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BAE broke bribery pledge, faked US arms-export applications

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Further details have emerged regarding the US Department of Justice case against UK-headquartered arms globocorp BAE Systems. The feds - without argument from BAE - say that the company engaged in a "conspiracy" to violate several US laws in recent years.

In particular, the Justice department alleges that BAE broke a promise made in writing to the US Defense secretary in 2000 that all its non-US businesses would "comply with the anti-bribery provisions of the [US] Foreign and Corrupt Practices Act as if those provisions applied to us". BAE also affirmed its commitment to comply with OECD anti-bribery rules. The company followed this up with another letter in May 2002 saying that all this compliance was now fully in place.

But according to the feds, in charges filed with the District of Columbia US court (and supplied to the Register):

BAE Systems regularly retained what it referred to as 'marketing advisors'... BAE Systems took steps to conceal its relationships with certain such advisors and its undisclosed payments to them. For example, BAE Systems paid certain of its advisors through various offshore shell entities... in certain situations there was a high probability that part of the payments would be used in order to ensure that BAE Systems was favoured in the foreign government decisions... BAE Systems also at times obfuscated and failed to record the key reasons for the suitability of an advisor or to document any work performed by the advisor... relevant materials were maintained by secretive legal trusts in offshore locations.

Apart from breaking its promise to abide by the the Foreign and Corrupt Practices Act and the OECD convention, the Justice department says that BAE also violated US arms-technology export laws, in particular with respect to the supply of Gripen fighters to Hungary and the Czech Republic. The Gripen is made in Sweden, but like any modern Western military aircraft it contains large amounts of controlled US technology. As a result, US export clearance was necessary to supply Gripens to a third nation.

The DoJ court documents go on to say:

With respect to the lease of Gripen fighter jets to the Czech Republic and Hungary, and sales of other defense materials to other countries, BAE Systems caused the filing, by the applicant, of false applications for export licenses of US Munitions List defense materials and the making of false statements to the Directorate of Defense Trade Controls...

BAE has decided to make a deal with both the Justice investigators and the UK's Serious Fraud Office (SFO), pursuing the company over the supply of a radar system in Tanzania. BAE will plead guilty to conspiring to make false statements to the U.S. Government, and pay a fine of $400m. The firm will also plead guilty in the UK to breach of duty to keep accounting records, and pay a fine of £30m.

BAE chairman Dick Olver said in a statement on Friday:

"In 2000, the Company gave a commitment to the US Government... it subsequently failed to honour this commitment or to disclose its shortcomings.

"In connection with the sale of a radar system by the Company to Tanzania in 1999, the Company made commission payments to a marketing adviser and failed to accurately record such payments...

"The Company very much regrets and accepts full responsibility for these past shortcomings.

"In the years since the conduct referred to in these settlements occurred, the Company has systematically enhanced its compliance policies and processes with a view to ensuring that the Company is as widely recognised for responsible conduct as it is for high quality products and advanced technologies."

Recent BAE products have included the Type 45 destroyers, which seem set to remain almost totally unarmed several years into their career with the Royal Navy; also the Nimrod MRA4 subhunter planes, well over ten years late, full of foreign kit, based on the airframe of 1950s De Havilland Comets and set to cost as much as a fleet of space shuttles. The last time BAE made a jet on its own it produced the Tornado F3, the laughingstock of the fighter world.

So it would seem that Mr Olver's aspirations have already been realised: BAE Systems is indeed as widely recognised for responsible conduct as it is for quality products. ®

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