Arab states that buy billions of dollars worth of weapons are at high risk of corruption and pose a continuing threat to regional security and stability, according to a new report by watchdog Transparency International.

As foreign secretary Philip Hammond continues a Gulf tour, the organisation warns that 16 of 17 Middle Eastern governments are graded as posing either a very high or critical risk of defence corruption. Only Tunisia performs better, although is still classed as high risk.

Briton sentenced to flogging in Saudi Arabia to be freed Read more

Hammond is meeting the leaders of Saudi Arabia, Qatar and the United Arab Emirates to discuss regional security and the crisis in Syria, ahead of talks in Vienna on Friday.

Saudi Arabia is the UK’s largest arms market. It bought £4bn of British defence equipment in the last five years and is categorised as a very high risk, as are Jordan and the UAE, which are also both close allies of the US and UK.

Qatar, Kuwait, Iraq, Iran, Syria, Oman and Bahrain are classed as critical risks because “there is virtually no accountability or transparency of defence and security establishments,” says TI.

All 17 countries suffer from lack of oversight, excessive secrecy and widespread nepotism, with networks based on family and business ties in the procurement of defence contracts. High-ranking Saudi princes preside over powerful agencies and use them to distribute patronage.

According to the report, Saudi defence spending often exceeds budgeted figures. “The government has never reported the actual cash it has spent on imports of defence items or on the value of the oil it has bartered as payment in certain deals,” it says. The kingdom is expected to become the world’s fifth-largest military spender by 2020, as it boosts its defence budget by 27%.

Corruption has “fundamentally undermined leadership” across the Iraqi armed forces, with a divisional commander’s job reportedly being sold for $2m (£1.3m). In Yemen and Oman all senior positions in the intelligence services are filled on the basis of political patronage and family ties.

Revealed: how UK targets Saudis for top contracts Read more

Overall the region has some of the most rapidly growing defence budgets in the world, with a total spend of $135bn. Up to a third of all government spending can be on defence. There is also well-documented evidence of weapons from a wide range of countries reaching terrorist groups such as Islamic State and the Houthis in Yemen.

“As world leaders, including the UK foreign secretary, gather in the Gulf for security talks, the question of corruption must be on the table,” said Katherine Dixon, TI’s Defence and Security Programme director. “Corruption contributes to instability and creates insecurity. If world leaders are serious about addressing the chaos in the region, they must argue for greater transparency and accountability.”

Neither Russia nor Iran have disclosed any financial details about the S-300 missile defence system deal signed in August, estimated to be worth $800m, the report says. In 2013 Saudi Arabia purchased a large supply of weapons from Croatia on behalf of anti-government rebels in Syria, and in 2014 financed the purchase of $2bn in Russian arms on behalf of Egypt’s military-backed government.

In Iran, a commander in the Iranian Revolutionary Guards’ Quds force reportedly allowed traffickers to smuggle drugs through Iran in exchange for helping Tehran arm Taliban forces.