Corruption is a Crime

From the Financial Times:

A top BAE Systems executive and ex-defence official has been questioned by investigators over a suspected bribery plot involving a Viennese count to win European arms contracts, the Financial Times has learned.

Julian Scopes – BAE’s former head of government affairs and former private secretary to Alan Clark, the late Tory defence minister – was interviewed at Guildford police station on Sunday by the Serious Fraud Office, people familiar with the matter said.

The questioning of Mr Scopes highlights the top-level business and government interests that have turned the BAE case into an explosive affair for both the company and ministers.

Mr Scopes, 55, was interviewed as part of an SFO probe into a suspected conspiracy to bribe people in high positions over arms deals in countries including Austria and the Czech Republic, people close to the matter said.

The New York Times reports:

As far back as July 2002, representatives from the State, Justice and Defense departments, as well as the C.I.A., sat down in Washington with senior British officials from the Ministry of Defense to complain about suspected bribery by BAE in Central Europe, the Persian Gulf and South Africa.

Sir Kevin Tebbit, then Britain’s permanent under secretary of the Ministry of Defense, rejected the suspicions as baseless. American officials who participated in the meeting later nicknamed him Sir Topham Hatt after a character in the Thomas the Tank Engine children’s series because of what they said was “his almost haughty disdain for the allegations of bribery involving BAE” and the manner in which he challenged them to detail evidence of wrongdoing…

American officials say they believe that the Hungarian and Czech governments were influenced by payments. They cite a C.I.A. briefing during which they were told that BAE paid millions of dollars to the major political parties in Hungary to win the contracts there.

Hat tip: Guido Fawkes.

Vince Cable, the Deputy Leader of the Liberal Democrats, has written an article for Comment Is Free calling for an inquiry into the Al Yamamah affair as a step towards cleaning up such international deals.

I still find it difficult to get my head round the idea that, until December, one agency of government (the Serious Fraud Office) was investigating what it believed could be crimes, leading to prosecutions, while another arm of government was cheerfully helping the suspected felons. Since there are six other bribery cases still being investigated by the SFO in relation to the BAE contracts with South Africa, Tanzania, the Czech Republic, Qatar, Chile and Romania, the obvious question is whether the government has been, or is, actively involved in facilitating payments there as well.
[...]
These issues are, on one level, legal and technical, but at another, moral and political. So far, the government has shown itself utterly impervious to political embarrassment. The prime minister happily signed up to a G8 communique condemning corruption, and British minsters and ambassadors go round the world lecturing (Africans, in particular) on the virtues of honest and transparent government procurement.

Read the full article here. Vince’s article from last week - “Today’s allegations about secret payments to a Saudi prince mean that the government must come clean about its role in the BAE arms deals” - is here.

Yesterday’s Observer newspaper carried three interesting stories about BAE Systems plc.

Congress stands by to torpedo BAE’s deal

In January, the US formally protested to the British government about the abandonment at the end of last year of the Serious Fraud Office investigation into bribery allegations over the £40bn al-Yamamah arms deal with Saudi Arabia and the sale of Eurofighters to the Saudis.
[...]
As for the Saudi allegations, BAE maintains it has not broken the law and that it would not have launched the Armor deal without taking soundings about regulatory problems. However, there is only so much BAE could have learned on this. One senior industry figure says: ‘I am sure they have got a sign from the Pentagon, but it would have been far harder to get a sounding from the Department of Justice, for example.’

Part of the difficulty is the spread of responsibility around government departments. The Department of Justice looks into anti-trust and criminal issues. A spokeswoman confirms that bribery allegations such as those made over al-Yamamah cannot be investigated under anti-trust laws. As for criminal activity - the SFO’s investigation was a criminal one - a spokesman says this would be the responsibility of the US Treasury.

BAE to face new bribes probe in US

Congressional aides told The Observer they were briefed on Tuesday by officials from the US State Department on investigations by the Serious Fraud Office into allegations of bribery relating to the £40bn al-Yamamah deal with Saudi Arabia, controversially halted in December, and continuing probes into deals with Tanzania, the Czech Republic, South Africa, Chile, Qatar and Romania.

It emerged recently that the UK government had a complaint from the US about the dropping of the Saudi inquiry, and it has been criticised by the OECD.

Swiss investigate BAE corruption claims

Jeannette Balmer, a spokeswoman for the Swiss federal prosecutor’s office, said that a criminal investigation is under way into suspicions of money laundering involving the company, but declined to give further details. The investigation was the result of a report prosecutors received from the Swiss money-laundering authority.

The Guardian reports today that prosecutors from the Sweden, Austria and the Czech Republic will meet with representatives of the UK’s Serious Fraud Office in The Hague next week “to co-ordinate their corruption investigations into BAE.”

The meeting of prosecutors will take place under the aegis of an EU body called Eurojust, set up in 2003 to fight organised crime. Law enforcement sources said the prosecutors expected to share information and decide which countries were best placed to bring any charges.

The newspaper also reports that Liberal Democrat Deputy Leader Vince Cable has been keeping up the pressure on the Labour Government:

Vince Cable, the Liberal Democrat deputy leader, this week renewed his attack on the UK government for blocking the SFO’s Saudi investigation. In an adjournment debate on Tuesday night, he accused BAE of passing secret funds through an undeclared British Virgin Islands company and asked: “Is that compatible with the Treasury’s rules about money laundering?”

He also demanded that the UK express confidence in Mark Pieth, head of the OECD’s anti-bribery watchdog, which is reviewing claims that Britain broke an international treaty by halting the Saudi investigation in order to protect its relations with the Saudi ruling family.

The full story is here.