The report examined, among other things, the existing policy in the Ministry of Defense on this matter, its practical implementation, and the interface between the Ministry and defense companies, against the backdrop of the State of Israel’s obligations under Israeli law and its international commitments, including the OECD Convention on Combating Bribery of Foreign Public Officials.
According to the audit findings, the use of marketing agents in defense export transactions involves compliance and Corruption risks, partly due to the scope of activity, the characteristics of the relevant markets, and the extent of fees paid. In addition, the report pointed to gaps in the Ministry of Defense‘s supervision and control, including the lack of current and clear regulation of supervision rules for marketing agents, the lack of determination of mandatory compliance measures for medium and small defense companies, the lack of orderly control over compliance programs for preventing corruption, and the failure to establish a complete database of marketing agents operating in defense export transactions.
The report also noted that issues concerning potential conflicts of interest, the involvement of boards of directors in approving engagements with marketing agents and the fees paid to them, as well as the conduct of Ministry of Defense employees in their interface with marketing agents, have not been adequately regulated.
The State Comptroller recommended that the Ministry of Defense formulate and regulate clear policies and rules on the matter, strengthen supervision and control mechanisms, define required compliance measures according to company size, and ensure full compliance with the State of Israel’s international commitments in the field of preventing bribery and corruption in international transactions.
To read the full report on the State Comptroller’s website