BAe pay £286m to settle corruption claims

Defence giant BAE Systems is to pay £286 million in fines and plead guilty to two criminal charges to settle corruption claims in the UK and US.

The settlement announced yesterday with the Serious Fraud Office (SFO) and US Department of Justice (DoJ) follows long-running probes into its business dealings across the world.

BAE will pay 400 million dollars (£255.7 million) to the DoJ and plead guilty to one charge of conspiring to make false statements to the US government.

The firm employs around 600 staff at Filton and in the Bristol area.

The charge relates to its US regulatory filings in the Czech Republic and Hungary, and its conduct in the US over the mammoth £43 billion Al-Yamamah contract with Saudi Arabia.

BAE will also pay £30 million in the UK for failing to keep "reasonably accurate" accounting records over activities in Tanzania – the SFO's largest settlement with a UK company.

The British charge relates to a £25m contract signed in 1999 to supply a radar system to Tanzania, and also to more than £7 million of payments to a former marketing adviser in the east African country.

Chairman Dick Olver said the settlement would help the firm draw a "very heavy line" under the corruption claims.

It comes four months after the SFO asked the Attorney General to pursue bribery allegations against BAE over its business dealings.

The SFO's own probe into Al-Yamamah was dropped in 2006 after intervention by then prime minister Tony Blair.

Mr Olver said the settlement would not affect its ability to trade in the US and Europe, while none of the counts related "to corruption, bribery or conspiracy to corrupt".

Saying the SFO had looked at the affair in a "very serious and pragmatic way", he added: "The company very much regrets and accepts full responsibility for these past shortcomings."

BAE has "systematically enhanced" its compliance policies and procedures in the decade since the conduct had taken place, it said.

The £30 million payout to the SFO will be made up of a fine set by a UK court with the remainder an "ex gratia payment" for the benefit of the people of Tanzania, BAE added.

Following BAE's settlement, the SFO said it was "no longer in the public interest to continue the investigation into the conduct of individuals".

As a result the SFO has dropped its corruption charge brought last week against Count Alfons Mensdorff-Pouilly, a former Austrian agent for BAE Systems.

The count was accused of bribing Government officials in the Czech Republic, Hungary and Austria in return for contracts for Gripen fighter jets, although his solicitor said last year that the accusations were groundless.

Speaking about yesterday's settlement, Richard Alderman, director of the SFO, said: "I am very pleased with the global outcome achieved collaboratively with the DoJ.

"This is a first and it brings a pragmatic end to a long-running and wide-ranging investigation."

The group will publish more details on the fine and its impact on the group's financial performance on February 18. In 2008 the group made pre-tax profits of £2.4 billion on worldwide sales of £18.5 billion.

Anti-arms trade campaigners said they were angered by the SFO's decision to settle with BAE.

Campaign Against Arms Trade (CAAT) said it meant there was "no opportunity to discover the truth" about the firm's bribery and corruption allegations.

CAAT spokesman Kaye Stearman said: "CAAT is outraged and angry that the allegations about BAE will not be aired in a criminal court and that the Serious Fraud Office has accepted a plea bargain relating only to the smallest deal.

"After the Government stopped the SFO's inquiry into the company's Saudi deals, it was even more important the truth about its dealings in central and eastern Europe and Africa was made public.

"One day a former BAE agent appears in court charged with corruption, the next BAE is let off for an accounting misdemeanour."

Nicholas Hildyard, for social justice campaigner The Corner House, called on the UK authorities to reopen its probe into the Al-Yamamah deal.

He said: "The company's admission obviously calls into question its repeated denials of any wrongdoing. Far from drawing a line under the allegations, the announcement simply raises far more questions and creates yet further demands for justice."

Former Attorney General Lord Goldsmith said that after the SFO dropped its probe into the Al-Yamamah deal he had urged it to continue with investigations into the firm's dealings in other countries.

He told BBC Radio 4's Today programme: "At the time I said to the director of the SFO 'There we are, there are particular problems in relations to Saudi Arabia, but I want you to pursue vigorously and rigorously the other investigations you have got', and I made sure that he had the money to do so.

"We are now seeing what the results of that are."

Lord Goldsmith said he "strongly supported" the SFO's new approach using plea bargaining.

"This is one of the most significant things about this settlement. It is the first time that there has been a plea bargain of this sort, and that is one of the things we are learning from the US," he said.

"That is the way to deal with these issues, to negotiate."