BAE legal action launched

12 February 2010


LEGAL CHALLENGE LAUNCHED of UK Serious Fraud Office's BAE settlement

As part of its continuing efforts to press the UK government to stop
turning a blind eye to the corrupt activities of British corporations
abroad, The Corner House this week joined Campaign Against Arms Trade
(CAAT) to request a judicial review of a recent controversial plea
bargain that would let arms manufacturer BAE Systems off the hook for
alleged bribery in several European and African countries.

Nicholas Hildyard, for The Corner House, said of the decision by the
UK's Serious Fraud Office (SFO) to allow the deal:

'Plea bargains should only ever be entertained when companies have
really come clean. BAE has not. Once again, an SFO decision has
reinforced the UK's reputation for letting big companies get away with
bribing.'

He added:

'The SFO's blatant disregard for the rule of law is damaging lives and
democracy abroad. We are undertaking this action in solidarity with all
those affected.'

Lawyers acting on behalf of The Corner House and CAAT wrote to the SFO
Director on Friday 12 February to signal their intention to request the
judicial review of the SFO-BAE settlement.

Under the SFO settlement, announced on 5 February 2010, BAE would plead
guilty to minor charges of 'accounting irregularities' in its 1999 sale
of a radar system to Tanzania for which the SFO proposed it should pay
penalties of 30 million pounds sterling. The SFO would not bring charges
relating to alleged bribery and corruption in BAE's arms deals elsewhere.

The basis for the legal challenge is that, in reaching this settlement,
the SFO failed properly to apply prosecution guidance (including its own
guidance). In particular, the plea agreement fails to reflect the
seriousness and extent of BAE's alleged offending, which includes
corruption and bribery, and to provide the court with adequate
sentencing powers.

The groups also argue that the SFO has unlawfully concluded that factors
weighing against prosecuting outweigh those in favour.

Kaye Stearman, CAAT's spokesperson, says: 'It is in the public interest
that BAE should not be let off the hook.'

The groups' lawyers also requested that the Serious Fraud Office delay
applying for court approval of its settlement with BAE Systems. If it
does not do so, the two groups will seek an injunction against the court
application.


Click on the link to read the letter, background and grounds:
http://www.thecornerhouse.org.uk/pdf/document/JRLetterBeforeClaim.pdf



BACKGROUND

1.
In December 2006 the SFO dropped its bribery and corruption
investigations into BAE's arms sales to Saudi Arabia, following pressure
from BAE and Saudi Arabia and a direct intervention from then Prime
Minister Tony Blair. The decision was subject to severe criticism and
prompted CAAT and The Corner House to launch a Judicial Review of the
decision. In April 2008, the High Court ruled that the SFO Director had
acted unlawfully by stopping the investigation; that decision was
subsequently overturned by the House of Lords in July 2008, which ruled
that he acted lawfully because he was faced with a threat to national
security.

For background and key documents, see: http://www.controlbae.org/jr


2.
On 1 October 2009 the SFO began drawing up legal papers to recommend
prosecution of BAE, following its six-year investigation into alleged
bribery in BAE arms deals with several other countries (Chile, Czech
Republic, Qatar, Romania, South Africa and Tanzania). BAE is alleged to
have paid bribes, often in the form of commissions to 'advisers' to
clinch the deals.

For a summary of these investigations, see:
www.caat.org.uk/issues/bae/bae_investigations.php

Campaign Against Arms Trade (CAAT) and The Corner House welcomed this
decision: http://www.thecornerhouse.org.uk/item.shtml?x=565973


3.
Under the SFO settlement announced on 5 February 2010, however, BAE
would plead guilty to minor charges of 'accounting irregularities' in
its 1999 sale of a radar system to Tanzania for which the SFO proposed
it should pay penalties of 30 million pounds sterling. The SFO would not
bring charges relating to alleged bribery and corruption in BAE's arms
deals elsewhere.

This settlement was announced in conjunction with a much larger
settlement made by the US Department of Justice with BAE. Under this
settlement, BAE admitted making false statements in 2000-2002 in
relation to BAE's arms deals with Saudi Arabia and passing covert
payments through the United States in regard to its arms deals in
Central European countries. It will be fined $400 million (256 million
pounds sterling). Because it has not pleaded guilty to corruption
charges, BAE can continue to bid for US military contracts.

CAAT and The Corner House expressed outrage at the settlement:
http://www.thecornerhouse.org.uk/item.shtml?x=565972


4.
The Corner House website:
http://www.thecornerhouse.org.uk/subject/corruption
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