BAE will be charged after SFO bribery probe

 

BAE Systems is to face prosecution over bribery allegations that the firm paid out millions of pounds to win contracts, the Serious Fraud Office said today.

Eurofighter Typhoon

Flying into a storm: The sale of BAE aircraft to South Africa was part of the Serious Fraud Office's investigations.

The fraud watchdog this morning pushed ahead with a prosecution of the arms company after last-ditch talks with BAE's lawyers at its offices failed to make progress.

The Attorney General will now have to make the final decision about criminal proceedings.

BAE is accused of paying hundreds of millions of pounds of bribes to win deals worth billions in South Africa, the Czech Republic, Romania and Tanzania.

It is claimed the firm, which is Britain's biggest defence contractor, could be forced to pay out between £500mn and £1bn if the SFO goes ahead.

The case represents six years of investigations, and the outcome could be hugely significant to the UK firm's business. It has always denied the allegations.

A different claim about an arms deal with Saudi Arabia was dropped in 2007 on grounds of national security after then Prime Minister Tony Blair stepped in.

The latest case involves 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.

BAE has been immersed in negotiations over a possible plea bargain, under which it would admit its guilt and pay fines that could reach hundreds of millions of pounds.

Under that plan, the SFO would have asked BAE to pay a fine relating to the value of the contracts under investigation, rather than face criminal charges. That could have meant a payment of between £500m and £1bn.

The SFO had set a deadline of midnight last night for BAE to come forward with an acceptable offer, but talks between director Richard Alderman and the firm's lawyers yesterday did not bear fruit.

The SFO declined to comment last night. The firm said: 'BAE Systems' view is that 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.' Attorney General Baroness Scotland must decide whether to permit the SFO to proceed with the case. If it were to be found guilty, BAE could be barred from contracts in the EU and the US. Senior Lib Dem MP Sir Menzies Campbell said the potential implications were 'serious, not just for BAE but for Britain's defence capacity'.

'The company is the principal contractor in the programmes for the Eurofighter, the aircraft carriers and Joint Strike Fighter which is to go on them, and many other significant procurement projects,' he said. 'These developments have a considerable impact on all of these projects.'

A decision to prosecute could also give 'protective' US politicians the excuse to stop British firms getting contracts on the other side of the Atlantic, he added.

Liberal Democrat frontbencher Norman Lamb branded the situation a 'political scandal' and welcomed the move to go to the Attorney General. 'It's the right course of action and I would expect, provided the evidence is there which I believe it is, the Attorney General to give approval to a prosecution taking place,' he said.

'If an agreement could be struck for guilty pleas with an agreed sum of confiscation then that's fine by me, but I think it goes beyond that because I think this is a political scandal as well as a corporate scandal and I think we've got to establish why the Government was in such an incestuous relationship with this company.' BAE Systems and years of corruption allegations

BAE is the second largest global defence company, employing 105,000 people across the world. Its sales topped £18.5bn last year.

It makes everything from British Army kit to warships and planes and sells to the UK, US, Sweden, Australia, India and Saudi Arabia.

The firm has been dogged by corruption allegations for years and has faced probes over its business practices in countries across the world.

For the UK, the most controversial was into a mammoth £43bn contract to supply more than 100 fighter jets to Saudi Arabia.

It was alleged the firm ran a multi-million pound 'slush fund' offering sweeteners to Saudi royals and shady intermediaries in return for lucrative contracts.

The Al-Yamamah deal, as it was called, was signed by Saudi defence minister Prince Sultan and then defence secretary Michael Heseltine in 1985.

Anti-arms trade campaigners were appalled that Britain was supplying military hardware to a regime with a reputation for human rights abuses and torture.

Allegations soon began to emerge that the contract had been won through bribery payments.