Publication: The Times Issued: Date: 2009-12-18 Reporter: Helen Power     

Serious Fraud Office to reinterview BAE chiefs over alleged bribes

 

Publication 

The Times
Date

2009-12-18
Reporter Helen Power
Web Link www.business.timesonline.co.uk



Mike Turner

Mike Turner *9, former chief executive of BAE Systems


The Serious Fraud Office is preparing to re-interview BAE Systems executives under caution after being told that it has a strong case against the company *1, which is accused of paying bribes to win defence contracts.

Tim Langdale, QC, a legal expert appointed by the SFO to examine evidence, has told its director, Richard Alderman, that there are grounds for a prosecution *2, The Times has learnt.

Sources close to the SFO said that its investigators had already told a number of senior former BAE directors and executives that it would re-interview them under police caution next month. The arms contractor has consistently denied any wrongdoing.

The final decision over whether to bring a case rests with the Attorney General, Baroness Scotland of Asthal *3.

The SFO was forced to drop an earlier investigation *4 into alleged bribery by BAE in Saudi Arabia after an intervention by the Government. It warned that the inquiry was threatening Britain�s national security *5, claiming that the Saudi ruling family would withdraw co-operation with the UK over terrorism and foreign policy objectives. The SFO' former director, Robert Wardle, stepped down after dropping the case.

BAE Systems has had lengthy discussions with the SFO about a settlement and insiders say there is still a good chance that the manufacturer will be able to hammer out a compromise deal under which it will pay a large fine but avoid a criminal prosecution. It is understood that Mr Langdale also made his recommendation to the SFO contingent on the SFO receiving final documentary evidence *6 promised by co-operating authorities in overseas jurisdictions.

The SFO�s case against the arms contractor is two-pronged, with the company itself accused alongside a number of its employees. Insiders said that the fraud watchdog must prove the employees guilty in order to show that the company broke the law.

It is believed that the arms contractor's former chief executive, Mike Turner, has given evidence to the SFO, although it is not clear whether he is still part of the investigation. Mr Turner left BAE Systems two years ago and has been replaced by Ian King. It is understood that negotiations between BAE and the Government continue over a possible settlement of the bribery charges. The SFO has not spoken to BAE since negotiations over a deal collapsed in October, when the fraud prosecutor said that it was pressing ahead with its case.

Insiders told The Times that one of the major obstacles to a settlement is a European Union law on bribery that states that European governments must not give work to companies found guilty of corruption. The EU directive means that a criminal conviction could ruin BAE *8, which employs more than 100,000 people and is the biggest supplier to the British Armed Forces. Most experts believe that a financial settlement will be reached that will mean BAE admitting lesser charges not covered by the EU rules.

However, there is no precedent for a penalty. BAE is thought to have ruled out paying more than 30 million, while at one stage the SFO was asking for ten times that amount.

BAE said: BAE Systems has at all times acted responsibly in its dealings with the SFO, taking into account the interests of its shareholders and employees and the legal advice it has received.

The SFO declined to comment.

With acknowledgements to Helen Power and The Times.


*1       The logic is simple : if the SFO has been told that it has a strong case against the company, it must prosecute and prosecute without delay.

Indeed it is not an argument, it is a tautology.


*2      Knowing the nature of some of the evidence in the Hawk/Gripen deal, then the SFO had a case soon after 2005.

If it had thus wanted, the DSO had a case in 2000.


*3      If the SFO with the advise of an independent QC says there's a case, what discretion does Ma'am have?

Diddly I say unto ye.

Or has the UK gone back into the Third World where it was 500 years ago.


*4      The UK went back into the Third World where it was 500 years ago.


*5      There is simply nothing worse that corruption to threaten a nation's security.


*6      Well, there is plenty evidence from South Africa.

Even the marketing director of British Aerospace's International Marketing and Sales Organisation (IMSO), has admitted to receiving a 5 million pound sterling reverse commission.


*7      This is clearly the inside tack of the corporate accused which it will use if the plea bargain fails.

It will say that the employees were off on a splodge of their own (because the senior managers get performance bonuses while the executive get reverse commissions and share incentives).

The employees will say that they were acting on instruction or policy.

So the prosecution will have to prove both angles to get criminal convictions.

In reality, both legs are true.

Like Siemens AG, British Aerospace's business model is based on bribery and corruption, pure and simple.

If you own a Siemens hearing aid, or cellphone, or expresso machine, or dishwasher, or microwave oven, or PABX, or public telephone exchange, or traction engine or frigate integrated platform management system, throw it into the sea - it is rubbish.

Rather buy the equivalents from those other war criminals in Japan. At least they had the crap fully knocked out of them.


*8      And that is the crux of this biscuit.


*9      In my view, just the body language and sheepish smile are sufficient grounds for a conviction of bribery beyond any doubt whatsoever.