BAe Systems Investigated for Bribery

[Steve Davies]

How are the US investigations into BAe Systems going? And are there any similar investigations ongoing into US defence companies?

Source: BBC

BAE Systems faces bribery charges

The SFO investigation refers to deals with a number of countries BAE Systems faces bribery chargesafter the Serious Fraud Office (SFO) said it would ask the AttorneyGeneral to prosecute the firm.

The SFO has been in longnegotiations with BAE but these broke down after the sides could notagree on what the firm would admit or the fine it should pay.

The case refers to allegations BAE paid millions of pounds to win contracts from several countries.

BAE admitted last year it had not always met the top ethical standards.

Itadded that it had been working with regulators to help theinvestigation "providing access to people, information and premiseswhenever requested".

A separate investigation into BAE by the SFO was dropped in 2007 after it was decided that national security was at risk.

In that case, the SFO ended its investigation into a giant 1980s arms deal BAE secured from Saudi Arabia.

'Explosive investigation'

The latest SFO investigations are into contracts BAE won fromcountries including Tanzania, the Czech Republic, Romania and SouthAfrica.

The BBC understands that the SFO wanted to strike adeal that would involve BAE pleading guilty to charges of corruptionand agreeing to pay a substantial sum in compensation - between £500mand £1bn - however no deal was done.

BBC business editor RobertPeston said the continuing probe was "the most explosive investigationinto a British company that I have ever encountered".

He addedthat, while BAE would like to settle the case through a plea bargain,its management had a legal duty not to hand over cash or damage thereputation of the firm unless they were advised by their own lawyersthat the SFO had an overwhelming case.

THE STORY SO FAR... Allegations that BAE contracts have been won through bribery payments are not newThe biggest probe focused on a £43bn contract tosupply more than 100 fighter jets to Saudi Arabia. The deal began in1985 but a National Audit Office investigation was suppressed in 1992The SFO launched an investigation in 2004 into theallegations - including BAE running a "slush fund" that offeredsweeteners to Saudi royals and their intermediaries in return forlucrative contractsThis was dropped two years later by Tony Blair afterpolitical pressure from the UK and Saudi Arabia. BAE always denied anywrongdoing Criminal charges would be brought under the 2001 Prevention ofCorruption Act, but conviction would be decided by a judge withoutneeding a crown court trial in front of a jury.

A finaldecision on whether to proceed with criminal proceedings will have tobe made by the Attorney General Baroness Scotland.

It will takeseveral weeks to prepare the papers for the Attorney General - and itis possible that the sides could still reach an agreement in that time.

The firm is the UK's largest manufacturer - making everythingfrom British Army kit to warships and planes. It has about 105,000employees worldwide, including about 32,000 in the UK with customers inmore than 100 countries.