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BAE Systems - Magda Hassan - 05-10-2009

Just business as usual as far as I can see.

BAE Systems around the world

Friday 2 October 2009
Czech Republic
Count Alfons Mensdorff-Pouilly had been BAE's secret middleman in the Czech Republic, Austria and Hungary since the early 90s. Prosecutors are understood to have questioned him about an £11m payment made to him by BAE to find out if the money was slipped to Czech politicians and officials. The count denies any wrongdoing.
The investigation revolves around a £400m Anglo-Swedish deal in 2004 in which the Czech Republic leased Gripen fighter planes. Jan Kavan, a former Czech foreign minister, told undercover reporters that "money changed hands" with politicians there. He named two BAE executives. Austrian prosecutors said they expect to bring charges against Mensdorff.
In 2003, the Romanians paid BAE £116m to refurbish and maintain two surplus British frigates. A Romanian admiral later said his country could have bought similar warships from the Dutch for less than half the price. The BAE deal had been organised by the British Ministry of Defence and financially supported by the UK government. The SFO investigated payments of £7m from BAE to a British middleman, Barry George. He is married to a Romanian with close connections to the former communist regime. When BAE sought financial support from the British government, the firm misled officials by saying that most of the £7m had gone to another agent, whom the firm refused to identify. The SFO found out that all the payments had in fact been funnelled to George. He and his wife denied any impropriety.
South Africa
In 1999 the ANC government spent £1.6bn buying fleets of Hawk and Gripen warplanes. The Hawk was said to be twice the price of an Italian competitor, but defence minister Joe Modise handed the contract to BAE.
Tony Blair had promoted the deal and it was given financial backing by the British government. A leaked SFO dossier alleged secret payments by BAE totalled more than £100m; it accused BAE of a corrupt relationship with Berkshire arms dealer John Bredenkamp, who, according to one former BAE executive, "suggested identifying the key decision-makers, with a view to 'financially incentivising them' to make the right decision". He has denied wrongdoing.
A seized memo referred to "third world procedures", said by the SFO to be a "veiled reference to the payment of bribes". The dossier also outlined millions of pounds paid to an aide to Modise, through secret offshore channels. SFO accused BAE of seeking to conceal the aide's involvement.
When what is an impoverished country took out a loan to buy a £28m military radar system in 2001, international bodies condemned the deal. BAE is alleged to have paid £9m in bribes to secure the contract.
Clare Short, then development minister, fought in cabinet to stop export approval. Tony Blair overruled her. Robin Cook, foreign secretary, remarked that BAE's chairman seemed to "have a key to the garden door of No 10".
A Tanzanian middleman, Sailesh Vithlani, is alleged to have been sent the payment to his Swiss account via a BAE front company registered in the British Virgin Islands. Investigators in Tanzania charged him with lying to them; he went on the run and is wanted by Interpol.
The only casualty so far has been Andrew Chenge, a Tanzanian minister forced to resign last year after the Guardian revealed that investigators had discovered more than £ 500,000 in his Jersey offshore accounts. He denied the money came from BAE, but does not dispute its existence.

The head of the Serious Fraud Office signalled his intention today to prosecute the arms company BAE on corruption charges, an unprecedented move immediately supported by the former attorney general, Lord Goldsmith.
Goldsmith, who was in post when the SFO was forced to drop a previous investigation into the company, backed the tough stance of the agency's current director Richard Alderman, who made clear he would seek to prosecute unless the firm accepted heavy financial penalties for its behaviour in securing foreign weapons contracts.
Writing in the Guardian, Goldsmith, whose successor Lady Scotland would have to give the all-clear for a criminal trial, said the SFO's "carrot and stick" approach to BAE was the right one.
Alderman announced this morning that the SFO would prepare paperwork to submit to the attorney general, seeking formal consent to prosecute BAE.
This followed BAE's refusal to bow to his 30 September deadline for negotiating a plea agreement as an alternative to a full criminal trial on bribery-related charges.
Today's public statement was dramatic and unprecedented in a British legal context. But the small print left room for BAE to return to the negotiating table. An official request for consent will not be submitted to the attorney general for the three or four weeks it takes to get the paperwork in order, according to SFO sources. They say BAE, having tried and failed to call the SFO's bluff, could reopen settlement talks at any time.
It was widely reported today , and not disputed by either of the parties, that money was the main sticking point in prolonged private negotiations. BAE is not willing to pay in the region of £500m which the SFO is demanding as the penalty for what it claims are corrupt dealings in four countries: Tanzania, Czech Republic, South Africa and Romania.
The company was hoping to escape with payments described by one source as only "tens of millions". BAE shares fell 4% today , wiping almost £500m from the company's value.
Alderman's statement said the SFO "intends to seek the attorney general's consent to prosecute BAE Systems for offences relating to overseas corruption and will prepare its papers to be submitted to the attorney when the SFO considers it is ready to proceed. This follows the investigation carried out by the SFO into business activities of BAE Systems in Africa and eastern Europe."
BAE said: "The company notes the announcement by the UK's Serious Fraud Office (SFO) and continues to expend considerable effort seeking to resolve, at the earliest opportunity, the historical matters under investigation by the SFO.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." It said if a prosecution was launched, the company would "deal with any issues raised in those proceedings at the appropriate time and, if necessary, in court".
Throughout the six years that corruption investigations have been going on into BAE, the arms company has declined to respond publicly to any of the detailed allegations that have surfaced about its practices. The closest it has come is in accepting a report commissioned from a retired lord chief justice, Lord Woolf, which said BAE "did not in the past pay sufficient attention to ethical standards".
Alderman's move to prosecute was welcomed today by anti-corruption campaigners, many of whom had been critical in 2006 when Tony Blair, as prime minister, and Goldsmith, as his attorney general, forced the SFO to drop its biggest BAE investigation, into commissions paid on the £43bn al-Yamamah arms deal with Saudi Arabia. Chandrashekhar Krishnan, executive director of Transparency International UK, said: "We welcome this robust action by the SFO and now expect the attorney General to consent to a prosecution."It sends an important wider message to UK plc that bribery does not pay." Andrew Feinstein, a former South African MP who tried to investigate arms corruption allegations, said: "Justice will be served … by a court case."

BAE Systems - David Guyatt - 05-10-2009

Fingers crossed that prosecution of BAE continues without behind-the-scenes political skulduggery.

BAE Systems - David Guyatt - 06-02-2010

David Guyatt Wrote:Fingers crossed that prosecution of BAE continues without behind-the-scenes political skulduggery.

No chance, eh. When a case like this settles out of court, you can be sure that something nasty is being covered up.

Quote:BAE handed £286m criminal fines

BAE Systems will admit two criminal charges and pay fines of £286m to settle US and UK probes into the firm.

It will hand over more than £250m to the US, which accused BAE of "wilfully misleading" it over payments made as the firm tried to win contracts.

The defence group will pay about £30m in the UK - a record criminal corporate fine - for separate wrongdoings.

The firm said the pleas did not relate to accusations of corruption or bribery but that it "regretted" shortcomings.

BBC business editor Robert Peston said that pleading guilty to criminal charges in Britain and the US was "a serious embarrassment" to BAE, the UK's largest manufacturer.

“ The US Department of Justice's charge is serious and damaging to BAE's reputation ”
Robert Peston
However, he added: "Although the fines will be seen by some as damaging to one of the UK's most significant companies, BAE's directors are relieved at what they see as a final settlement of a controversy that has dogged the company for years."

'Anti-bribery failures'

US and UK authorities have been investigating the case for about eight years, and it is believed to be the first time the two countries have co-ordinated such a corporate corruption "plea bargain".

The biggest probe into BAE focused on a £43bn contract to supply more than 100 fighter jets to Saudi Arabia. The deal began in 1985 but a National Audit Office investigation was suppressed in 1992
The SFO launched an investigation in 2004 into the allegations - including claims BAE was running a "slush fund" that offered sweeteners to Saudi royals and their intermediaries in return for lucrative contracts
This was dropped two years later amid political pressure from the UK and Saudi Arabia. BAE always denied any wrongdoing
In June 2007, BAE said it was being investigated by the US authorities over deals with Saudi Arabia
In July 2008, BAE pledged to implement recommendations from an independent review into its conduct
The SFO began new probes into whether BAE had used corruption to win contracts from countries including Tanzania, the Czech Republic and South Africa. Last year it asked the Attorney General to prosecute BAE as the sides could not agree what the firm would admit or the fine to be paid
In a deal with the US Department of Justice (DoJ), BAE admitted a charge of conspiring to make false statements to the US government.

A charge filed in a District of Columbia court contains details of substantial secret payments by BAE to an unnamed person who helped the UK firm sell plane leases to the Hungarian and Czech governments.

The DoJ also details services such as holidays provided to an unnamed Saudi public official and cash transfers to a Swiss bank account that it says were linked to the £40bn Al-Yamamah contract to supply military equipment to Saudi Arabia.

The DoJ gave a damning condemnation of BAE, which it said had accepted "intentionally failing to put appropriate, anti-bribery preventative measures in place", despite telling the US government that these steps had been taken.

It then "made hundreds of millions of dollars in payments to third parties, while knowing of a high probability that money would be passed on to foreign government decision-makers to favour BAE in the award of defence contracts", the DoJ said.

There was also an infringement of restrictions on the supply of sensitive US technology in deals to supply aircraft in Hungary and the Czech Republic.

BAE has also reached agreement with the UK Serious Fraud Office (SFO) to plead guilty to a breach of duty to keep accounting records.

The British charge stems from a $39.5m (£25.2m) contract signed in 1999 to supply a radar system to Tanzania, and relates to payments to a former marketing adviser in the east African country.

Part of the fine will be a charity payment which will go to Tanzania.

'Line drawn'

The SFO said the settlement brought an end to its probe into BAE.

The last of the offences was committed in 2002, and BAE says it has since reformed the way it conducts business.

"We're satisfied with that global settlement," said chairman Dick Olver.

"It allows us to draw a very heavy line under the legacy, the historical issues. We're obviously pleased to see uncertainty removed for our shareholders."

Transparency International UK, which campaigns against corporate and government corruption welcomed the announcement.

"It's important for companies to receive large fines if they have engaged in unethical behaviour," said executive director Chandrashekhar Krishnan.

BAE Systems - Jan Klimkowski - 06-02-2010

The decision is a farce - a plea bargain blood money payment to prevent the truth coming out in open court.

Tony Blair endorsed and backed this blatant looting of Tanzania as British PM, and is now getting his payback in highly lucrative consultancies from numerous financial entities.

Of course plea bargains form no part of the British legal system - well, they didn't, until yesterday. :eviltongue:

Quote:BAE deal with Tanzania: Military air traffic control – for country with no airforce

Claire Short and Robin Cook had tried to stop the sale of a hugely expensive radar to the poverty- stricken Tanzanians

Tony Blair was at the centre of controversy over BAE's arms deal with Tanzania, just as he was in the Saudi contracts.

Cabinet ministers Claire Short and Robin Cook had tried to stop the sale of the hugely expensive radar to the poverty- stricken Tanzanians. But, as prime minister, he overruled them and insisted that the deal had to go through.

It left Cook ruefully muttering that it seemed that Dick Evans, BAE's then chairman, seemed to have "the key to the garden door of No 10".

The World Bank and the International Civil Aviation Organisation judged that the 2001 purchase was unnecessary and overpriced.

But the £28m deal started to look even worse when the SFO discovered that a third of the contract's price had been diverted into secret offshore bank accounts.

The SFO believed that this money was used to pay bribes to Tanzanian politicians and officials.

Yesterday Short, who resigned from the government, said : "Every way you looked at it, it [the deal] was outrageous and disgraceful. And guess who absolutely insisted on it going through? My dear friend Tony Blair, who absolutely, adamantly, favoured all proposals for arms deals.

"It was an obviously corrupt project. Tanzania didn't need a new military air traffic control, it was out-of-date technology, they didn't have any military aircraft – they needed a civilian air traffic control system and there was a modern, much cheaper one. Everyone talks about good governance in Africa as though it is an African problem, and often the roots of the 'badness' is companies in Europe."

In Yesterday's agreement with the SFO, BAE admitted one offence under the 1985 Companies Act relating to the Tanzanian contract.

Dick Olver, the chairman, admitted that BAE "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."

The SFO discovered that the money had gone into a Swiss bank account controlled by Sailesh Vithlani, a middleman of Indian extraction with a British passport.

He left Tanzania after the country's anti-corruption unit accused of lying to investigators. He is listed as wanted by Interpol.

One Tanzanian politician, Andrew Chenge, was forced to resign in 2008 after investigators discovered more than £500,000 in a Jersey bank account he controlled. He denied the money had come from BAE.

BAE Systems - Magda Hassan - 04-10-2013

Al Yamamah' secrets leak from BAE files lost by SFO after probe

Revealed: bank records gathered in SFO's bribes' investigation detail offshore payments

By Frederika Whitehead, Mark Watts and David Pallister | 4 October 2013

Pic: Exaro
SFO's lost files went to this warehouse

Dopes: SFO's lost files were next to cannabis farm

Closed case: BAE faced bribes' probe

The documents were sent to a place that appears to be a cannabis farm, and now seem to be in the hands of journalists

Emily Thornberry, shadow attorney general

Details of two offshore companies drawn into an investigation into bribery in Saudi Arabia have leaked after the Serious Fraud Office lost the case files.
Records gathered by the SFO during its sensitive investigation into BAE Systems show that two Panamanian-registered entities and one other company received a series of mysterious payments that totalled $21.4 million.
The SFO forced BAE's bankers, Lloyds TSB, to disclose the documents that set out the transactions.
The material was among 32,000 pages, 81 audio tapes plus electronic media that was lost by the SFO after gathering them during its six-year investigation into bribery allegations surrounding BAE's sale of military jets for billions of pounds to Saudi Arabia under Al Yamamah'.
Exaro tracked down the BAE cache to a warehouse in London's Docklands after a trail that started with a tip-off last year. The files were heaped in hundreds of brown boxes, stored alongside a cannabis farm.
The owners of the warehouse which has no SFO connection were unaware of the secret material stashed in their storage site or of the cannabis farm.
Dominic Grieve, attorney general and the minister with responsibility for the SFO, issued an admission that the agency had lost the huge collection of confidential material.
The solicitor general, Oliver Heald, admitted to Parliament that prosecution witnesses were, he understood, identified in the lost cache.
Emily Thornberry, shadow attorney general, thanked Exaro for helping to expose the SFO's blunder.
One source who had access to the lost material offered to allow Exaro to comb through the entire cache for a fee, but we declined to make any payment.
However, Exaro has obtained a sample copy of some documents, which shows just how sensitive the lost material was.
The documents detail $21.4 million of payments to Swiss bank accounts of three companies Liriope Anstalt Inc, Hinglok Corporation and Mayne Limited between May and October 1999.
Exaro has established that Liriope, which received most of the money, and Hinglok are registered in Panama. They were set up in 1994 and 1989 respectively, and dissolved in 2011 and 2001.
Panamanian companies do not have to declare their beneficial owners, enabling Liriope and Hinglok to keep secret where the money ultimately went. Mayne is not registered in Panama, but no trace of this company can be found anywhere. There is an unrelated Mayne Limited in Ireland.
Lloyds TSB authorised the payments. Some of them were routed through the Republic National Bank of New York as it was subject to a takeover by HSBC.
The SFO was forced to drop the BAE investigation in 2006 under pressure from Tony Blair's Labour government. The decision came as the SFO was trying to force Swiss banks to identify beneficiaries of accounts that received mysterious payments under Al Yamamah.
BAE denied paying bribes. It pleaded guilty in 2010 in America to failing to guard against bribe payments, and was fined $400 million.
Offshore companies were at the centre of a later SFO investigation into bribery allegations against a British subsidiary of EADS, the European defence giant following a series of Exaro reports about a contract to overhaul Saudi Arabia's military communications.
The Cayman Islands featured in that case, but the SFO is also poised to drop this investigation.
Other documents from the BAE cache that was lost by the SFO and seen by Exaro shed light on lavish gifts for Saudi princes and princesses allegedly paid out of a slush fund that kept Al Yamamah rolling.
The explosive documents detailed startling evidence of how the UK lavished expenditure on Saudi royals to help facilitate the government-to-government deal.
Thornberry said: "The documents were sent to a place that appears to be a cannabis farm, and now seem to be in the hands of journalists."
She added: "Where is this going to end?"
The SFO investigation was highly sensitive both politically and in business terms. So the SFO was deeply embarrassed after it was found to have lost the case files while trying to return them to various sources following the close of the investigation.
According to the SFO, it has recovered 98 per cent of the material.

Some more of Exaro's excellent journalism on the matter.

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