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« Enforcement Report For Q3 '09 | Main | AGCO Resolves Iraq Bribe Charges »
Wednesday
Sep302009

SFO To Request Prosecution Of BAE

The U.K.'s Serious Fraud Office announced today that it intends to seek the Attorney General's consent to prosecute BAE Systems for offenses relating to overseas corruption. The agency said it will submit its request to the Attorney General "when the SFO considers it is ready to proceed." The SFO's statement (available here) said its decision "follows the investigation carried out by the SFO into business activities of BAE Systems in Africa and Eastern Europe."

The Times said the contracts investigated by the SFO involved "sales of aircraft in South Africa and the Czech Republic, purchases of two frigates in Romania, and radar equipment for air traffic control in Tanzania."

On September 5, the U.K. Mail reported that BAE -- the U.K.'s biggest defense contractor -- had been given until the end of the month by the Serious Fraud Office "to avoid a criminal trial for paying bribes." The BBC said today that the SFO "has been in long negotiations with BAE but these broke down after the sides could not agree on what the firm would admit or the fine it should pay. . . the SFO wanted to strike a deal that would involve BAE pleading guilty to charges of corruption and agreeing to pay a substantial sum in compensation -- between £500 million and £1 billion -- however no deal was done."

BAE's sales to Saudi Arabia will not be part of the request for a prosecution. The SFO dropped an investigation in December 2006 into allegations the company bribed members of the Saudi Arabian government in exchange for the sale of Typhoon jet fighters. The SFO said it had to stop the investigation after Saudi Arabia threatened to end anti-terrorism cooperation with the British government.

The U.S. Justice Department, meanwhile, is reportedly still investigating BAE's payments of about $2 billion to Saudi Prince Bandar bin Sultan. He was formerly ambassador to the United States and some of the payments allegedly passed through U.S. bank accounts he controlled.

Attorney General Baroness Scotland has final approval over BAE's prosecution. The case, according to the BBC, would be brought under the 2001 Prevention of Corruption Act and be decided by a judge without a jury. "It will take several weeks to prepare the papers for the Attorney General," BBC's report said, "and it is possible that the sides could still reach an agreement in that time."

BAE has 32,000 employees in the U.K. and about 105,000 worldwide. "The company is the principal contractor in the programs for the Eurofighter, the aircraft carriers and Joint Strike Fighter, and many other significant procurement projects," member of parliament Sir Menzies Campbell reportedly told Sky News. "These developments have a considerable impact on all of these projects." He said a decision to prosecute BAE could also give "protective" U.S. politicians an excuse to stop British firms getting contracts on the other side of the Atlantic.
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