BAE Systems Faces Prosecution Over Alleged Corruption

Charges are of corruption involving contracts with European and African nations

Britain's Serious Fraud Office announced on Oct. 1 that it would seek prosecution of defense equipment firm BAE Systems over alleged corruption involving contracts with European and African nations.

One analyst estimated that the penalties sought would amount to 1.0 billion pounds (US$1.6 billion), describing the sum as "unprecedented."

"The SFO has announced today that it 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," the office said. "This follows the investigation carried out by the SFO into business activities of BAE Systems in Africa and Eastern Europe."

Responding to the announcement, BAE Systems said it was prepared to go to court to settle the allegations.

"The sheer scale of the penalties being sought ... is unprecedented in the UK and will send shockwaves across corporate Britain. Whilst we have yet to see how this will play out, it is clear that the SFO is flexing its muscles and attempting to emulate the aggressive approach of the U.S. authorities," said Christopher Grierson, a partner in the bribery and corruption taskforce at Lovells LLP law firm.

The Serious Fraud Office had been trying to persuade the company to accept a plea deal rather than face prosecution over claims it paid millions of pounds to win contracts in Africa as well as central and eastern Europe, a source had said on Sept. 30.

The British defencs group has repeatedly denied allegations it paid sizeable bribes to win contracts in South Africa, Tanzania, the Czech Republic and Romania. BAE said in its statement released on Oct. 1: "The company notes the announcement by the UK's Serious Fraud Office and continues to expend considerable effort seeking to resolve, at the earliest opportunity, the historical matters under investigation."

It added: "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. If the director of the SFO obtains the consent that he seeks from the Attorney General and proceedings are commenced, the company will deal with any issues raised in those proceedings at the appropriate time and, if necessary, in court."

One of the world's biggest arms makers, BAE Systems generates 58% of its sales in the U.S. and is the sixth-largest supplier to the U.S. defense department.

Copyright Agence France-Presse, 2009

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