Publication: Business Day Issued: Date: 2007-02-09 Reporter: Jonathan Katzenellenbogen

Business Leaders Urge Bribery Probe

 

Publication 

Business Day
Date 2007-02-09

Reporter

 Jonathan Katzenellenbogen

Web Link

www.businessday.co.za

 

The British government is coming under new pressure to vigorously pursue its investigation into allegations of bribery by UK defence industry giant BAE Systems in SA and Tanzania.

The UK last year dropped an investigation into alleged bribery of Saudi officials on the grounds of national interest.

Letters by two of the UK’s most senior business leaders to a senior Liberal Democrat party MP, Vincent Case, make clear their concern that all cases of bribery be prosecuted.

The letters were leaked earlier this week to the UK Channel 4 TV news.

Anglo American chairman Sir Mark Moody-Stuart wrote to Case that the UK government’s “handling of the affair has damaged the reputation of Britain and that the efforts of many responsible companies to build transparent relationships in overseas operations and contract negotiations will be set back and affected by suspicion and compromise”.

Paul Skinner, chairman of Rio Tinto, a large mining company which also has interests in SA, writes: “Our objective in this area is to make it clear to governments that the business interest lies in the widest possible international commitment to anticorruption rules, so that we may compete on a level playing field and on a sound ethical and legal basis.”

With the UK Serious Fraud Office (SFO) having dropped its investigation into BAE Systems’ dealings with Saudi Arabia, the SFO now needs to show its muscle on the South African and Tanzanian cases, say observers.

The Saudis are reported to have threatened to cancel defence contracts and intelligence sharing with the British if the SFO continued its investigation into bribery allegations. In the case of SA, the SFO are reportedly looking into payments made by Red Diamond, a BAE Systems subsidiary based in Switzerland, to Fana Hlongwane, an adviser to former defence minister Joe Modise. After a year-long appeal from the British for help, the Scorpions have now agreed to begin co-operating with the SFO on the investigation.

President Thabo Mbeki has said the investigation into the South African case should go ahead.

However, at the World Economic Forum’s annual meeting in Davos, Switzerland, last month, Mbeki charged that UK Prime Minister Tony Blair was guilty of applying dual standards by dropping the probe into BAE Systems’ alleged bribery of Saudi officials, while pursuing an investigation into BAE’s African deals.

Blair’s government is also under pressure to show that the UK is not a country of lax regulation as London is competing with New York for the top position as a world financial centre.

This week, visiting British Foreign Aid Minister Hillary Benn said “one decision taken on one case does not mean we are going soft on corruption. Look at the broad range the things we are doing.”

With acknowledgements to Jonathan Katzenellenbogen and Business Day.