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Further Reading

BAE Systems

BAE Systems plc is a company registered in England and Wales. BAE Systems, Inc. is headquartered in Rockville, Maryland, and is responsible for developing BAE Systems' trans-Atlantic business, relationships with the U.S. Government, administration of BAE Systems' Special Security Agreement with the US Department of Defense, and managing BAE Systems' U.S. based operating groups, namely the Electronics, Intelligence and Support, and Land and Armaments operating groups. BAE Systems is active in each of seven home markets - Australia, India, Saudi Arabia, South Africa, Sweden, UK and the US. It is are divided into the following four operating groups:

1. The Electronics, Intelligence and Support operating group designs, develops, produces and services systems and subsystems for a wide range of military and commercial applications.
2. Land and Armaments provides design, development, production, through-life support and upgrade of armored combat vehicles, tactical wheeled vehicles, naval guns, missile launchers, artillery systems and munitions.
3. Programs and Support - Programs and support comprises the group's UK-based air and naval activities, the activities of the Detica security business and the Integrated System Technologies business.
4. The International operating group comprises the group's businesses in Saudi Arabia and Australia together with 37.5% interest in the pan-European MBDA joint venture, a 10.2% shareholding of Saab in Sweden and a 49% shareholding in Air Astana.

The Serious Fraud Office (SFO) is an independent Government department that investigates and prosecutes serious or complex fraud, and corruption. We are part of the UK criminal justice system with jurisdiction in England, Wales and Northern Ireland but not in Scotland, the Isle of Man or the Channel Islands. The Director of the SFO is appointed by and accountable to the Attorney General who is responsible to Parliament for the SFO and the other Law Officers' Departments. Fraud is a type of criminal activity, defined as: 'abuse of position, or false representation, or prejudicing someone's rights for personal gain'. Put simply, fraud is an act of deception intended for personal gain or to cause a loss to another party.

On 03 November 2004 the Serious Fraud Office ("SFO"), with the Ministry of Defence Police ("MDP"), commenced an investigation into suspected false accounting in relation to contracts for services between Robert Lee International Ltd, Travellers World Ltd and BAE in connection with defence equipment contracts with the government of Saudi Arabia. Today, searches were conducted at eight locations in London and the south of England by SFO investigators and officers from the MDP.

On 14 December 2006 the Director of the Serious Fraud Office decided to discontinue the investigation into the affairs of BAE SYSTEMS Plc as far as they relate to the Al Yamamah defence contract with the government of Saudi Arabia. This decision has been taken following representations that have been made both to the Attorney General and the Director of the SFO concerning the need to safeguard national and international security. "It has been necessary to balance the need to maintain the rule of law against the wider public interest. No weight has been given to commercial interests or to the national economic interest."

On 08 June 2007 the Guardian newspaper reported that the Attorney General ordered British investigators to conceal from the OECD details of the investigation into BAe Systems plc concerning the Al Yamamah contract and payments made under that contract. The Director of Serious Fraud Office confirms that the Attorney General Lord Goldsmith gave no such orders. The decision as to what information should be given to the OECD about the investigation was made by the SFO. The information provided by the SFO was as full as possible, having regard to the need to protect national security. The Director of the SFO also reiterates that the decision to discontinue the investigation itself for reasons of protecting national security was his and was not made under pressure from the Attorney General.

On 30 July 2008 the Serious Fraud Office welcomed the House of Lords decision to allow the appeal against the judgement of the Administrative Court. This means that the SFO's former Director, Robert Wardle, acted lawfully in discontinuing an investigation into alleged bribery and corruption surrounding the BAE contract to supply Tornados to the government of Saudi Arabia (The "Al Yamamah" contract). As a result of this legal ruling the current Director, Richard Alderman, has concluded that the investigation into the Al-Yamamah arms deal remained discontinued.

On 01 October 2009 the Serious Fraud Office announced 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 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.

On 29 January 2010 Count Alfons Mensdorff-Pouilly was charged in connection with defence contracts between BAe Systems plc and certain countries in Eastern/Central Europe. The charge is conspiracy to corrupt, contrary to section 1 of the Criminal Law Act 1977. Alfons Mensdorff-Pouilly, between 1 January 2002 and 31 December 2008, conspired with others to give or agree to give corrupt payments (contrary to section 1 of the Prevention of Corruption Act 1906) to unknown officials and other agents of certain Eastern and Central European governments, including the Czech Republic, Hungary and Austria as inducements to secure, or as rewards for having secured, contracts from those governments for the supply of goods to them, namely SAAB/Gripen fighter jets, by BAe Systems plc.

On 05 February 2010 SFO withdrew proceedings against Count Alfons Mensdorff-Pouilly. Following the announcement about the global agreement between the SFO, the US Department of Justice and BAE Systems plc, the Director of the Serious Fraud Office has considered the position in relation to individuals. The Director has taken into account that the company has agreed to plead guilty to serious offences both in the UK and in the US and to pay substantial financial penalties. In all the circumstances he has decided that it is no longer in the public interest to continue the investigation into the conduct of individuals.

On 05 February 2010 the Serious Fraud Office ("SFO") and the US Department of Justice ("DoJ"), both announced settlements with BAE Systems plc, in a ground breaking global agreement. The DoJ agreement involves BAE's business dealings in a number of countries, whilst the SFO agreement concentrates on the company's operations in Tanzania. The SFO reached an agreement with BAE Systems that the company will plead guilty in the Crown Court to an offence under section 221 of the Companies Act 1985 of failing to keep reasonably accurate accounting records in relation to its activities in Tanzania. The company will pay £30 million comprising a financial order to be determined by a Crown Court judge with the balance paid as an ex gratia payment for the benefit of the people of Tanzania. In conjunction with this agreement the SFO has taken account of the implementation by BAE Systems of substantial ethical and compliance reforms and the company's agreement with the DoJ announced today, and has determined that no further prosecutions will be brought against BAE Systems in relation to the matters that have been under investigation by the SFO. This decision brought to an end the SFO's investigations into BAE's defence contracts.