2010: baes had to pay 2 settlements:
-Under the agreement with the usa doj, which requires court approval, the Company will plead guilty to one charge of conspiring to make false statements to the U.S. Government in connection with certain regulatory filings and undertakings. The Company will pay a fine of $400m and make additional commitments concerning its ongoing compliance.
-Under the agreement with the Sfo, serious Fraud Office, the Company will plead guilty to one charge of breach of duty to keep accounting records in relation to payments made to a former marketing adviser in Tanzania. The Company will pay an agreed penalty of £30m comprising a fine to be determined by the Court with the balance paid as a charitable payment for the benefit of Tanzania….“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 in its accounting records. The Company failed to scrutinise these records adequately to ensure that they were reasonably accurate and permitted them to remain uncorrected.
BAE Systems plc (BAES) pleaded guilty today in U.S. District Court in the District of Columbia to conspiring to defraud the United States by impairing and impeding its lawful functions, to make false statements about its Foreign Corrupt Practices Act (FCPA) compliance program, and to violate the Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR), announced Acting Deputy Attorney General Gary G. Grindler. BAES was sentenced today by U.S. District Court Judge John D. Bates to pay a $400 million criminal fine, one of the largest criminal fines in the history of DOJ’s ongoing effort to combat overseas corruption in international business and enforce U.S. export control laws.
“Today, BAE Systems pleaded guilty to knowingly and willfully making false statements to U.S. government agencies. The actions of BAE Systems impeded U.S. efforts to ensure international trade is free of corruption and to maintain control over sensitive U.S. technology,”
The remediation measures BAE Systems has undertaken, in conjunction with its agreement to retain an independent compliance monitor
“Corporations and individuals who conspire to defeat CL not only cause harm, but also shake the public’s confidence in the entire system.”
baes gave false statements to circumvent U.S. export laws, and to defraud the U.S. Government. baes violated U.S. export controls to unlawfully/fraudulently acquire sensitive technologies
BAES is a multinational defense contractor with headquarters in the United Kingdom and with a U.S. subsidiary – BAE Systems Inc. – headquartered in Rockville, Md. None of the criminal conduct described in the plea involved the actions of BAE Systems Inc.
from 2000 to 2002, BAES represented to various U.S. government agencies, including the Dodj, that it would create and implement policies and procedures to ensure its compliance with the anti-bribery provisions of the FCPA, as well as similar, foreign laws implementing the (OECD) Anti-bribery Convention…..but,.. BAES knowingly and willfully failed to create mechanisms to ensure compliance with these legal prohibitions on foreign bribery. According to court documents, the gain to BAES from the various false statements and failures to make required disclosures to the U.S. government was more than $200 million.
BAES made payments to shell companies and third party intermediaries that were not subjected to the degree of scrutiny and review to which BAES told the U.S. government the payments would be subjected. BAES admitted it regularly retained “marketing advisors” to sell defense items without scrutinizing those relationships. instead, BAES took steps to conceal its relationships with these advisors and its nondisclosed payments to them. For example, after May 2001, BAES contracted advisors through offshore shell companies beneficially owned by BAES. BAES also encouraged certain advisors to establish their own offshore shell companies to receive payments from BAES while disguising the origins and recipients of these payments. BAES admitted that it established one company in the British Virgin Islands (BVI) to conceal its marketing advisor relationships, including who the advisor was and how much it was paid; to create obstacles for investigating authorities to penetrate the arrangements; to circumvent laws in countries that did not allow such relationships; and to assist advisors in avoiding tax liability for payments from BAES.
Through this BVI entity, from May 2001 onward, BAES made payments totaling more than £135 million, even though BAES was aware there was a high probability that part of the payments would be used to ensure that BAES was favored [bribes via 3ps] in foreign government decisions regarding the purchase of defense articles. BAES possessed no adequate evidence that its advisors performed any legitimate activities in justification of the substantial payments.
in the mid-1980s the U.K. and the Kingdom of Saudi Arabia (KSA) entered into a formal understanding. shortly after, BAES was appointed by mod, as the prime contractor to the U.K. government…how?: no public tender[comp], on national security grounds…. but it was shown that BAES gave substantial benefits to a foreign public official of KSA, who was in a position of influence regarding sales of fighter jets, other defense materials and related support services.
BAES admitted it undertook no adequate review or verification of benefits provided to the KSA official, including no adequate review or verification of more than $5 million in invoices submitted by a BAES employee from May 2001 to early 2002 to determine whether the listed expenses were in compliance with the undertaking made by BAES to the U.S. government regarding its anti-corruption compliance procedures…instead, BAES transfered more than £20 million to a bank account in Switzerland controlled by an intermediary, being aware that there was a high probability that the intermediary would transfer part of these payments to the same KSA official.
Also as part of its guilty plea, BAES admitted to making and causing to be made certain false, inaccurate and incomplete statements, and failing to make required disclosures to the U.S. government in connection with the administration of certain regulatory functions, including statements and disclosures related to applications for arms export licenses, as required by the AECA and ITAR. The AECA and ITAR prohibit the export of defense-related materials to a foreign national or a foreign nation without the required U.S. government license….why?: because to get such licence, applicants must identify the related paid commissions– whether they are legitimate commissions or bribes – to help secure the sales of defense materials.
BAES admitted that, as part of the conspiracy, it knowingly and willfully failed to identify commissions paid to third parties for assistance in soliciting, promoting or securing sales of defense items in violation of the AECA and ITAR. BAES failed to identify the commission payments paid through the BVI entity described above. BAES caused the filing of false applications for export licenses for Gripen fighter jets to the Czech Republic and Hungary by failing to tell the export license applicant or the State Department of £19 million BAES paid to an intermediary with the high probability that it would be used to influence that tender to favor BAES.
As part of its guilty plea, BAES has agreed to maintain a compliance program that is designed to detect and deter violations of the FCPA, other foreign bribery laws implementing the OECD Anti-bribery Convention, and any other applicable anti-corruption laws, and that is designed to detect and deter violations of the AECA and ITAR, as well as similar export control laws. Under the terms of the plea agreement, BAES has agreed to retain an independent compliance monitor for three years to assess BAES’s compliance program and to make reports to the company and the Justice Department.
the criminal (fraud) case
was prosecuted under the Foreign Corrupt Practices Act, and The Counterespionage Section[supervises the investigation and prosecution of cases involving the export of military and strategic commodities and technology, including cases under the AECA and ITAR]
The criminal case was investigated by FBI special agents, and special agents of the U.S. Immigration and Customs Enforcement’s Counter Proliferation Unit. Investigative assistance also was provided by the Defense Criminal Investigative Services and the General Services Administration, Office of Inspector General. The Criminal Division’s Office of International Affairs provided substantial assistance in support of the investigation. and the U.K.’s Serious Fraud Office
2010:
A pension fund [ a sh of baes] applied to the U.S. Supreme Court for leave to issue a sh claim v BAE Systems Plc over allegations that the company paid more than $2 billion (1.3 billion pounds) in bribes to win a record Saudi arms deal, the fund’s lead attorney said on Friday.
BUT the U.S. appeals court said that English law, not U.S. law, governed the shareholder lawsuit over alleged bribes to Saudi Prince Bandar bin Sultan and others…..but the claimant said the fund had no plans to take its case to England.
the sh claim is that current and former directors and executives of BAE, Britain’s No. 1 arms maker, breached their fiduciary duties and wasted corporate assets by allegedly allowing illegal bribes and kickbacks in the 1980s arm deal known as al-Yamamah, or “the Dove.”
BAE has denied that wrongful payments were made to secure the deal in which Tornado fighter jets, Hawker trainer aircraft and other military hardware were sold to Saudi Arabia in exchange for oil starting in 1985. The value of the government-to-government barter has been estimated at up to $80 billion, Britain’s costliest arms deal.
In June 2007, BAE said the U.S. Justice Department had opened its own investigation of BAE’s compliance with anti-bribery laws, including dealings with Saudi Arabia