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The LAF budget – closed ranks

Chinks of transparency begin to show in opaque budgets

by Executive Staff

“Whenever you have military contracting, there is bound to be some money creamed off the top,” according to Yezid Sayigh, senior associate at the Carnegie Middle East Center. How much is creamed off in Lebanon, however, is difficult to establish.

The Lebanese defense budget is one of the most opaque budgets in the world, being awarded the lowest possible rank in Transparency International’s 2011 Defense Budget Transparency report, on a similar level to Yemen, Saudi Arabia, Algeria, Egypt and Iraq. This indicates a lack of auditing, a lack of public access to budgeting information and a lack of access and detailed knowledge by oversight committees and the legislature. Furthermore, “secret expenditures,” go completely without oversight.

“There is money but no accountability,” says former General Brigadier Elias Hanna. The low score is, however, in line with regional trends according to Leah Wawro, project officer at Transparency International and author of the report. “The region is one of the worst performers on defense budget transparency,” he remarks.

Opaque contracting

In addition to it being hard to define how much the Lebanese government actually spends on the military, what it spends this money on is also a challenge. Although the budget offers a general breakdown of expenditure, who gets paid to supply military hospitals, or Lebanon’s 59,000 soldiers with food, clothing and spare parts for their equipment and the like, is information the Army refused to release to Executive, despite numerous requests.

In the end though, all public contracting in Lebanon is plagued by clientelism, according to Transparency International’s latest national integrity system assessment of Lebanon (2009).

The Transparency International report goes on to note that: “Lebanese investors routinely pay bribes to win contracts and political interference exists in contract awards. Contracts are not awarded to the most qualified applicants.”

Such political interference also extends to the military, says Halil Khashan, professor of political studies at the American University of Beirut, adding that: “The army is cohesive not because it has a mission, but because of a system of patronage.”

A public tender is required for all goods and services exceeding $535 and the Public Procurement Directorate supervises the procurement process and approves all contracts exceeding $50,000.

Security services, such as the Lebanese Armed Forces (LAF) and Internal Security Forces (ISF), are subject to special procurement systems, with the LAF’s procurement overseen by the logistics arm of the army.

Requests by Transparency International concerning military procurement were refused on the grounds that these expenses were ‘secret’, according to Transparency International researcher Nadia Massih.

Lebanon’s military budget lacks any kind of auditing; the committees of Defense, Interior and Municipalities who are responsible for the civilian oversight of the defense budget have little actual control according to a 2008 report by the Henry L Stimson Center, a Washington-based think tank. “The situation is such that, for example, very few members of Parliament on the Defense Committee are even aware of what the defense budget is,” states the report. “And even those that are informed about the budget might not know how the budget is spent or who the relevant decision makers are.”

In Lebanon, bids are invited from a select group of registered companies. “Only those that subscribe to this kind of [military] contracting get access,” according to Yahya Hakim of Transparency International’s Lebanon office. “You have to be registered and listed to access the information for procurement, you have to pay for that information; around 1 million Lebanese Pounds for access to military procurement contracts.”

The norm, and improving

Where Hakim sees this as objectionable, Riad Kahwaji, chief executive officer at the Institute for Near East & Gulf Military Analysis (INEGMA) think tank, says this is standard procedure for military contracts. “In all militaries I have worked with in my life; the United Arab Emirates, the United States, if you want to submit something, you have to put down a deposit,” he says.

The procurement process for obtaining contracts has been “very much modified and improved” over the past few years, according to Kahwaji. “There is a committee that functions under the [LAF’s] administrative department; each time they want to get anything; food, spare tires and so forth, a committee is formed and staffed with experts in that area.” The recommendations of this committee move up the chain to the department of procurement, the planning department has to approve it, then the director of administration, and finally the LAF command has to sign off.

Rather than going through middlemen, there is now a list of requirements companies need to fulfill.

“Whoever wants to bid has to provide evidence that he actually represents and owns an existing factory and is not selling through several subcontractors,” according to Kahwaji.

A general at a military hospital — who spoke on condition of anonymity — says that despite the bidding process being open, there is room for corruption. Although each bid needs at least three tenders before a committee decides, he says it was unclear what was negotiated between committee members and contractors before bidding companies hand over closed envelopes containing their bid.

One method through which deals have been made, the general says, is by low-balling  the value of the bid in the envelope even though a better deal for the company has been agreed on beforehand with the process guaranteed by bribes paid to LAF officials, he said.

Lebanon is, however, far from unique in this regard; many in the industry have come to expect that any kind of military contracting is bound to be opaque, with room for private transfers to grease the wheels. This is partially due to the exclusive realm of such contracts.

“Who knows about the tenders is always going to be an insider [in a] process where you have to be in the know,” says Kahwaji. “I have been around many armies and you cannot get a full picture.”

A former LAF staffer who worked in logistics — and was not cleared to speak to the press — confirmed this modus operandi: “You know how it works; connections are everything, everybody knows each other.”

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