A former UK defence secretary accused of directing the illegal lobbying of another former minister in a foreign country. Another British citizen in another country defending allegations that he acted as a conduit for bribes to win a contract the company should never have won. And apparently no formal UK investigation. Such is the way in the controversial world of UK arms exports.

In our new report, Corruption Watch UK outlines court documents that we believe show how former defence secretary Geoff Hoon and others were directing the activities of a paid lobbyist, Yang Kim, in South Korea. Kim – a former South Korean minister – was later jailed in South Korea where, unlike in the UK, it is illegal for firms and individuals to hire lobbyists to influence government officials. Hoon had been in contact with him while serving as the director of international sales at AgustaWestland, an Anglo-Italian multinational helicopter company that employs thousands of people at its production facilities in Yeovil. Hoon denies that he and AgustaWestland ever intended Kim to break the law and says that an email has been taken out of context. (His full response can be read here.) The interaction between Hoon and Kim is a vivid illustration of the revolving door between politics and business that is so pervasive in the defence sector.

But leaving aside Hoon’s conduct, we believe our report shows that there are bigger problems at AgustaWestland – now renamed Leonardo Helicopters. Over the past two years, Corruption Watch UK has investigated corruption allegations surrounding AgustaWestland in a number of countries, including India, South Korea and Panama. Our research shows that the company has been accused of making payments worth tens of millions to intermediaries to win contracts. In at least two cases, it has been alleged that officials were induced to falsify evaluation results or change tender criteria to benefit the company.

The allegations of corruption pose a real threat to the company’s shareholders and employees. In 2014, the Indian government cancelled a major contract with the company worth over €500m after allegations of corruption emerged. The corruption allegations also led the Indian ministry of defence to issue internal guidance that effectively froze the company out of any future defence deals in the country that is responsible for 12% of global arms imports.

AgustaWestland – whose response to our report can be read in its entirety here – says all its intermediaries are required to obey anti-corruption laws.

Identifying and investigating allegations of corruption in overseas sales is a national imperative – even if it means taking a hard line with British businesses. This is because corruption threatens the UK’s national interests and its national security in particular.

Our research shows that a good deal of the alleged corrupt payments were made from AgustaWestland’s UK bank accounts, and, in one instance, via a UK-registered company. In the circumstances, then, it is deeply concerning – perplexing even – that no formal investigation into the company has been launched in the UK by the Serious Fraud Office.

In this respect, the UK is lagging far behind authorities in other countries. The company has been subject to detailed investigations abroad. In Italy, the company was fined more than £6m in 2014 for failing to implement systems to prevent wrongdoing. AgustaWestland said it entered the plea bargain “accepting, without admission or finding of any wrongdoing, administrative penalties in order to bring a swift conclusion to proceedings”. A middleman who had been accused of corruption was jailed for more than a year. In 2017, both AgustaWestland International (based in the UK) and its parent company Leonardo (based in Italy) were indicted in India following an extensive international investigation. It can only reflect poorly on the UK that other countries are trying to deal with the behaviour of British companies abroad while the UK dithers.

It is imperative that Leonardo is properly investigated and, if appropriate, UK actors in this scandal are held to account. The Serious Fraud Office’s failure to institute a formal investigation into AgustaWestland can only send the message that the UK is not taking allegations of corruption seriously.