Corruption is a Crime

As the BBC reports:

A review into business practices at defence firm BAE Systems has called for tougher anti-bribery measures.

The study by Lord Woolf, former Lord Chief Justice of England and Wales, set out 23 recommendations for the firm.

Lord Woolf said the report provided a “route map” for BAE to ensure it was a leader for its ethical standards…

The BBC’s business editor Robert Peston says that the report’s finding, that in the past BAE did not pay sufficient attention to ethical standards in the way it conducted business, is an embarrassing admission.

Tanzania’s infrastructure minister, Andrew Chenge, resigned at the weekend after “being allegedly linked to a controversial BAE Systems defence contract that is being investigated by Britain’s Serious Fraud Office”, the Daily Telegraph reports.

The newspaper provides some background information:

The SFO is probing a 2002 contract under which BAE supplied Tanzania with a military radar system, a deal that was strongly criticised by aid agencies and politicians, including the then UK International Development Secretary Clare Short.
[…]
Despite the SFO abandoning its high-profile investigation into BAE’s Al Yamamah arms deal with Saudi Arabia, the fraud office has continued to probe several other overseas deals.

Poverty-stricken Tanzania bought a £28m military air traffic control system from BAE, when many experts said a far cheaper civil system would have done.

You can read the full story on the Telegraph website.

thisismoney.co.uk reports:

The ethics review into scandal-hit BAE Systems could be delayed for up to three months amid suspicions it will present a whitewash report into the activities of the controversial defence firm.

The probe into BAE’s business ethics by the independent committee, chaired by former chief justice Lord Woolf, is already almost a month overdue.And it appears Woolf - who has pocketed an estimated £500,000 in fees so far, all paid for by BAE - is in no hurry to get it finished. Sources have suggested his findings might not emerge until June.

The Serious Fraud Office (SFO) is escalating its probe into alleged bribery and corruption at BAE Systems, with one line of investigation being a series of commission payments personally overseen by chief executive Mike Turner during the late 1980s.

You can read the full report in the Sunday Telegraph.

The Government was accused in court yesterday of having rolled over in the face of threats from Saudi Arabia over the investigations into bribery and corruption allegations involving BAE Systems and arms deals with Saudi Arabia.

The comments came during a court hearing into the axing of the investigations:

Lord Justice Moses said the court had seen nothing to suggest that the government had done “anything other than roll over” in December 2006.

An attempt could have been made, he said, to get the threat to withdraw co-operation with the UK, including over security issues, lifted.

Liberal Democrat MP Vince Cable said:

These comments are seriously damaging to the Government’s credibility in its handling of this scandal. The Liberal Democrats alleged at the time that the Government had capitulated in the face of threats from Saudi Arabia which may or may not have had any substance. Today we have confirmation that this is exactly what happened.

Tony Blair’s role in the blocking of a criminal investigation into the Al Yamamah arms deal should be investigated by an independent inquiry, says newly elected Liberal Democrat leader Nick Clegg.

In a sign that he will continue the tough line taken by previous Liberal Democrat leaders, Mr Clegg responded to the publication of a letter from then Prime Minister Tony Blair to the Attorney General saying its contents confirmed his “very worst fears”.

As the BBC reports:

The letter from Mr Blair to Lord Goldsmith dated 8 December 2006 was released to the High Court during a case brought by two pressure groups who are challenging the legality of the decision to end investigations into BAE Systems’ dealings with Saudi Arabia.

It refers to “critical difficulties” that might have affected the major contract for new Typhoon military aircraft.

There was uproar when the Serious Fraud Office inquiry into the Al Yamamah contract from the 1980s was dropped, but Mr Blair insisted the decision was taken on security grounds.

Mr Clegg called for an independent inquiry into Mr Blair’s role and insisted that a National Audit Office report on the deal, which has never been made public, should be released.

He said: “Tony Blair must urgently explain what he thought he was up to by invoking the Typhoon contract as a reason to stop the SFO investigation.

“As his own attorney general, Lord Goldsmith, made clear to him between December 2005 and December 2006, commercial relations are an improper basis under international law to suspend a legal investigation.

“Knowing this, why did Tony Blair persist in pursuing a legally improper line of argument which could amount to an attempt to pervert the course of justice?”

A new criminal investigation into allegations of corruption in arms deals is set to interview dozens of senior staff at BAE Systems.

The investigation will cover six separate arms deals which may have involved corrupt payments to middlemen.

As the Sunday Times reports:

Whitehall officials say dozens of senior BAE executives are to be interviewed in the next two months about alleged bribery involving more than £80m in secret commissions. The money is said to have been paid to middlemen involved in lucrative government arms contracts in South Africa, Tanzania, Romania and two other countries. The new SFO interviews come only a year after Tony Blair and Lord Goldsmith, then attorney-general, controversially halted a separate corruption probe into BAE’s arms dealings with Saudi Arabia.

The government stopped that inquiry after the Saudis threatened to end intelligence cooperation in the war on terror, provoking a wave of international criticism.

Among those to be interviewed under caution in the new investigation will be Sir Dick Evans, BAE’s former chairman, who is still a consultant with the company. Mike Turner, the outgoing chief executive, is also expected to face questions. Both men adamantly deny any knowledge of wrongdoing.

Read the full story here.

Whilst the UK Government decided to axe Britain’s investigation into corruption allegations arrising from the Al Yamamah arms deal with Saudi Arabia, the Swiss are cooperating with the US’s own investigation:

Swiss prosecutors have also agreed to hand over financial records linked to the Saudi Royal family, according to a report by the Guardian newspaper. A US source told the paper “The investigators are confident they can get what they need from Switzerland. That’s where all the BAE arrangements were made”.

Read more in Arabian Business.

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.

From The Guardian:

US corruption investigators have gone behind the back of Downing Street to fly a British witness to Washington to testify about Saudi arms deals with the UK arms firm BAE Systems, the Guardian can disclose. In a hitherto secret move, Swiss federal prosecutors have also agreed to hand over to Washington financial records linked to the Saudi royal family.

The US is seeking - but has so far been refused - more than a million pages of documents seized from BAE, its bankers, Lloyds TSB, and the Ministry of Defence during an investigation by the Serious Fraud Office…

British ministers are refusing to grant a six-month-old official request from the US department of justice for mutual legal assistance, in defiance of the UK’s anti-bribery treaty obligations. This follows the suppression of Britain’s own Serious Fraud Office investigation, which was abandoned last year on the grounds that the inquiry might jeopardise national security.