BAE Systems settles corruption claims

8 February 2010

8 February 2010 | Helen Gilbert

Defence giant BAE Systems is to pay £287 million in fines in the US and UK to settle allegations over its conduct.

The company has been under investigation by the US Department of Justice (DoJ) since June 2007 and the UK Serious Fraud Office (SFO) since November 2004. It will now pay $400 million (£257 million) and £30 million to these organisations respectively.

BAE agreed it would plead guilty to one charge of conspiring to make false statements to the US government in connection with “certain regulatory filings and undertakings”.

BAE will also plead guilty to one charge of failing to keep reasonable accounting records in relation to payments made to a former marketing adviser in Tanzania. The company said this was in connection with the sale of a radar system in 1999.

The DoJ said BAE was charged with “intentionally failing to put appropriate, anti-bribery preventative measures in place” and “making hundreds of millions of dollars in payments to third parties” in an attempt to win deals overseas.

“BAE Systems allegedly failed to disclose these payments to the State Department, as it was required to do under US laws and regulations in order to get necessary export licenses,” it added.

SFO director Richard Alderman said he was pleased with the outcome achieved collaboratively with the DoJ. “This is a first and it brings a pragmatic end to a long-running and wide-ranging investigation,” he said.

In a statement, BAE Systems’ chairman Dick Olver said the company regretted “past shortcomings” and has improved internal governance.

“These settlements enable the company to deal finally with significant legacy issues. In the years since the conduct referred to in these settlements occurred, the company has systematically enhanced its compliance policies and processes with a view to ensuring that the company is as widely recognised for responsible conduct as it is for high quality products and advanced technologies,” he said.

As a result of the settlement, the SFO has dropped proceedings against Count Alfons Mensdorff-Pouilly, who was accused of conspiring with others to bribe public officials in Europe to win fighter jet deals for the defence supplier. The SFO said it was “no longer in the public interest to continue the investigation into the conduct of individuals”.

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