Author of Arms Trade Book Responds to Critique from Defense Executive

On January 23, the Early Warning blog published a critique of Andrew Feinstein's book, The Shadow World: Inside The Global Arms Trade by retired Lockheed Martin Senior Vice President Robert H. Trice. Author Feinstein responds below with a rebuttal to the Trice critique.

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I write in response to retired Lockheed Martin (LM) Senior Vice President Robert Trice’s critique of my book The Shadow World: Inside the Global Arms Trade.

Given his background, Mr. Trice has a personal and vested interest in defending LM and defense contractors generally. However, his years in the industry might have led him to believe it is possible to have ones cake and eat it. In the case of meaningful criticism of research it is not.

Mr. Trice praises what I have written on everything but the US arms industry and expects his reader to accept that I have got the US dimension wrong on the basis that I draw heavily on the work of Bill Hartung.

Hartung’s work on the US defense sector has been rightfully praised and used extensively in the US and abroad. However, in my book of 500 pages with over 2,500 references, I have drawn on a wide variety of sources. In the US sections I have used material from hundreds of researchers, writers, journalists and interviewees. They include long-time current Capitol Hill staffers, former Pentagon insiders, senior retired military personnel, government officials from a wide range of agencies and whistle-blowers. Are they all wrong, or is it that they present a different, perhaps more objective, picture of the industry than someone who has spent 28 years in its upper reaches?

It is important to note that LM declined to comment on Hartung’s work or my own when approached during the writing of our books.

Mr. Trice praises my account of the illegal arms trade but disregards the linkages between it and the formal trade he defends. He ignores my evidence that illicit dealers such as Viktor Bout and many others have been used as contractors by both the US government and major US companies as recently as the conflicts in Iraq and Afghanistan. He overlooks the detailed documentary evidence I cite which reveals that such practises have been common since the birth of the modern arms trade and intensified after WW II when the US government and companies became bed-fellows of a range of insalubrious characters including former senior Nazi officers.

While commending my work on corruption in major arms deals, Mr. Trice then denies it applies to the US in the past or present. He fails to mention the calculation by Transparency International in two separate studies, that the global arms trade, which the US dominates, accounts for between 40% and 50% of all corruption in all world trade.

I acknowledge in the book that the US and its defense contractors, which led the way in arms trade corruption in the 1950s, 60s and 70s, has cleaned up its act since the strengthening of the FCPA – legislation which American industry is now trying to weaken. However, this improved conduct neither alters the history nor diminishes the need for continuing vigilance. The Polish deal which I quote allegedly involved inappropriate US political and economic pressure and possibly corruption. [To set the record straight, my information on this deal is based on my own primary sources not Hartung.] The sections on Iraq and Afghanistan document the horrendous levels of malfeasance in recent contracting. And the case of BAE Inc, which was recently forced to admit to paying ‘unauthorised commissions’ in six weapons transactions is but the most obvious indicator of the need for vigilance.

Mr. Trice’s unfortunate views on bribery and corruption prior to the FCPA are a damning indictment of the ethics of the defense industry.

In the most blinkered of his criticisms Mr. Trice is unable to accept or comprehend what President Eisenhower and many others have revealed repeatedly: the cosy relationship between defense contractors, the Pentagon and political decision-makers, which was described to me, not by Hartung but by a long-time Capitol Hill staffer, as ‘legalised bribery’. The movement of senior Pentagon officials into the lucrative employ of contractors to whom they have often awarded major weapons projects in their careers, and the significant campaign contributions these companies make to the very law-makers who are required to approve and monitor these projects, would break the law in many of the world’s democracies.

I argue that this self-perpetuating circle of patronage has, on occasion, resulted in the commissioning of inappropriate weapons projects, wastage of public funds, poor quality standards and missed deadlines. The ailing F-35 project is only the latest, most expensive, manifestation of this.

In addition, as an outsider with experience of developing public sector financial management systems, including as an MP in South Africa under Nelson Mandela, I am shocked by the lack of meaningful checks and balances in the interaction between the Pentagon and defense contractors. Last year the Pentagon, which has not been properly audited for over two decades, informed Congress that it would miss an imposed deadline of 2014, but suggested it might be audit ready by 2017!

The uniqueness of the trade in weapons is that it is regulated by the very people who are complicit in the problem. This is why so many defense companies and arms trade intermediaries around the world either do not face meaningful justice when they have broken the law or suffer inadequate penalties for their transgressions when they occasionally do. Iran-contra is only the most obvious example. I document not only myriad company transgressions but also the misdemeanours of countless middlemen, many with connections to defense companies, intelligence agencies and other arms of government - who rather than being prosecuted are often generously rewarded for their illegality.

Mr. Trice suggests that the publicly-known cases I do present show how effectively the checks and balances are working. He entirely misses my point and much of the content of the book about the plethora of cases that never make it into the media, let alone the courts. The careers of most of the illicit arms dealers I cover, who also do work for defense contractors, makes exactly that point. As does the fact that when an Iranian arms intermediary was brought to the US to stand trial he revealed that literally hundreds of US defense contractors were selling illegally to Iran. They were let off the hook.

The cases that do make it into the public domain are, given the levels of corruption in the industry, the exceptions that enunciate the systemic problem. And how Mr. Trice regards the case of Boeing as an example of how well the system is working, is unfathomable. The company caused the cancellation of a tender process for tanker refuellers due to illegal and grossly unethical conduct but then still won the subsequent tender, from which in a more appropriately regulated environment it would have been excluded.

I have experienced through my involvement in investigations how even the best laid plans, with far more stringent checks and balances than exist in the US, have been undone by the use of secretive middlemen, offshore accounts, industrial offsets, and the symbiotic relationships between procurers, producers and governments.

Crucially, oversight arrangements for the industry are seldom open to meaningful public scrutiny. Most of the agencies Trice mentions as part of the regulatory structure were not prepared to talk to me about their work. Perhaps that’s why no one writes about them.

On the quantum of defense spending, Mr. Trice disregards the detailed analysis I provide. I note the volatility in spending but, as an economist with training from Cambridge University, the London Business School and the University of California at Berkeley, I am able to discern the significant upward trend of spending over decades and the reality that the US spends almost as much as the rest of the world combined on defense and national security. These facts are borne out by countless US and international experts.

Bill Hartung has separately dealt with most of the factual issues that Mr. Trice raises, quoting the late Senator Daniel Patrick Moynihan who noted that “Everyone is entitled to his own opinion, but not to his own facts.” To impugn work without providing alternative facts is disingenuous. If he would like to present me with additional information I would happily consider it.

I personally had no preconceptions about the industry before being forced, as an elected representative, to deal with its consequences. I witnessed the impact of it on South Africa’s young democracy and discovered, during my decade of research, that that experience was hardly unique. The manufacture and trade of weapons has brought immiseration, massive opportunity cost, corruption, and the undermining of accountable democracy and the rule of law in both buying and selling countries. Perhaps almost three decades in the industry makes it more difficult to see these consequences.

Andrew Feinstein