Corruption in the military has been around, world-wide, for a long time. In the last two decades a lot more of the details have emerged. This has been facilitated by better and cheaper communications (cell phones and the Internet) and the end of the Cold War (that eliminated the police state atmosphere that kept a third of humanity cloaked in layers of secrecy). Out of this came things like the Transparency International Corruption Perception Index. Started in the mid-1990s, these ratings are achieved by surveying local business people. This often reveals a lot of the bad behavior that goes on among government bureaucrats. The Transparency International poll is a largely voluntary effort that is accurate enough to be used for professional risk management analysis (an essential tool for banks, exporters, and potential investors).
With more data on corruption being collected by this “crowd sourcing” method there is enough data to reveal details of why there is so much corruption in military procurement and within many armed forces. What it comes down to is excessive secrecy and lack of any real fear of getting punished. Many countries declare all defense related matters state secrets and thus there is little monitoring of what is bought and from who and at what price. This is a perfect environment for thieving officials. Then there is the realization that for most countries war is rare and you can steal defense funds safely and weaken the military secure in the knowledge that if war does comes you can always find other reasons to explain the poor battlefield performance.
Corruption in military spending is an ancient problem, with some of the oldest known historical records complaining about it. In many cultures, past and present, it was taken as a given that, if you got a government job, you had a license to steal. In the military this means weapons are built in substandard ways, equipment is not properly maintained, and the troops are often not paid. Military corruption accounts for most of the poor military performance in the past, present, and future.
The corruption takes many forms. Mainly it is the idea that everything is for sale, like promotions and assignments. Lower ranking officers and NCOs will often sell weapons and equipment that was reported "destroyed" or "missing." Commanders who are not doing so well can pay to have reports of their performance upgraded. On the plus side, senior government officials tend to be aware of all this bad behavior and the impact it is having on the military. Thus they have doubts about how effective the military would be in another war and are thus encouraged to avoid getting into a war.
These ancient practices are becoming more difficult to sustain. For example, journalists now more carefully report military response to national disasters that employ troops to help out. Troops that have performance problems here will not do any better in combat, and often for the same reasons (decrepit and poorly maintained equipment and low morale because of poor living conditions and stolen pay). Even in countries (like China or Russia) where journalists are not supposed to report such embarrassing events, the journalists discuss it among themselves, and some of these discussions got onto the Internet and outside the country. While most governments try to keep details of military corruption out of the media, they cannot control the Internet. People love to gossip, especially in a police states. Even with all this new pressure, most governments (85 percent by one count) do not allow much access to what is going on with the defense budget. Can’t let the enemy know how much is being stolen now, can we.