Publication: The Guardian Issued: Date: 2007-06-27 Reporter: David Leigh Reporter: Rob Evans

Taking On Foreign Bribe Suspects

 

Publication 

The Guardian
Date

2007-06-27

Reporter

 David Leigh, Rob Evans

Web Link

 www.guardian.co.uk

 

BAE is among the top 10 military suppliers to the Pentagon and also in the top ranks of foreign firms making campaign contributions to US congressmen. But the company does not yet carry the same political clout in the US as in Britain.

That was demonstrated by yesterday's US department of justice decision, which BAE was forced to announce to the London stock exchange, to mount a formal investigation into the Saudi arms deals which the British government had declared off-limits to UK police.

Mike Turner, BAE's chief executive, will now need to study a policy statement made last year by Alice Fisher, the US assistant attorney general in charge of policing America's 1977 Foreign Corrupt Practices Act.

She warned foreign companies that, in effect, Washington was coming to get them. "We are making sure ... competitors do not gain an unfair advantage," she told US lawyers: "We are working ... to ensure that the major foreign competitors to US companies are subject to the same stringent rules, and the same penalties for violating those rules, as US companies." Prosecuting alleged overseas bribe payers has become a priority for the justice department in recent years, with extra resources poured in.

Ms Fisher sent the most significant signal of all when her department's FCPA prosecutor, Mark Mendelsohn, last year won cases against two foreign companies, Scottish-based ABB Vetco Gray (UK), and the Norwegian Statoil.

They showed that the arm of the FCPA was getting longer. Vetco, an oilfield services company, paid $16.4m (£8.2m) in penalties for bribing Angolan, Kazakh and Nigerian officials to get oil-drilling equipment contracts. Three former executives charged were British and the charges covered gifts and hotel stays made in the US. Statoil was fined $10.5m for bribing an assistant of the oil minister of Iran, in return for inside information and a lucrative contract. Once again the connection with the US seemed minimal: $5m of bribes were routed through US banks. But that was enough to give Washington jurisdiction.

The BAE connection is based on similar use of the US banking system. The alleged £1bn transfers to Prince Bandar of Saudi Arabia, revealed first by the Guardian, went from London to Riggs Bank in Washington DC, where the prince was Saudi ambassador.

Under the FCPA it is illegal to pay any foreign official to assist in getting or keeping business, and also illegal to keep misleading accounts, disguising payments for example as "consultancy", "hospitality" or "support services" *1.

US prosecutors take a tougher approach compared with Britain's Serious Fraud Office. They have to move fast as cases run out of time after five years and force companies from an early stage to do deals.

The department of justice points to companies who have received lenient treatment if they "took disciplinary action against wrongdoers, irrespective of rank". It would require a radical change of posture for BAE to investigate the same route. But US sales make up 42% of its turnover.

With acknowledgements to David Leigh, Rob Evans and The Guardian.


*1       Especially in respect of Service Provider Agreements, and more especially where these "conflict with intention *2".

*2      What I'd like to see :