Judge's refusal of permission
to apply for Judicial Review of SFO-BAE-Tanzania settlement
by Honourable Mr Justice Collins
first published 22 March 2010
On 22 March 2010 (although released only on 24 March 2010), a High Court judge, the Honourable Mr Justice Collins, refused to grant permission to Campaign Against Arms Trade (CAAT) and The Corner House to bring a judicial review of the Serious Fraud Office (SFO) 5 February decision to make a plea bargain settlement with BAE Systems and to drop "conspiracy to corrupt" charges against a BAE former agent.
"The ultimate question is whether corruption in the form of bribery should be charged against BAE Systems and Count Mensdorff-Pouilly", he stated. By his refusal, he concluded that it should not.
On the SFO's 1 October 2010 press release stating that the SFO intended "to prosecute BAe Systems for offences relating to overseas corruption . . . in Africa and Eastern Europe", the judge ruled that the legal challenge "cannot turn on the construction [or wording of the press release] as if it was a legislative provision", even though "it was undoubtedly drafted in an unsatisfactory way" (para. 3) The SFO Director had said in his Resistance that the press release "overstated" the case.
Paragraph 5 of the Judge's refusal outlines four factors he believed the SFO Director was entitled to take into account when making his decision to prosecute BAE only for accounting irregularities in its Tanzania deal and not for corruption offences in its Eastern European and South African contracts:
- BAE had made a settlement with the US Department of Justice on the Eastern European deals ("the US decision");
- "the steps taken by BAE to remedy what had gone before" [the SFO had stated that "the company had taken substantial steps to transform itself as an organisation", but had not outline what these steps were, para 14.5];
- "the substantial sums which would benefit Tanzania" [as part of the SFO's settlement, BAE agreed to make a payment of £30 million, "most of which was to be used for the benefit of the people of Tanzania" (SFO Resistance, para. 14.2). In the US, in contrast, BAE agreed "to pay a financial penalty of $400 million", about £256 million (para. 14.3), which will go to the US state];
- "the effect of a corruption conviction on the future of BAE", consideration of which was not, according to Justice Collins, prohibited by Article 5 of the OECD Anti-Bribery Convention. [The SFO Director had argued that a corruption conviction could mean that BAE was debarred from tendering for public contracts in the EU under Article 45 of the EU Public Sector Procurement Directive. Article 5 of the OECD Anti-Bribery Convention prohibits a prosecutor from stopping a corruption investigation or prosecution on national economic grounds.]
Justice Collins accepted that there were "potential difficulties in establishing criminal liability prior to 2002" (even though this point had been raised only by BAE Systems, the subject of the criminal investigation, not by the Serious Fraud Office itself) and in establishing the liability of the company (as opposed to individuals) for corruption because of challenges in identifying its "controlling mind", that is, whether senior executives were involved in the alleged corruption or not.
The judge stated that it was "reasonable" for the SFO Director to drop the prosecution against a former BAE agent, Count Mensdorff-Pouilly.