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External Reviews: Transparency International

External Reviews

Although offset obligations are often determined by the purchasing government, there are several steps that companies can take to increase transparency and, therefore, minimise the associated corruption risks.

Offsets

Does the company explicitly address the corruption risks associated with offset contracting, and is a dedicated body, department or team responsible for oversight of the company’s offset activities?

Offset, i.e. the execution of compensation transactions of any kind in the customer's country, is an essential factor in the public procurement practice of many countries. For the Marine Systems Business Unit, this means that the existence of offset obligations must be assumed in almost all major customer projects. As a rule, offset is subject to local statutory or similar provisions. The Marine Systems Regulation Offset business unit is responsible for dealing with risks associated with offset business. The Marine Systems Regulation Offset uniformly describes the offset procedure for Marine Systems.

Offset involves a number of specific challenges in the area of Compliance, particularly from the point of view of combating corruption. Every employee involved in offsets is therefore called upon to seek immediate support, in particular from the Compliance Department. if possible, risks are identified. Before starting the concrete processing of an offset project, it must also be ensured that the corresponding activity is permissible within the framework of the export control approval situation applicable to the respective location.

Responsibility for handling offset issues within the Marine Systems business unit lies exclusively with the central departments within the business unit designated for this purpose by the Business Unit Board.

For each offset project, a written description must be provided of the industrial logic involved, the support provided and how recognition by the competent authority is to be ensured.

Based on the above analysis, each offset project must be submitted in advance to management for approval. Approval must be obtained in time to ensure that no legal or factual commitment has yet been made. According to the procedures defined in the Marine Systems Regulation Offset, there is also a continuous monitoring process regarding all offset obligations and project in place with the Business Unit Board exercising the respective oversight.

Does the company conduct risk-based anti-bribery and corruption due diligence on all aspects of its offset obligations, which includes an assessment of the legitimate business rationale for the investment?

For offset obligations, we have imposed a strict Compliance process. A Compliance Officer in charge for the Marine business has to be involved in every offset business and will conduct a thorough risk assessment. The process is described in the Marine Systems Regulation Offset.

For each offset project, a written description has to be submitted, including a description of the industrial rationale of the project. Based on the individual project description Compliance performs a due diligence on the relevant partners including brokers and beneficiaries and identifying potential conflicts of interest. In addition, for the involvement of offset service providers (including offset brokers) the use of the Business Partner Compliance Tool (BPCT) is mandatory (for further details on the Tool and the regulatory framework see Third Parties, Agents and Intermediaries). With the BPCT, the offset service provider is reassessed in regular intervals. Furthermore, the Marine Systems Regulation Offset defines further safeguards that need to be observed when dealing with offset providers.

Does the company publish details of all offset agents, brokers currently contracted to act with and/or on behalf of the company?

In the defence business, contract details are generally subject to absolute confidentiality, as they deal with security aspects. The publication of details is therefore not permitted.

Does the company publish details about the beneficiaries of its indirect offset projects?

In the defence business, contract details are generally subject to absolute confidentiality, as they deal with security aspects. The publication of details is therefore not permitted.

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