Corruption is a Crime

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.
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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.