De-Funding the Enemy: Can Technology Help Prevent Military and Diplomatic Procurement Spending From Being Used Against Us?

By: James C Sinclair

Can technology help to prevent military and diplomatic procurement spending from being used against us?

Can technology help to prevent military and diplomatic procurement spending from being used against us?

Profli-gate

That there is a degree of waste associated with large-scale government procurement projects is hardly news. Even during peacetime, there are few limits on the profligacy and incompetence of sovereign supply chain administration, such as the £10bn spent by the UK Government on an abandoned NHS IT system.[1] In times of conflict, it gets even worse, with vast amounts of taxpayer’s money not just wasted but actually handed to our enemies, who are only too willing to accept our largesse. The 2011 US Commission on Wartime Contracting estimated that in the previous decade, contractors executing US Department of Defence and State projects had wasted or lost to fraud at least $60bn of US taxpayer funds committed for the reconstruction of Iraq and Afghanistan.[2] This fraud has reinforced the financial strength of international organized crime networks, some of which are now being used to facilitate the flow of African migrants and refugees into Europe.[3]

Between 2006 and 2013, I witnessed some of this waste and fraud at first hand. I was a co-founder and legal director of FSI Worldwide, a UN award-winning ethical employment organization trying to secure fair employment for South Asian and East African migrant workers in the Gulf. We watched as billions of US Dollars were plowed into corrupt networks of agents and fixers whose specialty was to move people and goods with a ruthless and deeply unethical efficiency. We pleaded the case for better supplier scrutiny with governments and corporations, both ostensibly committed to ethical business practices, especially around trafficking in persons. However, we found that all too often they were content with a ‘tick box’ approach to corporate compliance, despite the widespread acceptance that this was singularly ineffective. We were also deeply concerned about the long-term implications for governance and security in already troubled migrant worker source countries (e.g. Nepal), especially as these were people about whose prosperity we are supposed to care, and to whom we send significant amounts of aid and development funding. It was a classic case of giving with one hand and taking with the other.

In short, we had (and have) a system of sovereign and corporate procurement that is ineffective at monitoring how money is spent and, in particular, fails to ensure that it doesn’t find its way into the hands of corrupt or malign actors. This is not just a problem for governments, whose taxpayers are understandably wary of funding wasteful foreign adventures or vanity projects. It is also a major concern for international corporations, whose interests are both financial and reputational. The question is whether we can we do anything meaningful about it.

The legal framework

Governments in both the USA and the UK have responded quite positively in terms of creating a tough new regulatory environment for their own procurement protocols and those of their international businesses and supply chains. Since 2009, we have seen a number of incremental changes to the US Federal Acquisition Regulations, the 2010 California Transparency in Supply Chains Act, the 2010 UK Bribery Act (with its tough ‘duty to prevent’ regulations) and 2015 Modern Slavery Act. However, there remains a significant gap between the idealism of the new legislative and political environment, and the reality of supply chain management, which continues to see the enrichment of organized crime networks at our expense. An example of this is currently happening in plain sight on the FIFA World Cup construction sites in Qatar. Whilst the main parties involved insist that everything is being done to minimize corrupt and exploitative practices and, indeed, there is no shortage of laws, procedures, and policies to which they can point, numerous investigations suggest that this showpiece of international sport is exploiting and reinforcing the South Asian slave trade.[4] However, it should be noted that these are very complex problems involving webs of state and private sector corruption, allied to culturally ingrained working practices and tragic expectations of exploitation.

Technology and the aid paradigm

Encouragingly, there are a number of technological advances that could be about to help us clean up supply chains. Blockchain, the underpinning of the crypto-currency Bitcoin, is one option. It is essentially a shared public ledger based on a cryptographic platform which allows for a highly transparent, secure and perfectly auditable series of transactions.[5] When allied to the latest advances in machine learning, which enables computers to adapt to the data they are processing, the potential starts to become clear. It is easy to see how this push towards hyper-transparency and accountability could help to clean up military and commercial supply chains and improve international human rights. If we could shine a spotlight into the murky transactions that characterize corrupt or exploitative deal making, erase cash from the equation and otherwise systematize proper due diligence, could we not take a big step towards the creation of a more ethical international marketplace? If we can connect vulnerable workers directly with meaningful and effective grievance procedures and remedies, could we not give an ‘e-union’ voice to the voiceless? That is certainly the goal for those of us working in this area.

The technology will never be a ‘silver bullet’ as no such thing exists, and high-quality human intelligence will always be critical. However, it is a tool that could significantly enhance our capacity to tackle the most egregious human rights abuses and deny our enemies some of their funding.


James Sinclair is a War Studies PhD candidate, an international human rights lawyer at Clarkslegal LLP (@clarkslegal) and Executive Director at Ethical Innovations (@ethicalinnov), which is developing technological solutions to human rights problems. You can follow him at @jamescsinclair.


Notes:

[1] Rajeev Sayal ‘Abandoned NHS system has cost 10bn so far’ (The Guardian 2013) accessed online on 5th November 2016 at: https://www.theguardian.com/society/2013/sep/18/nhs-records-system-10bn

[2] Commission on Wartime Contracting, Final Report to Congress 2011 pp.68-98 accessed online on 5th November 2016 at: https://cybercemetery.unt.edu/archive/cwc/20110929213820/http://www.wartimecontracting.gov/docs/CWC_FinalReport-lowres.pdf

[3] Peter Tinti & Tuesday Reitano ‘Migrant Refugee, Smuggler, Saviour’. (Hurst 2016)

[4] Owen Gibson ‘Migrant workers suffer appalling treatment in Qatar World Cup stadiums’ says Amensty’ (The Guardian 2016) accessed online on 5th November 2016 at https://www.theguardian.com/global-development/2016/mar/31/migrant-workers-suffer-appalling-treatment-in-qatar-world-cup-stadiums-says-amnesty

[5] For a good explanation of cryptocurrencies and the general application of Blockchain, see Ferdinando Ametrano ‘Hayek Money’ (Politecnico Milano 2016) accessed online 5th November 2016 at: http://blockchain.cs.ucl.ac.uk/wp-content/themes/responsive-childtheme-master/p2pfisy/presentations/files/Ametrano_p.pdf


Image credit: http://www.blockchaintechnologies.com/blockchain-definition

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