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

[email protected]

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.


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.


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.

http://www.unhcr.org/refworld/country,,USDOS,,KHM,,4c18840232,0.html



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.


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.


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.

http://www.economist.com/node/9581310


http://www.oyak.com.tr/EN/corporate/annual-reports/annual-report-2009.html


http://www.idexuae.ae/page.cfm/Action=Exhib/ExhibID=1818



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.

http://www.hawaii.edu/cseas/pubs/explore/bradford.html


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

http://allafrica.com/stories/printable/201008060882.html


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.

http://www.lookatvietnam.com/2011/06/panel-targets-mining-corruption.html



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.

http://www.thejakartaglobe.com/news/tni-denies-receiving-freeport-money-to-provide-security-to-grasberg-mine/317712



http://www.hrw.org/sites/default/files/reports/indonesia0110webwcover.pdf



http://www.haaretz.com/print-edition/features/inside-intel-bloody-business-in-africa-1.1024



http://www.un.org/News/Press/docs/2001/sc7057.doc.htm

http://www.un.org/News/Press/docs/2001/sc7057.doc.htm


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.

http://news.bbc.co.uk/1/hi/world/africa/8662680.stm


http://www.illegal-logging.info/approach.php?a_id=83

http://www.illegal-logging.info/approach.php?a_id=83


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



http://www.eia-global.org/PDF/reports--lastfrontier--forests--feb05.pdf



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.

http://www.hrw.org/reports/2006/06/20/too-high-price


http://www.france24.com/en/20100129-indonesian-military-behind-illegal-logging-study-0#



http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a81zsQKitveA


http://cmsdata.iucn.org/downloads/sumaila_jacquet_corruption.pdf



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.

http://www.dawn.com/2011/01/21/military-land-income-issue-stays-unsettled.html




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.”


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.


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.

http://www.bangkokpost.com/news/investigation/35589/cambodia-s-military-fired-up-by-corporate-sponsorship-deals



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.

http://idsps.org/idsps-news/berita-idsps/bisnis-tni/


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


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.


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
















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


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


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.
















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

military-owned businesses: corruption & risk reform

Documents

tiuk defence

international secretariat

defence companies

debt tiuk

uk department

defence establishments

transparency internationals

international development