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Wednesday
Oct152014

Will GPT be the SFO's next BAE?

The Financial Times reported Friday that anti-corruption groups, (Global Witness, Transparency International and Corruption Watch) had written to the Prime Minister and the Director of the Serious Fraud Office raising concerns about the integrity of the SFO’s investigation into the sale by GPT Special Project Management, an Airbus subsidiary, of communications equipment to the Saudi National Guard.

The detailed background and allegations relating to this investigation were set out during the summer in Private Eye Edition No 1370 which also expressed concern that either the investigation would be terminated on national security grounds (as in the BAE Al-Yamamah investigation) or would be the subject of a deferred prosecution agreement.

It may be recalled that Corner House’s unsuccessful legal challenge to the termination of the SFO’s BAE investigation in 2006 revealed a serious lacuna in the efficacy of Art. 5 of the OECD Convention on Combating Bribery, namely, the extent to which national authorities were prevented from taking prosecution decisions by reference to national or international security considerations.

Art. 5 says,

Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.

The UK’s highest court rather lamely ducked the issue:

“The extreme difficulty of resolving this problem on a principled basis underlines the desirability of resolving an issue such as this in the manner provided for in the Convention.” (Art.12)

It went on to hold that the OECD Convention, being an unincorporated treaty, did not create enforceable rights to review non-compliant prosecutions. So it didn’t matter whether the Director was right to take account of Art. 5 because he was entitled to terminate the investigation for national security reasons. The court's decision is here.

Not surprisingly both the BAE and GPT cases were highlighted in the EU’s anti-corruption report on the UK dated February 2, 2014, which expressed concern that defense contracts were vulnerable to foreign bribery and that national security considerations could obstruct oversight and accountability. It also expressed concern about the revolving doors between public and private in the defense sector.

What alerted the anti-corruption groups to enter into unpublished correspondence with the authorities at this juncture is unclear but it hardly takes a fortune-teller to divine that for various geo-political reasons the national security card may yet be played again in some form or other. Notwithstanding ratified and implemented global anti-corruption conventions, the national security issue is likely to remain an opaque one for anti-corruption enforcement purposes. 

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Alistair Craig, a commercial barrister practicing in London, is a frequent contributor to the FCPA Blog.