Abdul Monaiem Kudrot Ullah:

THE Bofors scandal involved the purchase of 400 155mm Bofors field howitzers from the Swedish company Bofors AB in 1986. The scandal erupted in 1987 when it was alleged that Indian politicians and officials had received kickbacks from Bofors in order to secure the contract. The scandal led to the resignation of the then Indian prime minister, Rajiv Gandhi, and damaged the reputation of the Indian military. It also had a negative impact on India’s relations with Sweden. In 2020, a former Lockheed Martin executive was sentenced to four years in prison for conspiracy to commit bribery and fraud. The executive was convicted of accepting bribes from a Turkish businessman in exchange for helping him win contracts related to the F-35 joint strike fighter programme in the United States. The programme has been plagued by cost overruns and delays.

In 2019, the Pakistani government was accused of corruption in the procurement of military equipment from China. The allegations were made by a former Pakistani intelligence official, who claimed that Chinese companies had paid bribes to Pakistani officials in order to secure contracts. In 2017, a Russian newspaper claimed that Russian companies had paid bribes to Bangladeshi officials in order to secure contracts. In 2016, a British newspaper claimed that British companies had paid bribes to Saudi Arabian officials in order to secure contracts. In 2013, an Italian prosecutor claimed that Agusta Westland had paid bribes to Indian officials in order to secure a contract. In 2012, a French newspaper claimed that French companies had paid bribes to Russian officials in order to secure contracts. In 2011, the Chinese government was accused of corruption in the procurement of military equipment from the United States. The allegations were made by a former US intelligence official, who claimed that American companies had paid bribes to Chinese officials in order to secure contracts. All the governments denied these allegations, but the scandals have raised concerns about the potential for corruption to undermine the sanctity of the military globally. All of these cases highlight the potential for corruption to undermine the military.

Defence procurement deals with products that are highly differentiated, and its regulation is extremely complex. The realm of defence procurement, with its massive financial stakes, intricate contracts, cosy relationships between buyers and suppliers, and government-enforced secrecy, carries even higher risks. The ‘defence organisation’ and ‘industry’ are the two principal parties involved in procurement transactions. These entities work in unison to align procurement with broader defence objectives. The process is often perceived as labyrinthine and bureaucratic, resulting in delays in decision-making and project execution. Striking a balance in resource allocation between defence and other critical sectors is a source of contention. In essence, defence procurement stands as a linchpin of national security, entailing a complex interplay of agencies and stakeholders. Its significance is underscored by its role in capability enhancement, strategic investment, industrial development, and regional cooperation. Yet its effectiveness is tempered by challenges surrounding transparency, bureaucracy, resource allocation, supplier relations, technology transfer, and public perception. The effectiveness of procurement processes can be gauged through the lens of suppliers, who play a pivotal role in delivering goods and services to the government.

Cultural capture arises when the policy-relevant views of officials are disproportionately influenced by the private sector. It raises concerns about whether procurement officials and practitioners engage in social interactions that enable this influence. Procurement officials often identify with a community dominated by influential professionals and business practitioners, hold practitioners in high regard, and maintain interpersonal relationships with them. The risks associated with these factors are particularly pronounced in the United States, the United Kingdom, France and other EU countries. Examining the possibility of acquisition and policy being designed in favour of big business at the expense of consumers and small enterprises due to cultural capture. This concept is often overshadowed by traditional regulatory capture, but it is a critical factor that can distort competition policy, influence international acquisitions, and impact defence procurement.

This article explores the multifaceted dimensions of cultural capture, its implications for defence procurement, and the need for preventive measures. It delves into the insights gathered from conversations with suppliers, shedding light on their perceptions of the procurement systems in place. This examines their concerns and explores the challenges, structural issues, cultural aspects, and practical problems they encounter, aiming to uncover ways to enhance transparency, efficiency, and overall effectiveness in defence procurement. The thematic concepts were borrowed from the research and practices of defence procurement on both sides of the Atlantic; no formal data is collected in the perspective of the Bangladesh Armed Forces, but informal conversations and perceptions were taken into consideration.

The suppliers, pivotal actors in procurement, occupy a central role. In defence procurement, suppliers are entrusted with sensitive and classified information, necessitating a robust framework for security and confidentiality. Their involvement is indispensable in furnishing the armed forces with cutting-edge equipment and technology. Yet, they face a unique set of hurdles, from navigating stringent security protocols to managing risks associated with international defence trade. Managing relationships with defence suppliers, both domestic and foreign, proves to be a tightrope walk, especially in cases of contractual disputes. Acquiring advanced defence technology necessitates intricate negotiations and careful consideration of technology transfer agreements. Controversies surrounding defence procurement can cast a shadow on public perception and raise questions about the allocation of taxpayer funds. Understanding supplier satisfaction and loyalty provides a gauge for the impact of procurement practices on supplier relationships, offering insights for improvement. Suppliers in defence procurement face unique challenges. They may also encounter complex negotiations and technology transfer agreements.

‘Cultural capture’ in the context of defence procurement typically refers to a situation where the culture, values, or interests of a particular organisation, group, or industry have an undue influence on the decisions made during the defence procurement process. This influence can lead to biased or suboptimal outcomes in defence procurement, potentially resulting in higher costs, inferior products, or reduced competition. These can be grouped as: (1) Influence of industry: This occurs when defence contractors or industry lobbyists have a disproportionate influence over the decision-making process. (2) Political pressure: These can also result from political pressure, where elected officials or government agencies make procurement decisions based on political considerations rather than the best interests of national defence. This can lead to the allocation of resources to projects or programmes that may not be the most strategically sound or cost-effective. (3) Groupthink: Cultural capture can foster a culture of groupthink within the defence procurement community. This can result in a lack of critical questioning and independent analysis of procurement decisions, as individuals may be hesitant to challenge prevailing norms and practices. (4) Resistance to change: Cultural capture can make it difficult to implement reforms or adopt innovative approaches in defence procurement. Resistance to change may be rooted in the established culture and practices of the defence establishment, making it challenging to introduce more efficient or cost-effective procurement methods. (5) Lack of competition: When cultural capture is at play, there may be a reduced emphasis on promoting competition in defence procurement. This can limit the number of potential suppliers, reduce the pressure to drive down costs, and improve the quality of defence equipment.

There is another type of capture known as ‘state capture’. This refers to a situation where individuals, groups, or entities with significant political or economic influence exert undue control or influence over the defence procurement process within a country. State capture is not to be taken as mere widespread corruption but as the clustering of corrupt actors around specific public organisations, government functions, or supply markets. These ‘captured clusters’ may operate differently from their surroundings and can expand or contract over time. State capture can have a profound impact on defence procurement outputs, often leading to negative consequences for the efficiency, transparency, and effectiveness of the procurement process. A network analysis of data collected from open source in EU countries indicated that corruption risks in defence procurement markets are not randomly distributed but instead cluster around specific buyers and suppliers. This clustering effect was particularly pronounced in larger markets, highlighting the risk of state capture in specific institutions rather than as a wholesale phenomenon.

One illustrative instance of cultural capture unfolded during the UK’s Strategic Defence and Security Review in 2010. The corridors of power resonated with the echoes of lobbying efforts from the defence industry, effectively imprinting their agenda onto the review’s outcomes. The consequence? The cancellation of certain projects and the inexplicable persistence of others, even when they failed to align with the country’s strategic imperatives. This example vividly illustrates how cultural capture can unduly steer decisions away from the nation’s true defence needs. Across the English Channel, the French defence procurement agency found itself ensnared in controversy. Accusations flew that the agency’s close affiliations with the defence industry birthed conflicts of interest, thereby compromising its autonomy and accountability. The agency’s personnel exhibited a revolving door effect, with staff frequently shuttling between the DGA and the private sector. This practice bred an atmosphere of favouritism and collusion, eroding the public’s trust in the integrity of procurement processes. Meanwhile, across the Atlantic, the United States department of defence grappled with its own set of challenges. Allegations surfaced that the DoD tended to favour companies harbouring former DoD officials or military officers in their executive echelons or on their boards. This perceived partiality gave rise to suspicions of corruption. A comprehensive study spanning 2004 to 2006 uncovered a staggering statistic: 52 out of 108 major defence contractors boasted at least one former DoD official or military officer in a prominent position, a revelation that spotlighted the extent of potential influence.

These cases serve as poignant reminders that cultural capture can infiltrate even the most robust defence procurement systems, diverting them from their intended public-centric course. To foster a procurement landscape truly dedicated to safeguarding the nation’s interests, vigilance, transparency, and mechanisms to curb undue influence must take centre stage. By unmasking and countering the insidious grip of cultural capture, nations can fortify their defence procurement processes, ensuring they serve the greater good above all else.

To assess state capture risks, the researchers adapted an objective Corruption Risk Index based on several red flags, such as single bidding, non-open procedure types, and subjective evaluation criteria. Red flags are warning signs or indicators that suggest the presence of undue influence, bias, or corruption in the procurement process. The analysis revealed significant heterogeneity in corruption risks across countries, with military procurement contracts generally exhibiting higher corruption risks than other types of procurement. Identifying red flags for cultural capture and state capture in defence procurement is crucial for preventing and addressing these issues. Here are some common red flags for cultural capture and state capture in defence procurement:

Close relationships between government officials and industry representatives: (a) frequent social interactions, including dinners, trips, or events, between government officials responsible for procurement and representatives from defence contractors or industry lobbyists; and (b) personal friendships or family ties between decision-makers and individuals within the defence industry.

Lack of transparency: (a) limited transparency in the procurement process, including non-disclosure of contract details, evaluation criteria, and contract awards; and  (b) insufficient disclosure of financial interests and potential conflicts of interest among government officials involved in procurement.

Revolving door phenomenon: (a) frequent movement of individuals between government positions and roles in the defence industry or related organisations; and (b) government officials leaving public service to join defence contractors shortly after making significant procurement decisions.

Single bidding or limited competition: (a) a high prevalence of single-bid contracts or a lack of competitive bidding in defence procurement; and (b) contracts awarded without open and fair competitive processes, favouring specific suppliers.

Influence on technical specifications: (a) evidence that defence contractors or industry representatives have influenced the development of technical specifications for procurement projects to favour their products; and (b) njustified or frequent changes in technical requirements that align with the capabilities of a specific supplier.

Political donations and campaign contributions: evidence of defence contractors or their executives making substantial political donations or campaign contributions to political candidates or parties involved in defence procurement decision-making.

Lack of independent oversight: (a) absence or weakness of independent oversight bodies or agencies responsible for reviewing and auditing defence procurement decisions; and (b) limited external scrutiny or audits of defence procurement processes.

Rapid approval processes: (a) procurement decisions that are rushed or expedited without adequate time for review, analysis, or competitive bidding; and (b) contracts awarded without a comprehensive evaluation of bids or proposals.

No-bid contracts: (a) frequent use of no-bid or sole-source contracts, particularly for high-value or critical defence projects; and (b) contracts awarded without clear justifications for bypassing competitive bidding.

Political pressure: (a) evidence of political pressure on defence procurement decisions, including directives or interventions from high-ranking government officials; and (b) public statements or indications that procurement decisions are influenced by political considerations rather than national security interests.

Non-disclosure agreements and secrecy: (a) frequent use of NDAs or secrecy agreements that restrict the disclosure of information related to defence procurement contracts and decisions; and (b) lack of transparency regarding the rationale for classifying procurement information as sensitive or confidential.

Unusual contract outcomes: (a) contracts awarded to defence contractors who have a history of cost overruns, delays, or delivering subpar products; and (b) instances where contract outcomes do not align with industry norms or market expectations.

Recognising these red flags is essential for detecting potential cultural capture and state capture in defence procurement. When identified, appropriate measures, such as investigations, reforms, and increased transparency, can be taken to mitigate the risks and ensure that defence procurement processes remain fair, efficient, and aligned with national security interests.

It is important to note that the vast majority of military personnel are honest and ethical. They are revered for their honesty and integrity. They are entrusted with the safety and security of the nation, and their actions can have a profound impact on public trust in the military. However, in recent years, there have been a number of high-profile cases of corruption involving military personnel and defence suppliers globally. This has raised concerns about the potential impact of corruption on the military’s ability to function effectively and maintain public trust. It can undermine trust between leaders and their subordinates. When military personnel see their leaders engaging in corrupt behaviour, it can lead to a loss of respect and confidence. This can make it difficult for leaders to motivate and inspire their troops. Corruption can also lead to poor decision-making. When leaders are more concerned with personal enrichment than with the good of the military, they may make decisions that are not in the best interests of the nation. This can have a negative impact on the military’s ability to carry out its mission. Corruption can erode morale and discipline as well. When military personnel see that corruption is tolerated or even rewarded, it can lead to cynicism and a sense of impunity. This can make it difficult to maintain discipline and order within the military. Finally, corruption can damage the public’s trust in the military. When the public comes to believe that the military is corrupt, it can lead to a decrease in support for the military and its mission.

In conclusion, the intricate tapestry of procurement in Bangladesh reveals a complex interplay of actors, processes, and challenges. Defence procurement is the cornerstone of national security. Suppliers, the lifeblood of these processes, hold perceptions that shape their participation. Reforms focused on transparency, fairness, and efficiency are the lynchpins of a procurement landscape that serves the interests of all stakeholders. Through concerted efforts, Bangladesh can forge a procurement environment that is not only robust but also equitable and forward-looking.

Cultural capture in defence procurement is a complex issue with both potential advantages and disadvantages. It is important to weigh these factors carefully when developing and implementing defence procurement policies. In recent years, there has been a growing awareness of the risks of cultural capture in defence procurement. As a result, many governments are taking steps to mitigate these risks. For example, some governments have established independent oversight bodies to review defence contracts and procurement decisions. Others have implemented stricter rules on lobbying and campaign contributions from defence contractors. This comprehensive exploration of cultural capture in diverse policy areas underscores the importance of understanding and mitigating the influence of cultural factors on public policy and business decisions. As we navigate an increasingly interconnected global landscape, recognising and addressing these challenges becomes paramount to ensuring fair competition, efficient acquisitions, and effective defence procurement. Failing to do so can damage trust between leaders and subordinates, lead to poor decision-making, erode morale and discipline, and damage the public’s trust in the military.

Abdul Monaiem Kudrot Ullah, a retired captain of the Bangladesh navy, is a supply chain analyst.