edu/
cseas/pubs/explore/bradford.html.
BrownRA,‘IndonesianCorporations,Cronyism,and
Corruption’,Modern Asian Studies,vol.40,no.4,
2006.
DauvergneP,‘ThePoliticsofDeforestationin
Indonesia’,Pacific Affairs,vol.66,no.4,1994.
DecaloS,Coups and Army Rule in Africa: Studies in
Army Style,YaleUniversityPress,London,1976.
DeLopezTT,‘NaturalResourceExploitationin
Cambodia:AnExaminationofUse,Appropriation,and
Exclusion’,The Journal of Environment Development,
vol.11,no.4,2002.
DeMoraisR,“Angola:ThePresidency-theEpicentre
ofCorruption”,Pambazuka News,5August2010,
retrievedJuly2011,http://allafrica.com/stories/print-
able/201008060882.html.
EnvironmentalInvestigationAgency,The Last Frontier:
Illegal logging in Papua and China’s Massive Timber
Theft,2005,p.9,retrievedJuly2011,http://www.eia-
global.org/PDF/reports--lastfrontier--forests--feb05.
pdf.
FerreiraME,‘Larecoversioneconomiquedela
nomenklaturapetroliere’,Politique Africaine,vol.57,
1995.
FinerSE,The Man on Horseback: The Role of the
Military in Politics,Boulder,Westview,1988.
FinkelsteinDM&GunnessK(eds.),Civil-Military
Relations in Today’s China,M.E.Sharpe,NewYork,
2007.
FordM,‘TestingtheLimitsofCorporatism:Industrial
RelationsinSuharto’sIndonesia’,Journal of Industrial
Relations,vol.41,no.3,1999.
France24,‘IndonesianMilitarybehindIllegalLogging:
Study’,29January2010,retrievedJuly2011,http://
www.france24.com/en/20100129-indonesian-mili-
tary-behind-illegal-logging-study-0#.
FrancisCB,The Defense Sector as a Window into
China’s National System of Innovation,PeaceStudies
ProgrammeOccasionalPapers,InternationalRelations
andSecurityNetwork,2000.
FrynasJG&WoodG,‘Oil&WarinAngola’,Review of
African Political Economy,vol.28,no.90,2001.
GhummanK,‘MilitaryLandIncomeIssueStaysUn-
settled’,Dawn,21January2011,retrievedJuly2011,
http://www.dawn.com/2011/01/21/military-land-
income-issue-stays-unsettled.html.
GlobalWitness,The Credibility Gap - and the Need to
Bridge it,GlobalWitnessLimited,London,2001.
GlobalWitness,Time For Transparency: Coming
clean on oil, mining and gas revenues,GlobalWitness
Publishing,Washington,2004.
Bibliography
TransparencyInternationalUK’sDefence&SecurityProgramme 27
GlobalWitness,Paying for Protection: The Freeport
mine and the Indonesian security forces,Global
WitnessPublishing,Washington,2005.
GlobalWitness,Breaking the Links Between Natural
Resources, Conflict and Corruption,GlobalWitness
Publishing,Washington,2006.
GlobalWitness,Cambodia’s Family Trees: Illegal
logging and the stripping of public assets by
Cambodia’s elites,2007.
GlobalWitness,The Sinews of War: Eliminating
the Trade in Conflict Resources,GlobalWitness
Publishing,Washington,2006.
GlobalWitness,Fuelling Mistrust: The Need for
Transparency in Sudan’s Oil Industry,GlobalWitness
Limited,London,2009.
GlobalWitness,Country for Sale—How Cambodia’s
Elite has Captured the Country’s Extractive Industries,
GlobalWitnessLimited,London,2009.
HumanRightsWatch,Too High a Price: The Human
Rights Cost of the Indonesian Military’s Economic
Activities,2006,retrievedJuly2011,http://www.hrw.
org/reports/2006/06/20/too-high-price.
HumanRightsWatch,Unkept Promise: Failure to End
Military Business Activity in Indonesia,2010,retrieved
July2011,http://www.hrw.org/sites/default/files/re-
ports/indonesia0110webwcover.pdf.
HuntL,‘Cambodia’smilitaryfiredupbycorporate
sponsorshipdeals’,Bangkok Post,4April2010,
retrievedJuly2011,http://www.bangkokpost.com/
news/investigation/35589/cambodia-s-military-fired-
up-by-corporate-sponsorship-deals.
InternationalDefenceExhibitionConference’swebsite,
retrievedJuly2011,http://www.idexuae.ae/page.
cfm/Action=Exhib/ExhibID=1818.
KanSA,China’s Military-Owned Businesses,
CongressionalResearchService,Report98-197,
2001.
KhanA,“PanelTargetsMiningCorruption,”LookatVi-
etnam,1June2011,retrievedJuly2011,http://www.
lookatvietnam.com/2011/06/panel-targets-mining-
corruption.html.
LeBillionP,‘Angola’sPoliticalEconomyofWar:The
RoleofOilandDiamonds,1975-2000’,African Affairs,
vol.100,2001.
LeeD,‘ChineseCivil-MilitaryRelations:TheDivestiture
ofPeople’sLiberationArmyBusinessHoldings’,
Armed Forces & Society,vol.32,no.3,2006.
LeeT,‘TheMilitary’sCorporateInterests:The
MainReasonforInterventioninIndonesiaandthe
Philippines?’,Armed Forces & Society,vol.34,no.3,
2008.
MalikS,‘SecuritySectorReformsinPakistan:
Challenges,RemediesandFutureProspects’,South
Asian Survey,vol.16,no.2,2009.
ManiK,‘MilitariesinBusiness:State-Makingand
EntrepreneurshipintheDevelopingWorld’,Armed
Forces & Society,vol.33,no.4,2007.
MelmanY,“InsideIntel/BloodyBusinessinAfrica,”
Haaretz,31December2009,retrievedJuly2011,
http://www.haaretz.com/print-edition/features/
inside-intel-bloody-business-in-africa-1.1024.
MulvenonJ,Soldiers of Fortune, the rise and fall of the
Chinese military-business Complex, 1978-98,M.E.
Sharpeinc,NewYork,2001.
MulvenonJ,‘StrainingagainsttheYoke?Civil-Military
RelationsinChinaaftertheSeventeenthPartyCon-
gress’,inChina’s Changing Political Landscape: Pros-
pects for Democracy,BrookingsInstitute,2007.
O’MaraF,‘AComparativeStudyofCivil-Military
RelationsinCubaandChina:TheEffectsof
Bingshang’,Armed Forces & Society,vol.28,no.2,
2002.
O’MaraF&WiktorowiczQ,‘EconomicReformand
theMilitary:China,Cuba,andSyriainComparative
Perspective’,International Journal of Comparative
Sociology,vol.44,no.2,2003.
28 Military-ownedbusinesses:corruptionrisks&reforms
OsmanN,‘TNIDeniesReceivingFreeportMoneyto
ProvideSecuritytoGrasbergMine’,JakartaGlobe,13
July2009,retrievedJuly2011,http://www.thejakarta-
globe.com/news/tni-denies-receiving-freeport-mon-
ey-to-provide-security-to-grasberg-mine/317712.
OYAK,2009 Annual Report,Ankara,2009,retrieved
July2011,http://www.oyak.com.tr/EN/corporate/
annual-reports/annual-report-2009.html.
Pion-BerlinD,‘InformalCivil-MilitaryRelationsin
LatinAmerica:WhyPoliticiansandSoldiersChoose
UnofficialVenues’,Armed Forces & Society,vol.36,
no.3,2010.
Robertson-SnapeF,‘Corruption,Collusionand
NepotisminIndonesia’,Third World Quarterly,vol.20,
no.3,1999.
ScobellA,‘GoingOutofBusiness:Divestingthe
CommercialInterestsofAsia’sSocialistSoldiers’,
East-WestCenterOccasionalPapers,no.3,2000.
ScobellA,‘China’sEvolvingCivil-MilitaryRelations:
CreepingGuojiahua’,Armed Forces & Society,vol.31,
no.2,2005.
ShambaughD,‘ThePeople’sLiberationArmyandthe
People’sRepublicat50:ReformatLast’,The China
Quarterly,no.159,1999.
Siddiqa-AghaA,Military Inc: Inside Pakistan’s Military
Economy,PlutoPress,London,2007.
SukarsonoA,‘IndonesianSoldiersareActiveinIllegal
Logging,ReportSays’,Bloomberg,29January2010,
retrievedJuly2011, http://www.bloomberg.com/
apps/news?pid=newsarchive&sid=a81zsQKitveA.
SumailaUR&JacquetJ,When Bad Gets Worse:
Corruption and Fisheries,InternationalUnionforCon-
servationofNature,p.4,retrievedJuly2011,http://
cmsdata.iucn.org/downloads/sumaila_jacquet_cor-
ruption.pdf.
TangriR&MwendaAM,‘MilitaryCorruptionand
UgandanPoliticssincetheLate1990s’,Review of
African Political Economy,vol.30,no.98,2003.
TheEconomist,‘TheLongMarchtoBeaSuperpow-
er’,2August2007,retrievedJuly2011,http://www.
economist.com/node/9581310.
UnitedStatesDepartmentofState,Trafficking in per-
sons report 2010 - Cambodia,retrievedAugust2011,
http://www.unhcr.org/refworld/country,,USDOS,,KH
M,,4c18840232,0.html.
Transparency International UK International Defence and Security Programme 32-36 Loman Street London SE1 0EH United Kingdom
www.ti-defence.org www.transparency.org.uk