BAE guilty of making improper payments – judge flays BAE

Campaign Against Arms Trade (CAAT) and The Corner House today welcomed the damning remarks of Mr Justice Bean accompanying the sentencing in the crown court of BAE Systems plc.

The judge expressed surprise that although the accounting mistake to which the company pleaded guilty was the result of a deliberate decision by one or more officers of BAE and the appointment of the marketing advisor, to whom huge payments were made, was approved personally by the chairman of BAE (Sir Richard Evans), no individual was charged.

The judge accepted that there was no evidence that BAE was party to an agreement to corrupt. But as he noted, they did not need to be because the company had explicitly structured its payments to the marketing adviser in Tanzania via offshore companies so that they placed them at two or three removes from any shady activity.

The payments to the adviser were made with the intention that he should have free rein to make such payments to such people as he thought fit in order to secure the Radar Contractfor BAE, but that BAE did not want to know the details.

Kaye Stearman of Campaign Against Arms Trade said:

Today’s sentencing is an indictment of BAE’s culpability. Whatever the level of the fine the judge’s remarks are damning.

Nicholas Hildyard of The Corner House says:

BAE has been convicted of an accounting misdemeanour that hid a major crime: concealing improper payments. The company will never be able to deny this in future.

As part of the plea agreement, the SFO has given wide ranging commitments not to investigate or prosecute BAE further, or to name or make allegations against the company in future. Mr Justice Bean expressed his surprise at finding a prosecutor granting a blanket indemnity for all offences committed in the past, whether disclosed or otherwise.

Because the settlement was structured so that any fine would be deducted from a PR payment BAE would make to Tanzania, the judge said that the Court was under moral pressure to keep the fine to a minimum so that the reparation is kept at a maximum.

Nicholas Hildyard added:

The tragedy of this outrageous plea agreement is that the Tanzanian government is unlikely to accept the payment if doing so would be to admit that officials had taken bribes. The SFO’s practice of plea agreements must be reviewed urgently if justice is to be served and to ensure that this travesty never happens again.

Notes

1. Campaign Against Arms Trade (CAAT) works for the reduction and ultimate abolition of the international arms trade together with progressive demilitarisation within arms producing countries. The Corner House aims to support democratic and community movements for environmental and social justice through analysis, research and advocacy.
2. Over the years the Serious Fraud Office (SFO) has investigated allegations of corrupt payments made in Austria, Chile, Czech Republic, Hungary, Qatar, Romania, Saudi Arabia, South Africa and Tanzania, totalling over £1 billion. The investigation regarding Saudi Arabia was dropped after the intervention of then Prime Minister Tony Blair in December 2006.

3. On 23 November 2010, BAE pleaded guilty to a single criminal offence charge at Westminister Magistrates Court, namely that:

   Between 01/01/1999 and 31/12/2005 at …, being an officer of British Aerospace Defence Systems Limited, knowingly and wilfully authorised default to be made by the company in that it failed to keep accounting records which were sufficient to show and explain the company’s transactions. Contrary to section 221 (5) and (6) of and Schedule 24 to the Companies Act 1985.

   In effect, BAE is pleading guilty to accounting errors in relation to the sale of a military radar system to Tanzania in 1999, with BAE agreing to pay a sum of up to £30 million.

4. As part of the plea bargain the SFO underook never to prosecute any individual in future if doing so involves alleging BAE Systems was guilty of corruption. CAAT and The Corner House attempted to challenge the plea bargain through a judicial review earlier this year.

   In their letter of 19 November to SFO Director Richard Alderman the two groups state:

   We remain deeply concerned about the terms of the plea bargain that the SFO has struck with BAE. …you disclosed that:

   BAe requested an undertaking form [sic] the SFO that in any future proceedings (to which BAe was not a party) the prosecution would not allege that the company was guilty of corruption.

   Despite repeated requests, the SFO has not released further details of this undertaking.

5. Further information about BAE’s radar deal with Tanzania can be found here.
6. More information on the SFO’s plea bargain with BAE and the legal challenge brought by CAAT and The Corner House can found here.

ENDS