BAE guilty but escapes court: Denial of justice, say groups

PRESS RELEASE, 5 February 2010

Campaign Against Arms Trade (CAAT) and The Corner House are disappointed and angered by today's settlement between the UK's Serious Fraud Office (SFO) and BAE Systems of its long-running investigations into bribery allegations.

BAE has pleaded guilty in the UK only to minor accounting record offences in its sales to Tanzania of an air radar system and has agreed to pay a penalty of £30 million.

The SFO has been investigating bribery and corruption allegations in BAE's deals in several other countries besides Tanzania (including Austria, Chile, Czech Republic Romania, South Africa, Sweden and Switzerland), some of which were continuing right up until today. On 29 January 2010, the SFO charged a former BAE agent with corruption in relation to deals with several European countries.*

Today's settlement involves a lesser offence that took place in an economically weak country, but ignores allegations of much greater wrongdoing (in terms of both activities and monies involved) in the UK and other countries, all of whom are politically stronger or are close allies with the UK.

The two groups say that questions must be asked about why, how and when the decision to settle was made and whether undue influence was placed on the Serious Fraud Office. The SFO had indicated in October last year that it wanted to impose penalties of hundreds of millions of pounds, but BAE was reportedly prepared to pay only a fraction of that.

Kaye Stearman, spokesperson for CAAT, says:

"We are extremely disappointed that the allegations about BAE will not be aired in a criminal court and that the Serious Fraud Office has accepted a plea bargain relating only to the smallest deal. After the UK Government stopped the SFO's inquiry into the company's Saudi deals back in December 2006, it was even more important that the truth about its dealings in central and eastern Europe and Africa was made public. One day a former BAE agent appears in court charged with corruption, the next BAE is let off for an accounting misdemeanour."

Nicholas Hildyard of The Corner House says:

"This settlement means that the truth about these serious allegations against BAE may never be known. The UK fine may well be unprecedented, but will easily create the perception that alleged bribers can simply pay their way out of trouble. It is barely one-third of the money Tanzanians forked out for something they didn't need, money that could have gone on roads, hospitals and schools."

BAE also pleaded guilty in the United States to conspiring to make false statements to the US government in relation to payments and support services provided as part of the £40 billion Al-Yamamah contract to supply military equipment to Saudi Arabia. It will pay a fine of $400 million.

Back in December 2006, then SFO Director Robert Wardle believed he, too, had enough evidence to prosecute BAE on lesser false accounting charges in its Saudi Arabian deals, but was still not given permission by the Attorney General to do so.

Nicholas Hildyard for The Corner House commented:

"Given BAE's admission of guilt today in the US concerning the Al-Yamamah contract, the UK should re-open its own Saudi Arabian investigation immediately. The company's admission obviously calls into question its repeated denials of any wrong-doing. Far from ending the long-running and wide-ranging investigations, today's announcement simply raises many more questions about the UK's kow-towing to alleged bribers and creates yet further demands for justice."

ENDS

*Postscript

Late on 5 February 2010, the Serious Fraud Office announced that it was withdrawing proceedings against Count Alfons Mensdorff-Pouilly. He had been granted bail of £1 million on Thursday 4 February 2010.

Notes

1. Campaign Against Arms Trade (CAAT) works for the reduction and ultimate abolition of the international arms trade. The Corner House aims to support democratic and community movements for environmental and social justice through analysis, research and advocacy.
2. In December 2006, the UK's Serious Fraud Office (SFO) dropped its investigations into alleged bribery and false accounting in BAE's arms sales to Saudi Arabia, following pressure from BAE and Saudi Arabia and a direct intervention from then Prime Minister Tony Blair. The decision was subject to severe criticism and prompted CAAT and The Corner House to launch a Judicial Review of the decision. In April 2008, the High Court ruled that the SFO Director had acted unlawfully in stopping the investigation, a decision that was subsequently overturned by the House of Lords.
3. In October 2009, the SFO stated that it would begin to draw up legal papers to prosecute BAE following its six-year investigation into alleged bribery in BAE arms deals with several countries (Chile, Czech Republic, Qatar, Romania, South Africa and Tanzania). BAE is alleged to have paid bribes, often in the form of commissions to "advisers" on the deals, to clinch the sales. This announcement came after BAE reportedly rejected the SFO's "plea bargain" offer under which BAE would plead guilty to some charges and pay a fine, reportedly in the region of £300-500 million.
4. On 29 January 2010, the SFO charged Count Alfons Mensdorff-Pouilly with conspiracy to corrupt in connection with BAE's deals with eastern and central European governments including the Czech Republic, Hungary and Austria.