UK fraud office threatens to prosecute BAE Systems
Written on October 3, 2009
Britain’s Serious Fraud Office (SFO) said on Thursday it was prepared to prosecute BAE Systems
for bribery but stopped short of formally requesting a criminal trial of Europe’s biggest defense contractor.
Legal experts said BAE could face penalties of hundreds of millions of pounds if found guilty but said that securing a conviction would be very difficult, and that both sides would probably still seek to reach an out of court settlement.
BAE is facing allegations it used bribery and corruption in arms deals in South Africa, Tanzania, Romania and the Czech Republic dating back to the 1990s.
The SFO said it intended to ask the Attorney General for permission to prosecute BAE but did not give a timeframe, saying only that it would file the necessary paperwork “when the SFO considers it is ready to proceed.”
Reuters last week quoted sources close to the case as saying that the Serious Fraud Office wanted BAE to plead guilty and agree to a substantial fine by September 30 or face possible criminal prosecution.
TRACE International, a not-for-profit body that helps companies combat bribery, criticized the SFO for setting a deadline and then undermining its credibility by not moving quickly to indict BAE when the deadline was missed.
“The SFO’s strategy on the BAE matter is not at all clear,” said Alexandra Wrage, TRACE president and author of “Bribery and Extortion: Undermining Business, Governments and Security.”
“It’s difficult to see what incentive BAE has to do anything but proceed on the course it was on before the SFO started saber-rattling,” she added.
Christopher Grierson, bribery and corruption task force partner at law firm Lovells, also described the SFO’s words as “a little bit like saber-rattling” but said the watchdog was sharpening its act to show it can be as tough on corruption as other jurisdictions such as the United States.
For its part BAE said it would only go to court “if necessary” and that it continued “to expend considerable effort seeking to resolve (the issues), at the earliest opportunity.”
Shares in BAE, the Pentagon’s No. 5 supplier by sales, closed down 4.4 percent at 334 pence.
“HUNDREDS OF MILLIONS”
A spokesman for the Attorney General said that, as in all cases, she would only assess whether there was sufficient evidence for a prosecution and whether one was in the public interest once any file had been received from the SFO.
In December 2006, the SFO dropped an investigation of allegations of bribery of Saudi Arabian officials in an arms deal involving BAE after then-Prime Minister Tony Blair said the probe threatened national security.
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