Infrastructure
News and blog
Operational credibility is a strategic asset in the defence industry. What does that mean for Ukraine and its partners?
Europe’s defence sector is changing fast. More money, political attention and international partnerships are flowing into the industry. At the same time, defence companies face growing pressure to show not just what they produce, but how they operate. In this blog, Yuliia Brusko explores why transparency and operational credibility are becoming more important – especially for Ukraine’s wartime-built defence industry. The article builds on the Basel Institute’s ongoing work in Ukraine, including with defence-sector stakeholders on governance, integrity and operational resilience under wartime conditions. Defence companies are entering a new era of scrutiny European defence companies are attracting unprecedented levels of capital, political attention and strategic relevance. Yet alongside this growth comes a level of external scrutiny many firms were never built for. A recent public dispute involving Czech defence company Czechoslovak Group CSG illustrates this shift. A report published by Hunterbrook Media questioned aspects of CSG’s production claims, business model and corporate structure. Among other issues, the report raised questions about the transparency of certain ownership and subsidiary structures, the company’s reliance on intermediary and external procurement arrangements, and the extent to which publicly communicated production and business claims could be independently substantiated by external actors. While the company strongly rejected the allegations, the case reveals a broader structural change: the increasing demand for operational verifiability. In the booming defence industry, investors, procurement actors and international partners are no longer relying on growth narratives or high-level political positioning. Increasingly, they are trying to independently verify how companies actually operate, including: Where key dependencies sit How production is organised Whether public claims align with realities This shift is partly driven by the changing structure of the defence market itself. Alongside traditional defence primes, the sector now includes rapidly scaling private manufacturers, drone producers and venture-backed technology firms. Many are entering international financing and export ecosystems that expect a level of operational accountability historically uncommon in parts of the defence sector. Bridging wartime pragmatism and market expectations in Ukraine This demand for clarity creates a unique challenge for Ukraine’s defence industry. Developed under wartime conditions, Ukrainian companies have prioritised speed, adaptability and survivability over externally defensible corporate structures. Distributed manufacturing, fragmented supply chains and parallel operational entities are practical wartime adaptations, not signs of weak governance. However, as the sector seeks deeper integration with European partners, these same features can create friction. Documentation and traceability systems built under the urgency of survival often struggle to meet the requirements of international financing and export ecosystems. The problem is not necessarily the complexity or the inherent opacity of these arrangements; it is the inability to credibly explain and defend them to external stakeholders who can no longer rely on informal trust alone. Operational credibility is becoming a strategic requirement As scrutiny becomes more operational, companies are increasingly assessed not only on what they produce, but on whether their operational realities can withstand external examination. When structures are too opaque to confidently assess, perceived risk can outweigh strategic value. This creates pressure not only for Ukrainian manufacturers, but also for European defence companies navigating a rapidly changing market. For those seeking long-term integration into international financing, procurement and partnership ecosystems, the ability to defend operational realities is becoming a core business capability. A shift from trust-based networks to verifiable systems The transition from relatively closed government and industry networks toward a more financialised and internationally interconnected market is reshaping how defence companies are assessed. Shifting to this next step is crucial as deftech companies move from niche producers to systemically important security providers. As their technology increasingly moves independently from the large defense primes, the obvious question arises of “going it alone.” While technologically, the choice is obvious, providing sufficient assurance for direct competitive government procurements will require solid systems. The challenge is not eliminating operational complexity or wartime opacity. In many cases, these are unavoidable features of how modern defence industries function under pressure. The challenge is whether companies can credibly explain and defend those realities once they enter ecosystems built around external review, institutional accountability and sophisticated due diligence. For many defence companies, this will require the ability to clearly explain aspects like: How production is organised How supplier and partnership structures operate in practice How key decisions are documented under wartime conditions How public production claims can be substantiated when questioned by investors, procurement actors or international partners. This is likely to require more structured approaches to documentation, traceability and internal oversight – not to replicate peacetime bureaucracy, but to ensure that wartime realities can be credibly defended when scrutiny arises. Adaptability alone will no longer be enough In this environment, the ability to combine wartime adaptability with institutional credibility may increasingly determine which companies are able to scale, attract financing and secure long-term positions within international markets. This increases the importance of building credible systems for transparency, documentation, internal oversight and operational accountability in individual companies and across the defence ecosystem. Achieving this is no easy task. It will require sustained cooperation between Ukrainian defence companies, international partners, investors, procurement actors and policymakers – indeed, any actor keen to see Ukraine’s phenomenal defence capabilities more deeply integrated into international markets and partnerships. At the Basel Institute, we are increasingly working directly with Ukrainian defence companies and their associations to strengthen compliance on an individual or collective basis and welcome new partners. The Basel Institute's work on Ukraine's defence integrity is supported by Norway. This blog represents the views of the author only.
Building integrity from the ground up in Mozambique: training programme
Mozambique faces critical infrastructure challenges – and opportunities – across all areas of its economy. Yet the type of high-value procurement and infrastructure projects needed to boost development in the country are well known to be vulnerable to corruption. Risk factors include the high complexity, large transactions and multi-party negotiations that require close cooperation between the public and private sectors. To ensure procurement projects are not hijacked by corrupt interests, law enforcement officials need specific training to identify and investigate corruption and, if necessary, to recover stolen funds. Gaining specialised knowledge From 6-9 November 2023, 23 anti-corruption practitioners took part in ICAR's specialised training programme on "Corruption in Infrastructure Projects and Procurement" at the Prosecutor General's Office in Maputo, Mozambique. ICAR experts Phyllis Atkinson, Tom Walugembe and Emmanuel Mringo explored the most common fraudulent practices in procurement and infrastructure projects together with participants. In Mozambique as elsewhere, these include non-compliance with contract specifications, inflated invoices, product substitution, false claims and over-invoicing. The sessions led into interactive workshops and a simulated corruption case which participants investigated in teams. Learning through investigation ICAR courses allow participants to test out new knowledge and receive real-time feedback on their evolving skills by investigating a simulated case of public procurement corruption. In this course, a simulated case in a road construction project tested participants' ability to identify the "red flags" that can reveal a corruption scheme such as bid rigging, collusive bidding, fraud, conflict of interest, bribery and kickbacks. Participants found the learning structure helpful, with one stating: The methodology used for the course was excellent. The explanations in the presentations were directly relevant to the practical exercise. I will apply these new skills when investigating cases of corruption and the embezzlement of state funds. ICAR’s "learning by doing” approach means that participants are able to quickly apply new skills and easily transfer them to their daily work. As another participant noted: The training was excellent. It connects with very pertinent aspects of my day-to-day work. That means I was able to acquire more skills and investigative methodologies in the various legal types of crime that were covered here. This will enable me to achieve better results. Constructing the local context The participants' presentations at the end of the training demonstrated a thorough knowledge of the various offences common to public procurement corruption cases, such as abuse of office, passive corruption, embezzlement and money laundering. Importantly, their new knowledge was tailored to the local context, taking into account Mozambican law and procedures. Identifying and confiscating illicit assets was also a major focus of the training, through the use of both criminal/extended forfeiture laws and in the future, we hope, new civil forfeiture mechanisms. The successful implementation of these mechanisms is crucial to preventing future corruption in infrastructure and procurement. Learn more Learn more about ICAR’s training programmes and team. The training programme was delivered in the context of a long-running partnership with the Attorney General’s Office of Mozambique that started in 2019 and is funded by the Swiss Agency for Development and Cooperation SDC . Through a local team of field experts, we provide technical assistance and ongoing capacity building to law enforcement and judicial practitioners in investigating financial crimes and recovering illicit assets. Mozambique is also at the heart of a new Knowledge Community on Asset Recovery that arose from the ICAR-organised Lisbon Conference in 2022.
Publications
Infrastructure & Urban Development: Building Foundations for Transparency
This report from the World Economic Forum focuses on the second phase of the Partnering Against Corruption Initiative (PACI) project to address the needs of the infrastructure and urban development industries.
The report provides a solutions-based framework, a deep-dive at the state level in India and a diagnostic tool that can be replicated and enhanced. In addition, the report includes proposals and policy recommendations on processes and strategies to enhance transparency in the project pilot state of Maharashtra, India.
See also:
Building Foundations Against Corruption: Recommendations on Anti-Corruption in the Infrastructure & Urban Development Industries
Bribery and corruption exist across all industries, but the engineering, construction and real estate sectors are particularly at risk, given the size, complexity and strategic importance of infrastructure-related initiatives in both advanced and emerging economies.
This report provides practical advice on how corruption in infrastructure and related sectors can be addressed through Collective Action. By assessing infrastructure, real estate and related value chains, corruption risks can be mapped across the life cycle of typical projects, making it easier to determine where transparency issues arise and focusing industry-wide engagement on the most important areas for mitigation and response.
The report is part of the Building Foundations Against Corruption project, which aims to foster CEO and government collaboration to build a framework for open and transparent business practices.
- For case studies related to this project, see Learnings from the Field: Cases on Corruption in the Infrastructure and Urban Development Industries
- For a deep dive into a case study in India, see Infrastructure & Urban Development: Building Foundations for Transparency
Learnings from the Field: Cases on Corruption in the Infrastructure and Urban Development Industries
This collection of short cases on corruption in the infrastructure and urban development industries illustrates key operational challenges companies may face and how organizations can respond.
The report is part of the Building Foundations Against Corruption project, which aims to foster CEO and government collaboration to build a framework for open and transparent business practices.
This publication was produced by the World Economic Forum in collaboration with Deloitte.