To date, data on the arms trade and military-related services are still accessible and it is possible to produce a fairly detailed account of the level of production and its proceeds. But the public – warns a report by the Stockholm International Peace Institute (Sipri) – may not have access to a significant amount of data if the phenomenon of purchases of arms companies by private equity firms grows in the coming years. Sipri’s warning is contained in the latest report published at the beginning of December, according to which for the seventh consecutive year, the proceeds from arms sales will continue to grow: the data refers to 2021, the year following the outbreak of the Covid-19 pandemic, when the crisis in the distribution and supply chain limited the market’s possibilities and the war in Ukraine had not yet broken out.

The report in fact explains that, for data as early as 2021, part of the data on arms sales will not be accessible due to less stringent requirements for private investors: ‘Private equity companies,’ says Sipri, ‘are becoming increasingly active in the arms industry, particularly in the United States. This could affect the transparency of sales data due to less stringent financial reporting requirements than for public companies’.

In order to understand the significance of Sipri’s warning, one needs to understand what their economic-financial activity consists of: private equity is a form of medium- to long-term investment in unlisted companies with high growth and development potential (high-growth companies) mainly made by institutional investors with the aim of obtaining a substantial capital gain from the sale of the stake acquired or from the stock exchange listing. However, the term ‘institutional investor’ should not be misleading. This term refers to a generic private entity that invests financial resources on behalf of others, such as mutual funds or pension funds. These private entities then, in order to make a profit, enter the markets they find most promising. The arms market seems to be attractive as these companies are ‘increasingly active in the sector’, comments Sipri.

The reporting obligations, i.e. the process of accounting for the expenses actually incurred by the beneficiary, and any partners, in implementing the financed project initiative are stringent for public companies and more flexible for private ones. This situation ‘could affect the transparency of data’, the report adds: it would in fact prevent the knowledge of significant information on the arms market, i.e. the possibility of knowing who is buying and in what quantities. In this way, relations between countries, in such a relevant aspect as conflict, would escape public scrutiny. Actions would be further de-emphasised and a new piece of unknowability would be added to the complexity of the present.

It is not only Sipri, however, that expresses doubts about the transparency of private equity, as explained in an article by Insitutional Investor, a website dedicated to the sector, which cites an investigation by the Private Equity Stakeholder Project in collaboration with the Americans for Financial Reform Education Fund, two non-profit organisations, which published an assessment of the lights and shadows of private equity in a report listing and ranking the top eight private equity buyout firms invested in oil and gas.


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