Nato corruption probe 'reminder' of defense boom risks

Time of India

19-05-2025

Turkey NATO Foreign Ministers (AP)
The military alliance's procurement agency is under scrutiny for deals on arms and munitions. In a sector with notoriously patchy oversight, defense boom corruption risks are very real.
Revelations of an unfolding corruption investigation involving staff and ex-staff at the
Nato Support and Procurement Agency
(NSPA) have continued to emerge, with a total of five detentions — two in Belgium and three in the Netherlands — made public so far.
The Belgian public prosecutor reported the first detentions late Wednesday, saying they concerned "possible irregularities" in contracts awarded to buy ammunition and drones via
Nato
.
The Belgian authorities said in a statement that NSPA employees or former employees in Luxembourg may have passed information to defense contractors.
"There are indications that money obtained from these illegal practices would have been laundered, partly by setting up consultancy companies."
A short time later, Dutch authorities announced that they had made three arrests, including of one 58-year-old former Defense Ministry official whose previous job had "involved international procurement contracts."
In Luxembourg, the public prosecutor's office confirmed that documents had been seized in the Grand Duchy and said that the investigation had also spread into Italy, Spain and the US, coordinated by the EU justice agency Eurojust.
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Nato : 'We want to get to the root of this'
At the recent Nato meeting in Antalya, Turkey, the military alliance's secretary-general, Mark Rutte, told reporters that it was the agency itself that initiated investigations. "We want to get to the root of this," Rutte said.
With a staff of more than 1,500 people, the NSPA is headquartered in Luxembourg and has sites in several other European countries. As well as providing logistics support for Nato operations or missions, it can also negotiate defense contracts on behalf of the member states.
Such joint procurement initiatives are supposed to save national governments money by efficiently bundling demand. According to Nato , the agency itself operates on a "no-loss, no-profit" basis.
Last year, the NSPA signed a nearly $700-million (€624 million) contract for
Stinger
anti-aircraft missiles on behalf of several member states. Former Nato Secretary-General Jens Stoltenberg announced the deal in May 2024, without naming the countries involved, in comments reported by the Reuters news agency.
For defense expert Francesca Grandi of watchdog Transparency International, the ongoing Nato probe, whatever its outcome, is a "precious reminder" of the importance of thorough oversight of how public money is spent on defense. "This case really is timely, in a way, because it reminds us of the importance of transparency."
Bad timing for Nato
For Nato , the timing is somewhat unfortunate. Eyeballing Russia's massive military buildup amid its ongoing war with Ukraine, Nato countries are in the midst of a huge
defense spending boom
likely to last years.
At an upcoming Nato summit, under pressure from US President Donald Trump, the 32 countries look set to commit to spend at least 3.5% of their gross domestic product.
This would be a huge step up from the current target of 2%, as well as the current average proportional GDP expenditure of 2.7%. In 2024, the alliance collectively spent $1.3 trillion on defense, according to Nato figures published last month.
Meanwhile, the European Union, whose members make up two-thirds of Nato , is teeing up for a major spending spree.
The European Commission has announced a plan to use the EU's excellent credit rating to borrow €150 billion ($168 billion) that could help the 27 EU members invest €800 billion more in defense.
More money, more problems for the defense sector
With additional hundreds of billions set to flow to the defense industry in the next five years, public institutions will likely come under enormous pressure to manage risks of potential corruption.
Worldwide, the defense sector is particularly prone to corruption due to the high levels of secrecy that shroud governments contracts, the large amounts of money at stake and the sensitive nature of negotiations, Grandi explained.
Europe is no exception. At national and EU level, many of the transparency mechanisms that are supposed to help root out other public procurement processes often do not apply to defense and security.
For example, the European Parliament does not have its normal budgetary oversight over money sent to Ukraine for its defense needs through the European Peace Facility. More than €10 billion has already been allocated to Kyiv through the mechanism, which is outside the EU budget.
In general, Transparency International is very concerned about the lack of policymaker attention to transparency and oversight it sees in the burgeoning defense spending wave, Grandi said. At the same time, defense industry lobbying is on the rise.
"The risk from a lack of oversight is that we end up with a defense architecture that is not ensuring the security of its citizens as it should do, that is marred in inefficiencies, that wastes money, but also that creates space for abuse of power, for undue influence," she warned.