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Bribery allegations and BAE Systems

Published Wednesday, March 3, 2010

BAE Systems was accused of corruption, specifically making bribes, in regard to the Al Yamamah arms agreement with the Saudi Arabian Government. This was investigated by the Serious Fraud Office (SFO) following the leaking of a letter from the then Director of the SFO to the former Permanent Secretary at the Ministry of Defence. The SFO discontinued its inquiry in December 2006, citing the need to safeguard national and international security, a move which was supported by the then Prime Minister, Tony Blair. A legal challenge that the SFO's decision was unlawful was not successful. In addition to the allegations surrounding Al Yamamah, parallel SFO investigations were also conducted into a number of other BAE defence contracts in South Africa, Chile, the Czech Republic, Romania, Tanzania and Qatar. In February 2010, BAE Systems reached a settlement with the US Department of Justice (DoJ) to plead guilty of conspiring to make false statements to the US Government in connection with certain regulatory filings and undertakings, including the Al Yamamah agreement as well as contracts with the Hungarian and Czech governments. In March 2010, BAE Systems pleaded guilty to conspiring to defraud the United States by impairing and impeding its lawful functions, to make false statements about its Foreign Corrupt Practices Act compliance program, and to violate the Arms Export Control Act and International Traffic in Arms Regulations. It was given a $400 million fine and agreed to take measures in order to stay within US and foreign laws concerning corruption and the exports of arms. The company also agreed to retain an independent compliance monitor for three years to assess its compliance program and to make a series of reports to the company and the DoJ. This Standard Note is referred to in the Research Paper, The Bribery Bill (RP 10/19).

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BAE Systems was accused of corruption, specifically making bribes, in regard to the Al Yamamah arms agreement with the Saudi Arabian Government. This was investigated by the Serious Fraud Office (SFO) following the leaking of a letter from the then Director of the SFO to the former Permanent Secretary at the Ministry of Defence. The SFO discontinued its inquiry in December 2006, citing the need to safeguard national and international security, a move which was supported by the then Prime Minister, Tony Blair. A legal challenge that the SFO's decision was unlawful was not successful. In addition to the allegations surrounding Al Yamamah, parallel SFO investigations were also conducted into a number of other BAE defence contracts in South Africa, Chile, the Czech Republic, Romania, Tanzania and Qatar. In February 2010, BAE Systems reached a settlement with the US Department of Justice (DoJ) to plead guilty of conspiring to make false statements to the US Government in connection with certain regulatory filings and undertakings, including the Al Yamamah agreement as well as contracts with the Hungarian and Czech governments. In March 2010, BAE Systems pleaded guilty to conspiring to defraud the United States by impairing and impeding its lawful functions, to make false statements about its Foreign Corrupt Practices Act compliance program, and to violate the Arms Export Control Act and International Traffic in Arms Regulations. It was given a $400 million fine and agreed to take measures in order to stay within US and foreign laws concerning corruption and the exports of arms. The company also agreed to retain an independent compliance monitor for three years to assess its compliance program and to make a series of reports to the company and the DoJ. This Standard Note is referred to in the Research Paper, The Bribery Bill (RP 10/19).

Commons Briefing papers SN05367

Authors: Tim Jarrett; Claire Mills

Topics: Companies, Defence equipment and procurement

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