BAE Systems dogfight on bribery charges as arms giant battles to save 30,000 UK jobs after fraud office vows to prosecute [Daily Mail, 2009-10-02]

Publication: Daily Mail Issued: Date: 2009-10-02 Reporter: Matthew Hickley Reporter: Rupert Steiner

BAE Systems dogfight on bribery charges as arms giant battles to save 30,000 UK jobs
after fraud office vows to prosecute

Publication	Daily Mail
Date	2009-10-02
Reporter	Matthew Hickley Rupert Steiner
Web Link	www.dailymail.co.uk

Defence giant BAE Systems has pledged to fight Britain's largest corruption case to save tens of thousands of jobs.

The Serious Fraud Office yesterday announced plans to prosecute the arms contractor over alleged bribes linked to a string of deals around the world.

The firm has been involved in months of negotiations with the SFO, but has so far refused to agree on a plea bargain and a fine.

Probe: BAE Systems helps build the Eurofighter Typhoon, above. The arms giant is accused of using bribes worth hundreds of millions of pounds to win deals in South Africa, the Czech Republic, Romania and Tanzania

Last night legal experts accused the SFO of using strong-arm tactics to bully BAE into submission and said the draconian move would cripple a strategically vital British company.

Insiders said BAE had ruled out any deal if it involved the company receiving a criminal conviction for corruption.

They fear this would bar them from bidding for U.S. and EU military contracts - effectively cutting them off from their biggest markets.

Arms giant: Domes of the Astute nuclear powered submarine being constructed by BAE for the Ministry of Defence

BAE is the world's second largest arms company, employing 105,000 workers, including 32,000 in the UK.

It supplies personal equipment for British soldiers, and warships, fighter jets and submarines to more than 100 countries.

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But despite its huge commercial success the company has been blighted by allegations of corruption involving billions of pounds in kickbacks and bribes paid to foreign officials to secure huge deals.

The latest investigation centres on contracts BAE Systems won from Tanzania, the Czech Republic, Romania and South Africa between 1999 and 2004, and could lead to charges under the 2001 Prevention of Corruption Act.

BAE chairman Dick Olver, then chief executive Mike Turner and group finance director George Rose in 2004. Mr Turner has since been replaced by Ian King

Two years ago British ministers caused uproar by halting the Serious Fraud Office's investigation of alleged corruption surrounding BAE's massive £43billion Al Yamamah arms deal with Saudi Arabia, claiming the probe was against Britain's national interest. But inquiries into the other allegations were allowed to continue.

Well-placed sources have revealed that the SFO and BAE Systems have been locked in tense negotiations for months, with the prosecutors seeking a guilty plea while threatening fines of between £ 500million and £1billion.

With no deal reached, SFO bosses eventually lost patience and set a deadline which expired on Wednesday night.

In a sign of the extreme political sensitivity surrounding the case, sources have described how in recent weeks Downing Street, the Ministry of Justice and the Attorney General's office have all put pressure on the SFO to make its intentions clear and 'liaise more closely' with ministers - pressure which was resisted by the agency's director Richard Alderman.

The SFO has already spent £ 4.3million on the investigations.

Attorney General Baroness Scotland - herself under pressure for employing an illegal immigrant as her housekeeper - must now decide whether to approve or block the prosecution.

In a statement yesterday BAE said: 'If the Director of the SFO obtains the consent that he seeks from the Attorney General and proceedings are commenced, the company will deal with any issues raised in those proceedings at the appropriate time and, if necessary, in court.'

George Brown, an expert on global regulation at law firm Reed Smith, said the SFO faced an 'uphill struggle' to secure convictions.

He said: '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.

If there is a board of directors and there is dispersal of management . . . that is virtually impossible.'

Read more: http://www.dailymail.co.uk/news/article-1217300/BAE-Systems-set-charged-Serious-Fraud-Office-presses-ahead-aircraft-bribery-probe.html#ixzz0SnPFQtLQ

With acknowledgements to Matthew Hickley, Rupert Steiner and Daily Mail.