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Countries Requiring or Requesting Offsets

Source: CTO Quarterly Bulletin 2024

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Defense Offset Market Value Estimates

Source: Avascent

  • $371 Billion globally for 2021-2025

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  • Rise in geopolitical competition

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  • Greater push for self-reliance in defense

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  • Support local economies and supply chains

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Values and Motivations

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US Defense Offsets Agreement Trends

Source: Commerce Department, BIS, Annual Report 2024

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�Defense Offset Corruption Vulnerabilities

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Risk One: Opaque Negotiations over Flexible Inducements

Key Findings

  • Often negotiated secretly by political leaders

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  • Widespread use of flexible, indirect offsets

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  • Companies may hide offset costs

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Select Effects

  • Funds political supporters

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  • Purchase of inappropriate or faulty arms, illicit resource washing

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  • Complicates or cancels arms sale

Sources: Interviews, GDI, Prosecutions, CTO

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Risk Two: Use of Intermediaries or Offset Advisors

“I’ve seen circumstances where an offset advisor knowingly recommended that my client provide funding to a company that turned out to be merely a shell, with no ongoing business operations. After a little digging, it became clear that the offset support funds would flow directly into the coffers of a foreign official.”

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AugustaWestland in India

  • Offset brokers connected to AugustaWestland have been accused of offering bribes to rig the purchase of 12 military transport helicopters
  • The accusations include creating fictious offset projects in India to hide or launder the bribes.
  • AugustaWestland won deal. However, India ended up with helicopters unable to fly at the required altitudes. The prosecution is expanding in India.

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Complex, vague, and hidden rules for valuing offsets

Key Findings

  • Use opaque and broad formulas to value offset projects

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  • Most government officials not qualified to evaluate pricing and costs

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  • Companies seek to increase offset credits

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Select Effects

  • Common method for bribes and kickbacks, including big case in South Africa

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  • Governments frequently complain about company fraud

Sources: