Guns, Graft and Geopolitics: Defense-Sector Bribery 2026

Anti-corruption authorities have spent five decades building an international enforcement regime aimed at the arms trade — the industry most prone to bribery. But when prosecutions collide with national security and export interests, governments keep discovering how flexible their principles can be.

A Business Built on Middlemen

Few industries combine the ingredients of corruption as completely as defense. Contracts are enormous and infrequent — a single fighter-jet or missile-defense deal can decide a company’s fortunes for a decade. Buyers are governments, often in states with weak institutions. And the entire trade is wrapped in official secrecy, with details classified on national-security grounds that conveniently shield the paper trail. Transparency International has long ranked arms procurement among the sectors at highest risk of bribery worldwide.

The modern enforcement era was born of a defense scandal. In the mid-1970s, U.S. Senate investigations revealed that Lockheed had paid tens of millions of dollars to officials and intermediaries in Japan, the Netherlands, Italy and elsewhere to win aircraft sales — revelations that toppled a Japanese prime minister and embarrassed a Dutch prince. Congress responded in 1977 with the Foreign Corrupt Practices Act (FCPA), the world’s first law criminalizing the bribery of foreign officials. The industry’s structural reliance on local agents, consultants and “offset” arrangements — side deals promising investment in the buying country — has kept it at the center of enforcement ever since.

The Enforcement Architecture

For twenty years the FCPA stood almost alone, and American executives complained it put them at a disadvantage against European rivals — some of whom could, at the time, deduct foreign bribes as a business expense. The answer was to internationalize the rules. The 1997 OECD Anti-Bribery Convention committed the world’s major exporting nations to criminalize foreign bribery, and its Working Group on Bribery now peer-reviews each member’s enforcement record. The United Kingdom followed with the Bribery Act 2010, among the strictest such statutes anywhere, and France with its Sapin II law in 2016.

The results, when authorities have chosen to act, have been dramatic. Airbus paid roughly €3.6 billion in 2020 in a coordinated settlement with French, British and American prosecutors over a global scheme of payments to intermediaries — the largest bribery resolution in history, and proof that cross-border cooperation could reach even a company part-owned by European governments. Deferred prosecution agreements, corporate monitors and debarment from public tenders have become standard tools, and defense contractors now maintain some of the most elaborate compliance programs in the corporate world.

When the National Interest Intervenes

Yet the defining episodes of defense-sector enforcement are the cases that were not brought. In 2006, Britain’s Serious Fraud Office abruptly dropped its investigation into alleged payments by BAE Systems to Saudi officials connected to the Al-Yamamah arms deal, after the government warned that pressing on would jeopardize security and intelligence cooperation with Riyadh. Prime Minister Tony Blair defended the decision openly on national-interest grounds. The OECD’s anti-bribery convention expressly forbids exactly this: its Article 5 states that investigations may not be influenced by considerations of national economic interest or relations with another state. The BAE affair showed how little that commitment can weigh against a strategic ally and tens of thousands of jobs.

The tension is structural, not incidental. Arms exports are instruments of foreign policy: governments promote them through official export-credit agencies, ministerial trade missions and government-to-government frameworks. The same state that employs the prosecutor also owns, subsidizes or champions the national contractor under investigation. Classified material gives defendants and ministries alike a lever to slow cases, and offset obligations create channels for value to flow to well-connected local partners under only limited scrutiny. Enforcement, in short, is asked to police deals the state itself has blessed.

The American Recalibration

The clearest recent illustration of the dilemma has come from Washington itself. In February 2025, President Trump ordered a pause of all FCPA enforcement, arguing that aggressive application of the statute harmed American economic competitiveness. When the Justice Department issued new guidelines that June, they recast the statute explicitly around the national interest: prosecutors were directed to focus on bribery that threatens U.S. national security — naming defense, intelligence and critical infrastructure as priority sectors — on cartels and transnational criminal networks, and on protecting the competitiveness of American companies. Enforcement activity fell sharply; the Securities and Exchange Commission brought no foreign-bribery cases at all in 2025, and only a modest resurgence followed late in the year, with officials insisting the change was a “pivot” rather than a retreat.

The recalibration cuts both ways for the arms trade. By designating defense a strategic sector, the guidelines arguably sharpen the focus on corruption that lets rivals win sensitive contracts — particularly where foreign competitors bribe their way into markets at American firms’ expense. But critics, including the OECD’s own Working Group on Bribery, worry that enforcement conditioned on national advantage is precisely what Article 5 was written to prevent. When every country prosecutes the other side’s bribes and excuses its own, an anti-corruption regime becomes an instrument of industrial policy.

Filling the Vacuum

Other authorities have moved to fill the space. In 2025 prosecutors in Britain, France and Switzerland launched an International Anti-Corruption Taskforce to coordinate cross-border bribery cases, and the U.K. Serious Fraud Office has pressed ahead with new corporate charges and compliance guidance. The European Union is advancing an anti-corruption directive to harmonize offenses and penalties across member states. Even Washington’s new guidelines acknowledge the shift, instructing prosecutors to weigh whether a foreign authority is willing and able to pursue the same conduct. For multinational defense contractors, the practical message is that a quieter Justice Department does not mean a quieter world: parallel investigations, extraditions and asset seizures are now a multi-jurisdictional reality — a shift also visible in the underlying Israeli defense export data.

An Unfinished Fight

Fifty years after the Lockheed scandal, the tools to fight defense-sector bribery are stronger than they have ever been — sweeping statutes, coordinated prosecutors, corporate monitors and record settlements. What remains unresolved is the question the BAE case posed two decades ago and Washington’s recalibration poses today: whether governments will enforce those rules when the defendant builds their weapons, employs their voters and courts their allies. The arms trade sits where commerce and statecraft meet, and so does its corruption. Until enforcement is insulated from the strategic interests it inevitably touches, the war on defense-sector bribery will be fought the way the industry does business — deal by deal, and always with one eye on the national interest.

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Adv. Sagiv Rotenberg is a founding partner of the Rotenberg Criminal Law Office in Tel Aviv, with more than 25 years of practice in white-collar crime, money laundering, extradition, Interpol proceedings, and cross-border criminal enforcement.

Guns, Graft and Geopolitics: The Uneasy War on Defense-Sector Bribery