SFO aims to prosecute BAE Systems

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Britain’s Serious Fraud Office wants to prosecute Europe’s biggest defence contractor, BAE Systems, for corruption and bribery, and lawyers said big fines were possible, though securing a conviction would be difficult.
The SFO said today it would seek government consent to prosecute BAE after a long-running probe into arms deals in the Czech Republic, Romania, South Africa and Tanzania dating back to the 1990s.
“The SFO intends to seek the Attorney General’s consent to prosecute BAE Systems for offences relating to overseas corruption,” it said, though a spokesperson would not say when it would be ready to submit documents to the Attorney General.
BAE, which has denied the allegations, said in a statement it would continue to attempt to resolve the matter.
“The company will deal with any issues raised in those proceedings at the appropriate time and, if necessary, in court,” the group said in a statement.
BAE shares were down 4.5 % at 333.5 pence by 11:54 a.m., having risen nearly 12 % last month, valuing the firm at around £11.5 billion (R140 billion).
Reuters last week quoted sources close to the case as saying that the SFO wanted BAE to plead guilty and agree to a substantial fine by September 30 or face possible criminal prosecution.
Hundreds of millions
  
In December 2006, the SFO dropped an investigation of allegations of bribery of Saudi Arabia officials in an arms deal involving BAE after then-Prime Minister Tony Blair said the probe threatened national security. The investigation continued, however, into bribery allegations related to BAE sales to the other four countries.
Lawyers said BAE faced huge penalties if it was found guilty, but that such cases were notoriously difficult to prove.
“I would have thought it would go into hundreds of millions. The UK authorities will want to show that there is some sort of comity in relation to the way in which one deals with international corruption and will want to follow the lines of Germany and the US,” said George Brown, partner in Global Regulatory Enforcement at law firm Reed Smith.
Late last year, German industrial conglomerate Siemens, agreed to pay just over $1.3 billion (R9.9 billion)) to settle corruption probes in the US and Germany.
Howard Wheeldon, senior strategist at BGC stockbrokers, said the Anti-terrorism, Crime and Security Act 2001 extended UK corruption law to include bribery of overseas officials, but that if the case referred to events before that date it would be “very difficult for the SFO to build a case.”
Reed Smith’s Brown also noted that it was much easier to convict individuals of bribery or corruption than companies.
“To get a prosecution of the company you have to prove that the person who is the controlling mind and body of the company was involved in making the decisions,” he said, adding that a case could take 12-24 months to reach a conclusion.
South Africa`s Parliamentary official opposition Democratic Alliance (DA) party has welcomed the development.
DA shadow defence minister David Maynier said BAE Systems allegedly paid “millions of pounds in so-called ‘commissions` to secure the deal to supply fighter aircraft for the South African Air Force.
“The prosecution of BAE Systems represents the last best hope for us to get to the bottom of what really happened during the arms deal,” Maynier said in a statement.
“The public has a right to know who was paid and how much they were paid to sway the tendering process in favour of BAE Systems.
“If called upon to do so we hope that if officials from the (SA) police service and prosecution authority will continue to cooperate with the Serious Fraud Office in the United Kingdom.”



Pic: BAE Systems logo