Saturday, 18 December 2010
BAE could be fined tens of millions over bribes claims
Aerospace and defence giant BAE Systems is facing fines running into tens of millions of pounds after an inquiry by the Serious Fraud Office into allegations of bribery during arms and equipment sales. The SFO has been conducting a long-running corruption probe into the sale of aircraft and other equipment to South Africa, the Czech Republic and Tanzania. The SFO has now approached BAE with a deal under which the company will pay a fine rather than face a complex criminal trial. Hawk aircraft similar to this one are among the equipment at the centre of the corruption allegations facing BAE. It is understood that the company, which has until the end of the month to negotiate the deal, could face fines potentially running to tens of millions because the penalty will relate to the £2.5billion plus contracts rather than the scale of the alleged bribes. It could represent the biggest payout of its kind in British financial history.
The German firm Siemens recently agreed about £500million in fines to settle similar bribery allegations in America involving a £1billion slush fund. The deal is being offered under a US-style plea-bargaining system unveiled by the SFO last year, in which individuals and companies receive more lenient sentences if they admit wrongdoing. The system was brought in after criticisms of the SFO for its low conviction rate and its bruising battle over the BAE Systems bribery allegations. Its BAE inquiry started more than four years ago, and it has already spent millions on lawyers and other specialists on top of its own costs. Court documents lodged in South Africa contain claims suggesting that ‘commissions’ totalling £115million were paid to agents who helped BAE clinch a $1.6billion arms deal involving a 1999 contract for Hawk and Gripen aircraft. The SFO has also been examining alleged corruption relating to a Tanzanian air traffic control deal, thought to have been worth £28million, and in an abortive 2001 sale of fighter aircraft to the Czech Republic worth more than £1billion.
If the deal between BAE and the SFO goes ahead, it would be an extraordinary turnaround for the agency, which in 2006 dropped its probe into allegations that BAE paid bribes to Saudi Arabian government officials to secure lucrative arms contracts.The then Attorney General, Lord Goldsmith, had claimed that any breakdown of diplomatic relations with the Saudis could damage national security. But bribery inquiries relating to BAE sales to other countries remained under investigation. Some of these – thought to include Romania, Qatar and Chile – have been dropped. But sources say that intense negotiations are under way between the SFO and BAE regarding the three remaining deals. The Serious Fraud Office declined to comment. BAE Systems said: ‘The interests of the company as well as all of its stakeholders, including the general public, are best served by allowing the ongoing investigations to run their course.