BAE to Pay $450 Million in Fraud Fines

The defense firm admitted to making false statements to the U.S. government about its compliance with anti-corruption regulations, and for failing to keep accurate accounts regarding a 1999 deal with Tanzania.

Defense giant BAE Systems said on Feb. 5 it had agreed to pay fines of nearly $450 million to settle charges brought by the U.S. Department of Justice and. Britain's Serious Fraud Office.

The fines -- $400 million to the DoJ, and 30 million pounds (US$47 million) to the SFO -- relate to investigations into BAE deals with countries including Tanzania, the Czech Republic, Romania and South Africa.

The defense firm admitted to making false statements to the U.S. government about its compliance with anti-corruption regulations, and for failing to keep accurate accounts regarding a 1999 deal with Tanzania.

"The company very much regrets and accepts full responsibility for these past shortcomings," BAE Systems chairman Dick Olver said. "These settlements enable the company to deal finally with significant legacy issues."

He said the firm had made significant changes to the way it operated and hoped that in future, "the company is as widely recognized for responsible conduct as it is for high quality products and advanced technologies".

Under the U.S. deal, which still requires court approval, BAE has agreed to plead guilty to one charge of conspiring to make false statements to the U.S. government concerning certain regulatory filings and undertakings.

The DoJ accused the firm of making hundreds of millions of dollars in payments to third parties, in the knowledge that the money would very likely be handed over to people to favor BAE in the awarding of defense contracts. It claimed that before that, BAE had intentionally failed to put appropriate anti-bribery measures into place despite assurances to Washington that it would -- and afterwards, it had failed to inform U.S. authorities about the payments.

Under the British deal, BAE said it would plead guilty to one charge of breach of duty to keep accounting records concerning payments made to a former marketing advisor in Tanzania over the sale of a radar system in 1999.

BAE admitted the commission payments were not properly recorded, and it had failed to ensure its records were correct. It has agreed to pay 30 million pounds, of which some will be charitable payment for the benefit of Tanzania.

Copyright Agence France-Presse, 2010

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