Sovereign Wealth Funds: Corruption and Other Governance Risks

Mubadala, which is Arabic for “exchange,” was founded in 2002 as the Mubadala Development Company to diversify the UAE economy,⁵ but it originates with the UAE Offsets Group (UOG), which is sometimes cited as the Offsets Development Company. The UOG was founded by Amin Badr el-Din, a Jordanian who at the time was an adviser to then chief of staff of the UAE Armed Forces (now Emirati President) Sheikh Mohammed Bin Zayed Al Nahyan (commonly referred to by his initials MBZ). El-Din is credited with writing the UOG’s guidelines and elevating offsets as part of the UAE’s larger economic development plans.⁶ A 2022 filing with the U.S. Securities and Exchange Commission (SEC), regarding a company in which el-Din is a board member, states, “Between 1990–2000, Dr. Badr el-Din has been Chairman and Chief Executive to the UAE Offsets Group, also known as Mubadala, which he created in the early 1990s.” The SEC filing goes on to note that it was the UOG which established the “Mubadala sovereign fund.”⁷

Mubadala was created as a civilian adjunct to the overall defense offset program of the Emirate of Abu Dhabi’s military-procurement-focused, high-tech industrial development program.⁸ The fund is a public joint stock company, with the Government of Abu Dhabi as its sole shareholder.⁹ Mubadala acts as a holding company for local start-ups and joint ventures, often with foreign firms as coinvestors. The fund also makes strategic investments in foreign firms, with the goal of moving some of their production to Abu Dhabi.¹⁰ Today, Mubadala’s portfolio is much larger than just defense offset–related financing and includes investments in sectors such as healthcare, pharmaceuticals, metals and mining, and real estate spanning over fifty countries.¹¹ It is nonetheless still used to help funnel Emirati defense offsets, such as a 2021 deal between a Swiss aircraft manufacturer, Pilatus, and the UAE company Strata. That deal was funneled through Mubadala to complete an offset deal for the UAE’s prior purchase of Swiss trainer aircraft.¹²

In 2017, the Mubadala Development Company absorbed another Emirati sovereign wealth fund, the International Petroleum Investment Company (IPIC). The merged funds are now called the Mubadala Investment Company.¹³ As described in chapter 3, IPIC—and especially its subsidiary Aabar Investments—had been embroiled in the infamous Malaysian 1MDB money laundering scandal in which Emiratis who ran IPIC helped Malaysian elites launder at least $4 billion from Malaysia’s 1MDB sovereign development fund.¹⁴ In 2018, Mubadala was merged again, this time with the Abu Dhabi Investment Council, bringing its assets to $284 billion¹⁵ and becoming the third-largest sovereign wealth fund in the UAE and the thirteenth-largest in the world.¹⁶

Another series of Emirati sovereign development funds within the UAE’s defense offset program are those under the control of the Tawazun Council (commonly referred to simply as Tawazun).¹⁷ It was established in 1992 as the investment arm of the UAE’s Offset Program Bureau until it was renamed in 2007 and again in 2022.¹⁸ Tawazun oversees the military component of the various defense offset agreements.¹⁹ Per its website regarding its core functions, “Tawazun Council is an independent government entity that works closely with the Ministry of Defense, Abu Dhabi Police and security agencies in the UAE”²⁰ To maintain a dialogue between the Tawazun Council and defense contractors, there is also a Foreign Defence Contractors Council, which consists of the representatives of the Tawazun Council, companies that supply the UAE Armed Forces, and any third parties they choose to invite.²¹

Mubadala and Tawazun co-owned a group that until 2019 was called the Emirates Defence Industries Company (EDIC); it was renamed EDGE Group in 2019 and absorbed into Mubadala. EDGE is now the UAE’s main state-owned defense industry conglomerate, with more than twenty-five companies.²² In addition to absorbing EDIC, Mubadala also absorbed Tawazun’s sovereign development fund, called Tawazun Holding, as well as another defense conglomerate called the Advanced Instruments Group.²³ (Confusingly, despite Tawazun Holding moving under the Mubadala SWF, the Tawazun Council remains distinct from Mubadala.)

When Tawazun Holding was moved under Mubadala in 2019, the Emirati government created a new $680 million sovereign fund under the control of the Tawazun Council called the Defense and Security Development Fund (now called the Strategic Development Fund).²⁴ This 2019 fund invests both domestically and internationally. For instance, it has signed agreements to set up a factory in the UAE for 3-D printing with an Australian firm²⁵ and has invested in Al Marakeb, an Emirati firm that develops and updates unmanned surface drones.²⁶ With a Singaporean partner, the fund has also invested in an Israeli satellite firm, hiSky Ltd.²⁷ The Strategic Development Fund has also partnered with three UAE state-owned banks to provide low-cost, low-collateral loans to Emirati small and medium sized enterprises in the security and defense sectors.²⁸

UAE’s Defense Offset Corruption Risks

Offset contracts are a major means for defense companies to improve an arms contract proposal’s standing vis-à-vis other bidders, but they can also be a pathway for kickbacks and patronage, whereby senior officials of the purchasing country can direct offsets to their own companies or to underlings in return for loyalty.²⁹ Countries can require offset deals to be public and transparent, but a high degree of secrecy is more often the norm. Some countries, including the UAE, declare these contracts to be secret. Others, like the United States, provide only the bare minimum of information, as described in box 1.³⁰

The large monetary value of these side contracts—plus their secrecy—has led to some breathtaking examples of corruption. For instance, a British law enforcement investigation of the Al Yamamah arms deal between the British government, British Aerospace (now called BAE Systems), and the Saudi government documented at least 6 billion British pounds ($12 billion at the time)³¹ in bribes going to the Saudi royal family through secret accounts, shell companies, and fraudulent invoices.³² Many of these kickbacks were part of the offsets associated with the deal. Likewise, the ongoing corruption trial against former South African president Jacob Zuma involves kickbacks from corrupt arms deals from 1999 to 2005 when he was deputy president.³³ Many of the bribes and preferential contracts to Zuma and his cronies were allegedly funneled through the associated offset contracts. The World Peace Foundation’s online Compendium of Arms Trade Corruption documents the use of offsets for corrupt purposes in at least eleven of the forty cases they assess,³⁴ thus raising red flags among anti-corruption and arms control advocates.

Global totals of offset contracts are hard to come by, but some aggregate figures and estimates suggest they are substantial. For the United States, in 2019 (the latest data available), indirect offsets made up 70 percent of obligations by American defense companies (and direct offsets made up the other 30 percent), with ten U.S. defense contractors signing thirty-one new offset agreements with eleven countries.³⁵ The total value of these offsets was $8.2 billion, or 62.5 percent of the value of the arms contracts signed that year. Lockheed Martin alone had $17.5 billion in offset agreements outstanding at the end of 2020, up from $12.1 billion in 2018.³⁶

The management consultancy Avascent estimates that the worldwide total value of defense offset contracts from 2021 to 2025 will be $371 billion, but only $229 billion will be fulfilled.³⁷ There is no means of estimating what percentage of these contracts may be diverted for patronage, overpriced for kickbacks, or paid for but never completed. However, even if it is a mere 10 percent of the expected value of all offset contracts over the next five years, then $37 billion could disappear from government treasuries—a staggering sum.

The aggregate numbers above are an undercount, as not all offset agreements are officially declared. In some cases, firms may camouflage offsets, for example by becoming major shareholders in local firms. Firms would not report such deals as official offsets, and a U.S. foreign military sales contract notification would claim that there were no known offsets associated with the arms agreement in question.³⁸

The UAE requires that any defense contract over $10 million must contain associated offsets worth at least 60 percent of the contract value.³⁹ That is, if a company were to fulfill a $10 million contract, it would also have to expend $6 million worth of direct or indirect offsets. Tawazun handles the offset contract negotiations and monitoring.⁴⁰ Companies have a variety of means of fulfilling their offset obligations, including investing in projects where at least one entity is a local partner; manufacturing products in the UAE and exporting them or providing the products to foreign buyers; taking part in technology transfer; establishing a company in the Abu Dhabi Global Market free zone; and offering internships and job placement for UAE nationals.⁴¹ Indirect offsets have been funneled into a wide array of investments, including luxury real estate; leasing programs for aircraft, oil tankers, agricultural and fish farming, shipbuilding, and waste management; and agreements for Western legal and financial firm services.⁴²

As scholar Shana Marshall has explained in her study of offsets in the UAE, Saudi Arabia, and Kuwait, “Official rationales have focused on increasing employment opportunities for Gulf nationals, attracting new technologies and foreign investment, and reducing the Gulf economies’ reliance on oil and gas exports through strategies of diversification.”⁴³ These are all worthy goals. She notes, however, that offsets have created few actual jobs, especially compared to the large burden that offsets place on state budgets, particularly since the cost of defense purchases increases to cover the cost of the offset deals. Moreover, because the countries making the purchases front much of the cost of offsets through tax credits and other investment incentives, these programs can be an especially inefficient means of generating job growth and facilitating technology transfer.⁴⁴

Marshall contends that “the primary area where offsets do have a discernable impact is on investment portfolios of influential domestic elites.”⁴⁵ She argues this is the real driving force behind these side deals. When examining a 2008 study by an Abu Dhabi–based investment bank, Marshall found that eight of the ten most powerful families in Abu Dhabi held significant shares and/or board seats on an average of 3.8 companies that had been established by, or received substantial investment from, an offset agreement. The families included that of UAE’s president, MBZ.⁴⁶ Such investments may legitimately advance the UAE’s goal of diversifying its economy away from oil, but they appear to be extensively linked to UAE’s elites.

The public and private sectors in the UAE—especially in strategic sectors like defense—have long been intertwined. As a foreign executive quoted in the Financial Times put it, “The line between royals and business [in Abu Dhabi] is getting blurred. I don’t think it exists now; it’s very hard to say what is the exclusive preserve of the private sector . . . I don’t think there are any credible private sector players in strategic sectors.”⁴⁷

Because so many of the deals are extremely complex, tracking the various flows of funds and potential conflicts of interest can be a challenge, even when the deals are publicized. For example, in 1997, an offset deal for Jordan involving Royal Jordanian airlines’ lease payments included the UAE government, thirty-seven banks, and four defense companies.⁴⁸ In another example, a 2007 deal called Project Alpha, facilitated by a defense offset broker called Blenheim Capital, involved fifteen defense companies that were pooling funds to provide financing for the main highway between Dubai and Abu Dhabi, plus the Al Raha Beach development, partnering with a then three-year-old company called Aldar Properties.⁴⁹ The project did indeed assist with the development of the UAE: today, Aldar is one of the largest developers in the UAE. At the time of the investment, the founder and chairman of Aldar, Ahmed Ali Al Sayegh, had also served on the board of the UAE Offsets Group (now called Tawazun) and since then has been a board member on many other firms funded with offset contracts.⁵⁰ He is also a founding board member of Mubadala.⁵¹ Mubadala was a founding stakeholder in Aldar and continues to hold a 25 percent stake in the company.⁵²

There are additional mechanisms for firms to keep an arm’s length from the actual offset contract. For instance, in the UAE, a defense company does not actually have to be a part of a joint venture to fulfill an offset obligation. Instead, it can encourage a third-party supplier to enter a joint venture. In addition, company “offset credits” can be applied not only to the contract at hand but also—if there are “leftover” credits—to other defense contracts it has been awarded, or they can even be traded to other firms who need offset credits to reach their requirements.⁵³

To help handle these complex exchanges, companies often use offset brokers. A few key firms stand out, such as Chescor Capital, which is incorporated in Mauritius, located in a Dubai free zone, and was started by Amin Badr El Din, the aforementioned founder of the UAE Offsets Group and Mubadala.⁵⁴ One of the most prolific offset brokers had been the aforementioned London-based Blenheim Capital (formerly called Summit Corporate Services), which was established by a former adviser to the UAE offsets program in the 1990s, R. Grant Rogan, and by the UAE Offsets Group. One oil industry journal noted at the time that it was the “brainchild” of el-Din and MBZ. Blenheim Capital was initially financed through offset funds provided by Lockheed Martin and funneled through Mubadala; it was recently dissolved after its founder declared bankruptcy.⁵⁵ Firms like Blenheim Capital handle the buying and selling of offset credits on behalf of defense companies, while allowing defense companies to keep an extra layer between themselves and whoever ultimately receives the offset funds. This especially concerns anti-corruption and arms control advocates. According to Transparency International’s Defense Companies Index, which measures the defense industry’s commitment to combating corruption, defense companies are less committed to combating corruption involving defense offsets than any other area of their corporate policies. Based on an analysis of 134 defense companies worldwide, 90 percent of surveyed companies exhibited “limited” to “very low” commitment to combatting corruption in this area.⁵⁶

In the UAE, there is an additional option for fulfilling offset contract obligations: cash. In 2016, Tawazun introduced an Accelerated Project Funding option for offsets. Contractors could invest cash into projects that were part of Tawazun. As an offset trade publication noted at the time, “the process would be transparent to overcome the challenges for US primes concerning cash payments and the Foreign Corrupt Practices Act.”⁵⁷ Details were scant because defense contractors who attended a meeting where the announcement was made were forced to sign nondisclosure agreements. The cash payments would be given a multiplier of six, meaning that if a company owed $6 million in offset commitments, paying $1 million in cash to the fund would yield the equivalent of the $6 million requirement.⁵⁸ More recent trade publications note that cash contributions now have a multiplier value of 2, the same multiplier that salaries of UAE nationals hired via offset agreements have.⁵⁹

The scheme received unwanted attention in 2017, when a series of leaked emails revealed the cash payment option.⁶⁰ (This arrangement violates the basic tenets of offset contracts, which are supposed to support the Emirati economy by bringing in new technologies or know-how or providing local employment.⁶¹) At the time, an arms industry expert, William Hartung, noted, “Offsets are a common practice in the global arms trade, and they are largely unregulated . . . I’m less familiar with the idea of using cash payments, which seem at best a form of legalized bribery.”⁶² Despite the publicity, cash contributions are still permitted per the UAE’s 2019 offset guidelines.⁶³

UAE Defense Sector Procurement Corruption Risks

According to Transparency International’s Government Defence Integrity Index (GDI), which assesses the comprehensiveness of anti-corruption measures in national defense institutions,⁶⁴ the UAE is considered a “very high risk” country for defense sector corruption. Procurement processes are opaque, underregulated, and lack public oversight—and are therefore highly susceptible to corrupt schemes.⁶⁵ Based on research conducted in 2019, the GDI found no laws or regulations that address the UAE’s defense procurement process. Instead, acquisitions are guided by a secret strategy derived by a small team of Emirati officials and foreign consultants. The UAE has no official reporting mechanisms regarding defense acquisitions except for occasional disclosures to defense industry journalists and experts. While some basic internal auditing practices are in place, there are no external oversight bodies that can monitor the administration of the UAE’s defense purchases.⁶⁶

Yet funneling defense offset contracts and associated financing through sovereign funds does not necessarily impede transparency and accountability if those funds are fully transparent and accountable. Indeed, Mubadala scored a 75 out of 100 in 2019 on the Peterson Institute’s sovereign wealth fund scorecard on transparency and accountability. (The average score was 66.) Mubadala also largely complies with the Santiago Principles for governing sovereign wealth funds.⁶⁷ Further, it received a score of 10 out of 10 on the Linaburg-Maduell Sovereign Wealth Fund Transparency Index (LMTI).⁶⁸

On the other hand, funds run by Tawazun have not been rated by the Peterson Institute or in the LMTI, nor is Tawazun a member of the International Forum of Sovereign Wealth Funds or a signatory to the Santiago Principles. The organization and administration of its funds and projects have also been excessively secretive. While Tawazun has publicly provided broad offset guidance, its treatment of specific policies has been described by contractors as “paranoid, secretive, and bizarre.”⁶⁹ For example, when new offset guidelines were sent out to contractors by the Emirati government in 2019, every page of the eighteen-page document was embossed with the following: “Highly Restricted. This information must not be shared in any circumstance with anyone other than its intended recipients.” The document also included other confidentiality warnings within the policy.⁷⁰

Both Mubadala and Tawazun are ultimately run by UAE’s president, most known by his initials MBZ.⁷¹ He has also personally been closely linked with defense offsets, having headed the UAE Offsets Group in the 1990s and early 2000s when he was chief of staff of the UAE Armed Forces.⁷²

Leadership between Mubadala and Tawazun and the entities that they control is fluid, which could lead to conflict-of-interest concerns. For instance, the current director of Tawazun, His Excellency Tareq Al Hosani, was formerly an associate director at Mubadala.⁷³ In addition to his duties at Tawazun, he sits on the boards of many companies funded by Mubadala and/or administered by Tawazun. For example, he is on the board of the International Golden Group (IGG), which was funded in part by Tawazun and in part by the Kaabi family,⁷⁴ while its chairman is former Armed Forces deputy chief of staff Major General Mohammad Helal Al Kaabi.⁷⁵ In September 2021, Tawazun increased its holdings of IGG by an undisclosed amount. The IGG provides “partnering services” for foreign defense companies and thus has numerous joint ventures with Tawazun-associated firms.⁷⁶ Al Hosani is also on the board of Al Yah Satellite Communication (Yahsat), where he was the executive director before taking up the Tawazun position.⁷⁷ Yahsat was 100 percent capitalized by Mubadala through offset partners Thales, Astrium, and European Aeronautic Defence and Space (EADS, a division of Airbus).⁷⁸ He also sits on the board of the EDGE Group, the consortium of companies run by Tawazun. This is not to suggest that these links have led to specific acts of corruption, undue influence, or other impropriety—only that there are potential risks associated with the linkages.

Some firms taking part in Emirati offset agreements have expressed concerns about the appearance of corruption. In 2012, for example, an offset trade magazine reported how firms were especially concerned at how Tawazun’s former chief executive officer, Saif Al Hajeri, was also the chief executive officer of Tawazun Holding (a predecessor to the current SDF). The director of Tawazun’s offset unit at the time, Matar Al Romaithi, justified this by stating, “[Saif Al Hajeri] is not getting anything personally. Tawazun Holding is our investment arm, which is part of the Tawazun Economic Council, and both of them are government entities. So where is the conflict of interest?”⁷⁹ He later stated, “We don’t want international companies to feel or to have a sense of doubt . . . The international firms we have consulted confirm we are not in breach of any conflict of interests or bribery acts.”⁸⁰

It Is Not Only the UAE: Global Defense Offset Risks

The UAE is not the only country that executes defense offset contracts through its sovereign wealth funds. Saudi Arabian Military Industries (the main partner for companies engaged in offset obligations there),⁸¹ the Helicopter Company, and other Saudi defense companies are wholly owned subsidiaries of the country’s Public Investment Fund (PIF),⁸² and civilian offsets are managed by the PIF.⁸³ PIF is one of the largest sovereign wealth funds globally, with over $600 billion in assets, and it seeks to have over $1 trillion in funds by the end of 2025, with about 30 percent of those being international investments (more details on PIF can be found in chapter 6).⁸⁴ Saudi Arabia’s General Authority for Military Industries, which is a subsidiary of the PIF and which is responsible for managing the country’s defense-related offset programs,⁸⁵ also recently signed a memorandum of understanding with Tawazun to facilitate cooperation between both groups, including joint ventures.⁸⁶ As with the UAE offset program, “cash donations” are also acceptable to fulfill offset obligations.⁸⁷

According to Transparency International’s GDI Index, Saudi Arabia is also at critical risk of defense corruption.⁸⁸ The Saudi defense sector has been embroiled in large-scale corruption scandals, including the aforementioned Al Yamamah deal. In March 2024, two middlemen employed by British company GPT Special Project Management Ltd (now part of EADS) were acquitted by a British court for bribing then head of the Saudi Arabian National Guard, Prince Miteb bin Abdullah (son of then Saudi King Abdullah), with millions of dollars between 2007 and 2010. A jury acquitted the middlemen after they successfully argued that their payments had been authorized by the Saudi and British governments.⁸⁹ And PIF, headed by Saudi Arabia’s Crown Prince Mohammed bin Salman, is currently involved in a civil dispute over $3.5 billion missing from a Saudi counterterrorism fund.⁹⁰

Bahrain has also developed an offsets program. The Bahrain Defense Forces recently signed a memorandum of understanding with Tawazun to “share expertise on offset programmes.”⁹¹ This memorandum came after Bahrain established a formal offset program for the first time in September 2020, which was reported to be almost identical to the UAE’s program.⁹² Per a November 2021 agreement, foreign suppliers with offset obligations in Bahrain can meet those requirements in the UAE and vice versa.⁹³ Bahrain’s sovereign wealth fund, Mumtalakat, has also recently signed a co-investment deal with Mubadala.⁹⁴ Per an offset trade publication regarding Bahrain’s offset guidelines,

The guidelines are almost entirely a replica of the policy published by the UAE. Large parts of the document are identical, with the words “Bahrain” and “BDF” (Bahrain Defence Force) replacing “UAE” and “Tawazun.” The quotas, multipliers, penalties, project categories and performance periods are also identical, although Bahrain sets a lower threshold.⁹⁵

Like Saudi Arabia and the UAE, Bahrain’s defense sector is considered to be at critical risk for susceptibility to defense-related corruption.⁹⁶ The royal family maintains absolute control over politics and the economy, controlling the country’s oil wealth, its security sector, and its sovereign wealth fund.⁹⁷

Ramifications and Recommendations

One area that requires additional study is the potentially significant ramifications for regional security. The lack of transparency into defense offset agreements makes such assessments exceedingly difficult, but the activities of some companies funded through the combination of offsets and sovereign wealth funds indicates a possible troubling nexus.

For example, Horizon Flight Training Academy was started in 2002 with funds from Mubadala and remains 100 percent owned by the fund as part of the new EDGE conglomerate. Its purpose is to train civilian and military pilots, trainers, and technicians.⁹⁸ The majority of its pilots go to the Emirati military, ⁹⁹ where they have flown in highly controversial military operations in Yemen.¹⁰⁰ One of the members of Horizon Flight Academy’s board is retired U.S. Army Lieutenant Colonel Stephen Toumajan, who appears to have commanded the UAE’s Joint Aviation Command (its combat helicopter wing). According to reports, Toumajan has officially been a contractor for Knowledge International, a U.S. sister company of Knowledge Point, another EDGE company.¹⁰¹ Though he has previously told the press that he is merely an adviser to the UAE, he has also identified himself as a “commanding general of the Joint Aviation Command of the UAE” and wore a uniform with insignia designating him as such in a U.S. Defense Department video from 2017.¹⁰² Toumajan has sat on the board of directors of other EDGE companies including Knowledge Point,¹⁰³ which demonstrates the close links between Mubadala, Tawazun, their associated companies, and Emirati military activities and oversight.

Moreover, the IGG has been identified in arms sale deals with signs of malfeasance. The former head of a Ukrainian arms firm told the Organized Crime and Corruption Reporting Project (OCCRP) in 2017 that Emirati firms, including IGG, sponsored arms shipments to places such as South Sudan. Documents provided to OCCRP from a Ukrainian arms firm included a “framework agreement” to ship $169 million worth in arms to South Sudan despite an EU arms embargo, with IGG acting as a broker.¹⁰⁴ In January 2024, IGG was added under the EDGE Group umbrella owned by Mubadala.¹⁰⁵

Given these allegations regarding UN sanctions violations and possible human rights violations associated with defense companies under the auspices of Mubadala and Tawazun, more insight into these funds and their associated offset contracts would help civil society, scholars, and the intelligence community better understand these entanglements.

Ideally, both the United States and the UAE would open up their offset-related arms procurement and export contracts to public scrutiny. At a minimum, the U.S. Congress should legislate changes to defense offset contracts that require public disclosure of summaries of these contracts, pricing details, and the beneficial owners of any associated contracts and subcontracts. The beneficial owners of offset agreements that are part of the U.S. Foreign Military Sales program could be made known under Section 885 of the Fiscal Year 2021 National Defense Authorization Act, which requires making beneficial ownership information for federal contracts available. This information could also be publicly posted through the Federal Awardee Performance and Integrity Information System,¹⁰⁶ as well as the more easily accessible USAspending database.¹⁰⁷ These steps would partially solve the problem, but they still would not enable the public disclosure of offsets associated with arms sales made through direct commercial sales between defense export companies and a government, nor would they cover military exports classified as “dual use” or those offsets that shirk the “offset” moniker. While there are substantial corruption concerns regarding the use of defense offset agreements globally, taking these steps would at least help ensure that the U.S. government is not complicit in corrupt offset-related activities abroad.

This compilation has documented how elites can use sovereign wealth funds for rent-seeking activity, including corruption. The combination of opaque defense procurement contracts intertwined with sovereign wealth funds in countries already considered highly susceptible to defense-related corruption should be of concern to governments, the defense sector, and civil society. Furthermore, the fact that potential corruption activities can have significant effects on peace and security only heightens the need for sovereign wealth funds to undergo much higher levels of scrutiny and associated government regulation by arms-exporting nations.

Notes

¹ Susan Rose-Ackerman and Bonnie J. Palifka, Corruption and Government: Causes, Consequences, and Reform (New York, NY: Cambridge University Press, 2016), 108; and Kevin Dehoff, John Dowdy, and O Sung Kwon, “Defense Offsets: From ‘Contractual Burden’ to Competitive Weapon,” McKinsey & Company, July 1, 2014, https://www.mckinsey.com/industries/public-sector/our-insights/defense-offsets-from-contractual-burden-to-competitive-weapon.

² The shrimp pools could not remain cool, and the project failed. A retired brigadier general who owned an 18 percent share of the Arabian Shrimp Company had been the head of Saudi Arabia’s Economic Offset Secretariat until he had retired from the military. He also had a 45 percent stake in the private venture firm that handled the offset obligation. “Guns and Sugar,” Economist, May 25, 2013, https://www.economist.com/business/2013/05/25/guns-and-sugar; and Shana Marshall, “The New Politics of Patronage: The Arms Trade and Clientelism in the Arab World,” University of Maryland College Park, 2012, 151, retrieved from https://www.proquest.com/dissertations-theses/new-politics-patronage-arms-trade-clientelism/docview/1179020359/se-2.

³ Marshall, “The New Politics of Patronage,” 169–170.

⁴ “UAE: OPB Turns Into TEC,” Countertrade and Offset, June 25, 2012. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter. See also Daniel Haberly, “From Financialization to Vulture Developmentalism: The South-North Strategic Sovereign Wealth Fund and Politics of the ‘Quadruple Bottom Line,’” in The Oxford Handbook of Sovereign Wealth Funds, eds. Douglas Cumming, Geoffrey Wood, Igor Filatotchev, and Juliane Reinecke (Oxford, UK: Oxford University Press, 2017); Agnes Helou, “UAE Launches ‘Edge’ Conglomerate to Address Its ‘Antiquated Military Industry,’” Defense News, November 6, 2019, https://www.defensenews.com/digital-show-dailies/dubai-air-show/2019/11/06/uae-launches-edge-conglomerate-to-address-its-antiquated-military-industry/; “About Us,” EDGE Group, accessed July 12, 2023, https://edgegroup.ae/about; “Our History,” Mubadala, accessed July 12, 2023, https://www.mubadala.com/en/who-we-are/our-history; and “Top 100 Largest Sovereign Wealth Fund Rankings by Total Assets,” Sovereign Wealth Fund Institute, accessed July 12, 2023, https://www.swfinstitute.org/fund-rankings/sovereign-wealth-fund, 100.

⁵ “Our History,” Mubadala, accessed July 29, 2023.

⁶ El-Din reportedly stepped down from UOG in 2000, which would predate Mubadala’s founding by two years. Marshall, “The New Politics of Patronage”; and “United Arab Emirates: The Cabinet—His Highness Sheikh Mohamed Bin Zayed Al Nahyan,” accessed December 8, 2023, https://uaecabinet.ae/en/details/federal-supreme-council/his-highness-sheikh-mohamed-bin-zayed-al-nahyan, 200–201. Most dates for the founding of the UOG merely point to its establishment in the 1990s, but one source states that it was founded in 1998 by the governments of Abu Dhabi and Dubai. Prior to 1997, each of the seven emirates that make up the UAE had to organize, train, and equip their own forces. In 1997, these forces were combined under one General Headquarters (GHQ). The UOG was created to serve as a combined organization to funnel defense offset–related investments into UAE-wide projects, whereas the Offsets Program Bureau (now Tawazun) was originally designated for offset investments just for the emirate of Abu Dhabi. “Abu Dhabi—UAE Offset Group,” The Free Library, 2014, accessed July 29, 2023, https://www.thefreelibrary.com/ABU+DHABI+-+UAE+Offset+Group.-a097785581.

⁷ US Security and Exchange Commission Form S-1 , “Makara Strategic Investment Corp.” February 25, 2022, accessed July 29, 2023, https://www.sec.gov/Archives/edgar/data/1871810/000110465922027517/tm2130459d2_s1.htm. Other sources that cite Mubadala’s development from the UAE’s offset program and its prior title as the Offset Development Company include Haberly, “From Financialization to Vulture Developmentalism,”101–103; and “Abu Dhabi Leading German Press Headlines,” Emirates New Agency, April 27, 2004, https://wam.ae/en/details/1395226435407. Another example comes from Stanley Carvalho, “New Firm to Control Dolphin,” Gulf News, March 20, 2003, https://gulfnews.com/uae/new-firm-to-control-dolphin-1.350783; which notes that the new “Offsets Development Co,” has replaced the “UAE Offsets Group” as the new equity holder with a 51 percent interest in Dolphin Energy Ltd. Subsequent reports note that it is Mubadala that has the 51 percent stake, such as Daniel Canty, “Special Report: Dolphin Energy: Mubadala, Total, and Oxy Have Turned Pipe Dreams Into Reality,” Oil & Gas Middle East, May 12, 2009, https://www.oilandgasmiddleeast.com/news/article-5444-special-report-dolphin-energy.

⁸ Haberly, “From Financialization to Vulture Developmentalism,” 101–103. Mubadala and the Tawazun are not the only funds set up to funnel defense offsets to UAE-based businesses. Others include Sinaat, a joint stock company established in 1999; a company called UAE Special Investments set up by Chase Manhattan Bank and Finasa Emirates in 1994; and the Alfia private equity fund managed by First Gulf Bank and incorporated in Mauritius in 2000. Little information is publicly available on these funds once they are established. Yawar Hanif Mian, “UAE Offset Programme: A Success Story,” Military Technology 23, no 3 (March 1999): 6015, accessed July 29, 2023, https://www.proquest.cm/docview/199055721/FA489EE4C984454FPQ/2?accountid=11091; “Chase Sets Up UAE Offset Investment Company,” Project and Trade Finance, issue 134 (September 1994), accessed July 29, 2023, https://www.proquest.com/docview/200636132?accountid=11091&forcedol=true; and Marshall, “The New Politics of Patronage,” 169–171.

⁹ James Chen, “Mubadala Development Company,” Investopedia, September 9, 2022, https://www.investopedia.com/terms/m/mubadala-development-company.asp.

¹⁰ Haberly, “From Financialization to Vulture Developmentalism,” 108.

¹¹ Andrew England, Simeon Kerr, and Samer al-Atrush, “The New Gulf Sovereign Wealth Fund Boom,” Financial Times, January 3, 2023, https://www.ft.com/content/33a985a5-6955-4f44-869f-82e82e620581.

¹² “Pilatus Gives Workshare to UAE’s Strata,” Countertrade and Offset XXXIX, no. 8, April 26, 2021, 4. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter.

¹³ Stanley Carvalho, “Abu Dhabi Creates $125 Billion Fund by Merging Mubadala, IPIC,” Reuters, January 21, 2017, https://www.reuters.com/article/us-emirates-abudhabi-funds-idUSKBN1550R2. If Mubadala was formed from IPIC in 2002 as described on Mubadala’s website, then the child sovereign wealth fund has acquired its original parent.

¹⁴ Carvalho, “Abu Dhabi Creates $125 Billion Fund by Merging Mubadala, IPIC”; James Griffiths, “How 1MDB Finally Caught Up With Najib Razak,” CNN, February 11, 2019, https://www.cnn.com/2019/02/10/asia/malaysia-najib-trial-1mdb-profile-intl/index.html; and England, Kerr, and al-Atrush, “The New Gulf Sovereign Wealth Fund Boom.”

¹⁵ England, Kerr, and al-Atrush, “The New Gulf Sovereign Wealth Fund Boom.”

¹⁶ “Our History,” Mubadala; “About Mubadala,” Mubadala, accessed July 12, 2022, https://www.mubadala.com/en/who-we-are/about-the-company; and “Top 100 Largest Sovereign Wealth Fund Rankings by Total Assets,” Sovereign Wealth Fund Institute.

¹⁷ Since 2019, the Defense and Security Development Fund has been managed under the Tawazun Economic Program, which in turn is run by Tawazun.

¹⁸ “UAE: OPB Turns Into TEC,” Countertrade and Offset; and “UAE: Tawazun Gains Muscle as New Investments are Readied,” Countertrade and Offset XXVI, no. 21, November 10, 2008, 6–7. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter.

¹⁹ Haberly, “From Financialization to Vulture Developmentalism,” 107. Tawazun is Arabic for “balance.” It was the U.S. Commerce Department’s International Trade Division that originally suggested establishing such funds in 1997. Soon after, however, the agency backed off, especially after members of Congress and some Commerce Department staff raised concerns that up-front offset payments could be used to channel financial favors to foreign officials. Daniel Pearl, “Offset Requirements of Defense Deals Often Have Little to Do With Purchaser,” Wall Street Journal, April 20, 2000, https://www.wsj.com/articles/SB956183692708157042.

²⁰ “Tawazun Council—Who We Are,” accessed December 8, 2023, https://www.tawazun.gov.ae/who-we-are/. The council members are the Tawazun Council CEO, the Chief Officer of the Industrial Development Unit, and the Senior Manager of Government Affairs. The Tawazun Council is also part of the Tawazun Economic Committee (TEC) which is “composed of six members who represent the GHQ [General Headquarters of the UAE Armed Forces], the Presidential Guard Command (PGC), and the Tawazun Economic Council. GHQ and PGC members include the Chief of Logistics Staff, Director of Purchasing Department, and Director of Contracts and Finance of PGC.” The Offset Guidelines Quarterly Bulletin, CTO, July 31, 2023, 318. CTO archives available via paywall at https://www.cto-offset.com/archive-qb. Though the UAE recently renamed the Tawazun Economic Council simply the “Tawazun Council,” trade publications still refer to it as the “Tawazun Economic Council,” including the source cited here.

²¹The Offset Guidelines Quarterly Bulletin, CTO, 318..

²² “Entities by Cluster,” EDGE Group, accessed July 28, 2023, https://edgegroup.ae/entities.

²³ Helou, “UAE Launches ‘Edge’ Conglomerate to Address Its ‘Antiquated Military Industry.’”

²⁴ “Abu Dhabi’s Tawazun Economic Council Launches $680m Defense Fund,” Arab News, February 14, 2019, https://www.arabnews.com/node/1451806/amp.

²⁵ “Titomic to Advance 3D Manufacturing Line With UAE-Based Tawazun SDF,” Australian Manufacturing (blog), February 26, 2021, https://www.australianmanufacturing.com.au/titomic-to-advance-3d-manufacturing-line-with-uae-based-tawazun-sdf/.

²⁶ “Defense and Security Development Fund Invests Into Al Marakeb in Return for 30%,” SDF (blog), February 19, 2019, https://www.sdf.ae/defense-and-security-development-fund-invests-into-al-marakeb-in-return-for-30/.

²⁷ The Singaporean firm is called ST Engineering. Its corporate venture capital unit that conducted the deal was itself originally formed from Singapore’s sovereign wealth fund, Temasek Holdings. “ST Engineering’s Corporate Venture Capital Unit Invests in HiSky,” Satellite Markets & Research, December 8, 2021, http://satellitemarkets.com/st-engineering-investment-hisky; “HiSky Raised $30M Series A Funding, Led by ST Engineering,” Strategic Development Fund, December 2021, https://www.sdf.ae/hisky-raised-30m-series-a-funding-led-by-st-engineering/; and Kristie Neo, “ST Engineering Ventures Eyes China Market, Plans Presence in US, Israel,” DealStreetAsia (blog), October 25, 2018, https://www.dealstreetasia.com/stories/st-engineering-ventures-109670/.

²⁸ The three banks are First Abu Dhabi Bank, Commercial Bank of Dubai, and National Bank of Fujairah. Deena Kamel, “Tawazun’s Defence Fund Partners With Local Banks on Dh700m Programme,” National, November 13, 2019, https://www.thenationalnews.com/business/banking/tawazun-s-defence-fund-partners-with-local-banks-on-dh700m-programme-1.937276.

²⁹ Dehoff, Dowdy, and Kwon, “Defense Offsets.”

³⁰ It is not only states that demand these agreements be shielded from public view; defense firms often argue that offsets should be classified as “proprietary” information to prevent disclosure. See box for additional information on U.S. laws and regulations regarding defense offsets. For references in box 1, see Colby Goodman, “Holes in the Net: US Arms Export Control Gaps in Combatting Corruption,” Transparency International Defence and Security Program, January 2020, https://ti-defence.org/publications/united-states-arms-export-sales-corruption-fraud-risk/; “Guns and Sugar” Economist; “Defense Production Act Amendments of 1992,” Public Law 102–558, October 28, 1992, https://www.govinfo.gov/content/pkg/STATUTE-106/pdf/STATUTE-106-Pg4198.pdf#page=1; “Military Exports: Concerns Over Offsets Generated With US Foreign Military Financing Funds,” Government Accountability Office, June 1994, https://www.gao.gov/assets/nsiad-94-127.pdf; “Foreign Military Sales Case Development,” Defense Security Cooperation Agency, accessed July 12, 2023, https://samm.dsca.mil/chapter/chapter-5#C5.4; and The Offset Guidelines Quarterly Bulletin, CTO, July 31, 2023, 341. CTO archives available via paywall at https://www.cto-offset.com/archive-qb/.

³¹ The estimated dollar value based on a British pound/U.S. dollar exchange rate of 1.98 as of December 1, 2006. The SFO investigation was shut down by the UK government in December 2006 as allegations of these immense bribes continued to emerge. Exchange rate for 2006 accessed from https://www.poundsterlinglive.com/bank-of-england-spot/historical-spot-exchange-rates/gbp/GBP-to-USD-2006.

³² “The Al Yamamah Arms Deals,” World Peace Foundation, accessed July 12, 2023, https://sites.tufts.edu/corruptarmsdeals/the-al-yamamah-arms-deals/.

³³ “The South African Arms Deal,” World Peace Foundation, accessed July 12, 2023, https://sites.tufts.edu/corruptarmsdeals/the-south-african-arms-deal/; Mogomotsi Magome, “South African Court Rules Zuma’s Corruption Case to Continue,” AP News, October 26, 2021, https://apnews.com/article/africa-money-laundering-south-africa-jacob-zuma-87b8accb7f37accbe168ff8104c4bbcf; and Mogomotsi Magome and Gerald Imray, “Former South African President’s Trial Over Arms Deal Begins,” Defense News, May 26, 2021, https://www.defensenews.com/global/mideast-africa/2021/05/26/former-south-african-presidents-trial-over-arms-deal-begins/.

³⁴ Goodman, “Holes in the Net,” 10.

³⁵ “Annual BIS Offset Report: Total Volume of Offsets Higher Than Average Despite Lowest Number of Offset Contracts and Transactions,” Countertrade and Offset, August 16, 2021. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter. American defense companies must annually report any offset contract agreements that exceed $5 million, as well as the performance of any offset obligations worth over $250,000 in credits. The Commerce Department only publishes aggregated data; no individual company data can be released without the permission of the company. “Reporting for Calendar Year 2020 on Offsets Agreements Related to Sales of Defense Articles or Defense Services to Foreign Countries or Foreign Firms,” U.S. Federal Register 86, no. 100 (2021): 28335–6, https://www.govinfo.gov/content/pkg/FR-2021-05-26/pdf/2021-11068.pdf.

³⁶ “Lockheed Adds $2.4 Billion of Outstanding Offsets in 2020, Drops $100m in Penalty Liabilities,” Countertrade and Offset, March 22, 2021. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter.

³⁷ “Defense Offsets Expectations Are Considerable, But Implementation Is Uneven,” Avascent (blog), February 23, 2021, https://www.avascent.com/news-insights/perspectives/defense-offsets-expectations-are-considerable-but-implementation-is-uneven.

³⁸ Marshall, “The New Politics of Patronage,” 154.

³⁹The Offset Guidelines Quarterly Bulletin, CTO, July 31, 2023, 323. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁴⁰ Bilal Y. Saab, “The Gulf Rising: Defense Industrialization in Saudi Arabia and the UAE,” May 7, 2014, 28, www.atlanticcouncil.org/images/publications/The_Gulf_Rising.pdf. An offset agreement is known as a Tawazun Economic Programme Agreement (TEPA). The Offset Guidelines Quarterly Bulletin, CTO, July 31, 2023, 323. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁴¹The Offset Guidelines Quarterly Bulletin, CTO, July 31, 2023, 320-322. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁴² Marshall, “The New Politics of Patronage,” 167.

⁴³ Marshall, “The New Politics of Patronage,” 149.

⁴⁴ Marshall, “The New Politics of Patronage,” 211–17, 224–29.

⁴⁵ Marshall, “The New Politics of Patronage,” 148.

⁴⁶ Marshall, “The New Politics of Patronage,” 168.

⁴⁷ Andrew England and Simeon Kerr, “The Abu Dhabi Royal at the Nexus of UAE Business and National Security,” Financial Times, January 25, 2021, https://www.ft.com/content/ce09911b-041d-4651-9bbb-d2a16d39ede7.

⁴⁸ Carola Hoyas, “Quid Pro Quos Mean Defence Contracts Help Gulf Economies,” Financial Times, October 9, 2013, https://www.ft.com/content/2e332690-25f1-11e3-8ef6-00144feab7de.

⁴⁹ Hoyas, “Quid Pro Quos Mean Defence Contracts Help Gulf Economies.”

⁵⁰ Shireena Al Nowais, “President Sheikh Khalifa Appoints New Minister of State,” National, September 18, 2018, https://www.thenationalnews.com/uae/president-sheikh-khalifa-appoints-new-minister-of-state-1.768327.

⁵¹ In July 2022, Mubadala announced that Aldar was buying $1.17 billion worth of properties from Mubadala. “Minister of State His Excellency Ahmed Bin Ali Al Sayegh,” United Arab Emirates Ministry of Foreign Affairs & International Cooperation, accessed August 13, 2022, https://www.mofaic.gov.ae/the-ministry/the-ministers/minister-of-state-and-chairman-of-abu-dhabi-global-market/minister-of-state-and–chairman-of-abu-dhabi-global-market; and Massoud A. Derhally and Sarmad Khan, “Aldar Agrees to Buy Four Properties From Mubadala in $1.17bn Deal,” National, July 28, 2022, https://www.thenationalnews.com/business/2022/07/28/aldar-agrees-to-buy-4-properties-from-mubadala-in-117bn-deal/.

⁵² Derhally and Khan, “Aldar Agrees to Buy Four Properties From Mubadala in $1.17bn Deal.”

⁵³ Leo G.B. Welt and Dennis B. Wilson, “Offsets in the Middle East,” Middle East Policy Council, accessed November 1, 2023, https://www.mepc.org/journal/offsets-middle-east; and “UAE: Tawazun’s Policy Is Off the Record—And That’s Official,” Countertrade and Offset, March 18, 2019, 2–3. The Offset Guidelines Quarterly Bulletin, Countertrade and Offset, July 31, 2023, 320–322. Excess credits can be banked for up to five years following the completion of the offset project. The Offset Guidelines Quarterly Bulletin, Countertrade and Offset, July 31, 2023, 327. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁵⁴ Marshall, “The New Politics of Patronage,” 200–201; and “Chescor Capital I Corporate Finance & Strategy I Dubai,” Chescor Capital, accessed January 30, 2022, https://www.chescorcapital.com.

⁵⁵ Blenheim was also heavily involved in aircraft leasing, which is another common use for offset funds. Marshall, “The New Politics of Patronage,” 201–204; “Blenheim Capital Services Limited,” UK Companies House, accessed July 12, 2023, https://find-and-update.company-information.service.gov.uk/company/05819287/officers; and Anne Rhodes, “UAE Offsets Move Westward With Refining and Marketing Megaproject,” Oil & Gas Journal 98, no. 36 (September 4, 2000): accessed July 29, 2023, https://www.proquest.com/docview/274441469/C62E1617E5D642AAPQ/1?accountid=11091. Blenheim declared bankruptcy in 2021 after a public and expensive divorce by R. Grant Rogan and a feud with Lockheed Martin over offset contracts with South Korea.

⁵⁶ Transparency International, “Defence Companies Index 2020 on Anti-Corruption and Corporate Transparency,” Transparency International Defence and Security Program, accessed July, 28, 2021, https://ti-defence.org/dci/.

⁵⁷ “UAE: Tawazun Introduces Temporary ‘Get Out of Trouble’ Option,” Countertrade and Offset, November 7, 2016, 6. CTO zrchives available via paywall at https://www.cto-offset.com/archive-newsletter.

⁵⁸ “UAE: Tawazun Introduces Temporary ‘Get Out of Trouble’ Option,” Countertrade and Offset, 5–6.

⁵⁹The Offset Guidelines Quarterly Bulletin, CTO, July 31, 2023, 326. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁶⁰ Ryan Grim, “Gulf Government Gave Secret $20 Million Gift to D.C. Think Tank,” The Intercept (blog), August 10, 2017, https://theintercept.com/2017/08/09/gulf-government-gave-secret-20-million-gift-to-d-c-think-tank/.

⁶¹ If, for instance, a company were to win an arms contract worth $10 million, then presumably, a $6 million offset would be owed with it. That $6 million should be put into creating a local parts supplier, for instance, which increases the country’s industrial base and provides jobs. If, however, cash is provided instead, it would have made much more sense to simply charge $4 million for the defense contract rather than charge $10 million to the country’s treasury but then divert $6 million of that to an off-budget fund.

⁶² Alex Emmons, “Weapons Money Intended for Economic Development Being Secretly Diverted to Lobbying,” The Intercept (blog), August 17, 2017, https://theintercept.com/2017/08/17/weapons-money-intended-for-economic-development-being-secretly-diverted-to-lobbying/.

⁶³ “UAE: Tawazun’s Policy Is Off the Record,” Countertrade and Offset, 2. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter.

⁶⁴ The Government Defense Integrity Index (GDI) is the only global assessment tool for countries’ security sector susceptibility to corruption. As the European Commission noted about the index, “It [the GDI] is thus a comprehensive assessment of the quality of institutional controls in the defence sector.” See “Government Defence Integrity Index,” European Commission, accessed April 19, 2024, https://composite-indicators.jrc.ec.europa.eu/explorer/explorer/indices/gdii/government-defence-integrity-index.

⁶⁵ Transparency International, “Government Defence Integrity Index 2020—United Arab Emirates,” Transparency International Defence and Security Program, accessed July, 28, 2021, https://ti-defence.org/gdi/countries/united-arab-emirates/.

⁶⁶ Transparency International, “Government Defence Integrity Index 2020—United Arab Emirates.”

⁶⁷ Julien Maire, Adnan Mazarei, and Edwin M. Truman, “Sovereign Wealth Funds Are Growing More Slowly, and Governance Issues Remain,” Peterson Institute for International Economics, February 2021, https://www.piie.com/publications/policy-briefs/sovereign-wealth-funds-are-growing-more-slowly-and-governance-issues.

⁶⁸ “Linaburg-Maduell Transparency Index,” accessed July 12, 2023, https://www.swfinstitute.org/research/linaburg-maduell-transparency-index.

⁶⁹ “UAE: Tawazun’s Policy Is Off the Record,” Countertrade and Offset.

⁷⁰ “UAE: Tawazun’s Policy Is Off the Record,” Countertrade and Offset, 1.

⁷¹ Artur Grigoryan, “The Ruling Bargain: Sovereign Wealth Funds in Elite-Dominated Societies,” Economics of Governance 17, no. 2 (May 2016): 169–170, https://doi.org/10.1007/s10101-015-0168-7; and “ Sheikh Mohamed Bin Zayed Al Nahyan Issues Resolutions Appointing Tawazun to Manage Procurements, Contracts of UAE Armed Forces, Abu Dhabi Police,” Zawya, press release, February 24, 2021, https://www.zawya.com/en/press-release/sheikh-mohamed-bin-zayed-al-nahyan-issues-resolution-appointing-tawazun-to-manage-procurements-contracts-of-no72gg8d.

⁷² Kristian Coates Ulrichsen, The United Arab Emirates: Power, Politics, and Policymaking (New York, NY: Routledge, 2017), 145.

⁷³ “HE Tareq Al Hosani—Al Yah Satellite Communications Company,” Yahsat, accessed July 13, 2023, https://www.yahsat.com/en/about-yahsat/our-leadership/board-of-directors/he-tareq-abdulraheem-al-hosani.

⁷⁴ Marshall, “The New Politics of Patronaged,” 422; and “HE Tareq Al Hosani—Al Yah Satellite Communications Company,” Yahsat.

⁷⁵ Marshall, “The New Politics of Patronage,” 169.

⁷⁶ Charles Forrester, “Tawazun Boosts Investments After Reshuffling Businesses,” Janes, September 23, 2021, https://www.janes.com/defence-news/news-detail/tawazun-boosts-investments-after-reshuffling-businesses.

⁷⁷ “HE Tareq Al Hosani—Al Yah Satellite Communications Company,” Yahsat.

⁷⁸ Marshall, “The New Politics of Patronage,” 427.

⁷⁹ “UAE: Duel in the Sun as Passions Boil Over,” Countertrade and Offset, August 27, 2012. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter.

⁸⁰ “UAE: Duel in the Sun as Passions Boil Over,” Countertrade and Offset.

⁸¹ The CEO of Saudi Arabian Military Industries is the former defense contractor Rheinmetall CEO. The Offset Guidelines Quarterly Bulletin, CTO, July 31, 2023, 233. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁸² “Airbus to Form Joint Venture With SAMI as It Pushes for Jet Order,” Countertrade and Offset, December 20, 2021. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter.

⁸³The Offset Guidelines Quarterly Bulletin, CTO, July 31, 2023, 233. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁸⁴ Hadeel Al Sayegh and Moataz Mohamed, “Saudi Arabia Transfers Aramco Shares Worth $80 Bln to State Fund,” Reuters, February 13, 2022, https://www.reuters.com/business/saudi-arabia-transfers-4-aramco-shares-sovereign-wealth-fund-state-news-agency-2022-02-13/; England, Kerr, and al-Atrush, “The New Gulf Sovereign Wealth Fund Boom.”

⁸⁵ The board of the General Authority for Military Industries (GAMI) is headed by Crown Prince Mohammad bin Salman; other members include the Minister of Energy, Industry, and Mineral Resources; Minister of Finance; Minister of Commerce and Industry; Chairman of the Board of SAMI; and representatives from the ministries of defense and interior plus the national guard. The Offset Guidelines Quarterly Bulletin, Countertrade and Offset, July 31, 2023, 233. CTO archives available via paywall at https://www.cto-offset.com/archive-qb. Offset proposals from defense contracts may be submitted to GAMI before they develop a full offset plan; among the information contained in a project proposal is information on the chosen local partner or subcontractor. A trade publication notes, “Selecting a partner [a local Saudi partner to an offset agreement] connected to the royal family, perhaps through a young person close to Prince Salman, could liberate the OEM [original equipment manufacturers] from offset requirements and focus instead on localization.” The Offset Guidelines Quarterly Bulletin, Countertrade and Offset, July 31, 2023, 236–237. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁸⁶ “GAMI and Tawazun Sign Cooperation Agreement,” Countertrade and Offset, March 8, 2021. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter.

⁸⁷The Offset Guidelines Quarterly Bulletin, Countertrade and Offset, July 31, 2023, 239. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁸⁸ “Saudi Arabia,” Transparency International Government Defence Integrity Index, September 2019, accessed July 29, 2023, https://ti-defence.org/gdi/countries/saudi-arabia/.

⁸⁹ This trial has been especially sensitive in the United Kingdom because the defendants claimed that GPT was merely a “middleman” to facilitate the payment of bribes (to Saudi senior leaders and royals) that were arranged as part of a UK-Saudi arms deal that had been agreed to in 1978. Oliver Briggs, “GPT Pleads Guilty to Corruption,” UK Serious Fraud Office, April 28, 2021, https://www.sfo.gov.uk/2021/04/28/gpt-pleads-guilty-to-corruption/; “GPT and the Saudi National Guard,” World Peace Foundation, accessed August 13, 2022, https://sites.tufts.edu/corruptarmsdeals/gpt-and-the-saudi-national-guard/; “Court Halts Case Into UK Bribery to Secure Saudi Arms Deal,” Middle East Monitor (blog), July 15, 2022, https://www.middleeastmonitor.com/20220715-court-halts-case-into-uk-bribery-to-secure-saudi-arms-deal; and David Pegg and Rob Evans, “Two Men Acquitted of Bribing Saudis in Huge British Defence Deal,” Guardian, March 6, 2024, https://www.theguardian.com/uk-news/2024/mar/06/two-men-acquitted-of-bribing-saudis-in-huge-british-defence-deal.

⁹⁰ Andrew England and Simeon Kerr, “Saudi Arabia: $3.5bn Fraud Case Set to Define Crown Prince’s Anti-Graft Campaign,” Financial Times, March 28, 2021, https://www.ft.com/content/df95eab7-5dce-48fc-943d-889efe74fd6b.

⁹¹ “Tawazun and Bahrain Strengthen Offset Cooperation,” Countertrade and Offset, December 6, 2021. CTO archives available via paywall at https://www.cto-offset.com/archive-newsletter.

⁹² “Tawazun and Bahrain Strengthen Offset Cooperation,” Countertrade and Offset, 6.

⁹³The Offset Guidelines Quarterly Bulletin, Countertrade and Offset, July 31, 2023, 41. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁹⁴ Fareed Rahman, “Mubadala and Bahrain’s Mumtalakat Sign Deal to Explore Co-Investment Opportunities,” National, December 14, 2021, https://www.thenationalnews.com/business/economy/2021/12/14/mubadala-and-bahrains-mumtalakat-sign-deal-to-explore-co-investment-opportunities/.

⁹⁵The Offset Guidelines Quarterly Bulletin, Countertrade and Offset, July 31, 2023, 39. CTO archives available via paywall at https://www.cto-offset.com/archive-qb.

⁹⁶ “Bahrain,” Transparency International Government Defence Integrity Index, October 2020, https://ti-defence.org/gdi/countries/bahrain/.

⁹⁷ For more on Bahrain’s defense sector, see Jodi Vittori, “Bahrain’s Fragility and Security Sector Procurement,” Carnegie Endowment for International Peace, February 26, 2019, https://carnegieendowment.org/2019/02/26/bahrain-s-fragility-and-security-sector-procurement-pub-78443.

⁹⁸ “Mubadala Shares Plans: Establishing Strong Aerospace Industry in Abu Dhabi,” November 10, 2007, https://www.mubadala.com/en/news/mubadala-shares-plans-establishing-strong-aerospace-industry-abu-dhabi. Some Mubadala press releases are no longer available on their website. The author is grateful to a researcher in the UAE who shared downloads of the original press releases.

⁹⁹ Peter Shaw-Smith, “Horizon Flight Academy Vital to Mideast Rotorcraft Training,” Aviation International News, January 23, 2020, https://www.ainonline.com/aviation-news/general-aviation/2020-01-23/horizon-flight-academy-vital-mideast-rotorcraft-training. At least one member of the Board of Horizon Flight Academy is also a senior military leader: His Excellency Major General Staff Pilot Stephen A. Toumajan.

¹⁰⁰ “Statement of Armed Forces Official Source on Refugee Boat Incident,” Emirates News Agency, March 20, 2017, http://wam.ae/en/details/1395302603973.

¹⁰¹ Quoted from Michael Picard and Colby Goodman, “Hidden Costs: US Private Military and Security Companies and the Risks of Corruption and Conflict,” Transparency International Defence and Security, July 2022, 18-20, available at https://ti-defence.org/wp-content/uploads/2022/08/Hidden-Costs-US-Private-Military-and-Security-Companies-and-the-Risks-of-Corruption-and-Conflict-Web-PDF.pdf.

¹⁰² Quoted from Picard and Goodman, “Hidden Costs.” Per an Emirati government website, “Toumajan was the former Commander and Senior Aviation Advisor for the Joint Aviation Command (JAC). Specifically responsible for the combat readiness and execution of all aviation missions and training for UAE forces and numerous Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) aviation programs.” A few paragraphs later, the same website states, “He [Toumajan] has been a member of the several [sic] Board of Directors including Knowledge Point International and Horizon Flight Academy International and Board of Directors for Horizon flight Academy and AMMROC Maintenance Company.” More information on his role in the UAE can be found at Aram Roston, “This American Is a General for a Foreign Army Accused of War Crimes in Yemen,” BuzzFeed News, May 7, 2018, https://www.buzzfeednews.com/article/aramroston/stephen-toumajan-general-us-uae-yemen-contractor; Craig Whitlock and Nate Jones, “UAE Relied on Expertise of Retired U.S. Troops to Beef Up Its Military,” Washington Post, accessed July 12, 2023, https://www.washingtonpost.com/investigations/interactive/2022/uae-military-us-veterans/.

¹⁰³ In 2021, Knowledge Point was placed under the company Jaheziya, another EDGE Group company that specializes in firefighting and emergency response. See “Edge Consolidates Training Businesses,” Janes, October 27, 2021, available at https://www.janes.com/defence-news/news-detail/edge-consolidates-training-businesses; and Picard and Colby, “Hidden Costs.”

¹⁰⁴ “Documents Show Arms Network Skirted EU Embargoes,” Organized Crime and Corruption Reporting Project, October 2, 2017, https://www.occrp.org/en/investigations/7070-documents-show-arms-network-skirted-eu-embargoes; “From London to Juba: A UK-Registered Company’s Role in One of the Largest Arms Deals to South Sudan,” Amnesty International, 2017, https://www.amnesty.org/en/wp-content/uploads/2021/05/ACT3071152017ENGLISH.pdf.

¹⁰⁵ “EDGE Expands End-to-End Defence Capabilities With Addition of International Golden Group,” Aletihad, January 23, 2024, https://en.aletihad.ae/news/business/4458457/edge-group-adds-international-golden-group-to-portfolio-of-c.

¹⁰⁶ Neil Gordon, “The U.S. Just Created a Public Beneficial Ownership Registry for a Subset of Companies,” Project On Government Oversight, March 4, 2021, https://www.pogo.org/analysis/2021/03/the-u-s-just-created-a-public-beneficial-ownership-registry-for-a-subset-of-companies/.

¹⁰⁷ “Government Spending Open Data,” USAspending, accessed July 12, 2023, https://www.usaspending.gov/.