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BAE handed £280m criminal fines BAE handed £280m criminal fines
(about 1 hour later)
BAE Systems is to pay a fine of $400m (£250m) after pleading guilty to a charge of conspiring to make false statements to the US government. BAE Systems will pay fines of £280m in a deal with US and UK authorities to settle investigations into its actions in Saudi Arabia and Tanzania.
The UK's largest defence group has also reached agreement with the UK Serious Fraud Office to plead guilty to breach of duty to keep accounting records. The firm will pay most of the fines in the US after admitting hiding payments it knew had a "high probability" of being used to help win contracts.
That case is in relation to payments to a former marketing adviser in Tanzania. BAE will hand over about £30m in the UK - a record criminal corporate fine.
In relation to the UK offence, it will pay a penalty of £30m, some of which will be a fine, some a charity payment. The firm said the pleas did not relate to accusations of corruption or bribery but that it "regretted" shortcomings.
BAE's directors are relieved at what they see as a final settlement of a controversy that has dogged the company for years Robert Peston class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/02/bae_systems_pays_the_price.html">Read Robert's blog class="" href="/2/hi/business/8284853.stm">How are arms deals done? BBC business editor Robert Peston said that pleading guilty to criminal charges in Britain and America was "a serious embarrassment to BAE".
The charity payment will go to Tanzania. "Although the fines will be seen by some as damaging to one of the UK's most significant companies, BAE's directors are relieved at what they see as a final settlement of a controversy that has dogged the company for years," added our business editor.
The last of the offences was committed in 2002. BAE has since reformed the way it conducts business. 'Anti-bribery failures'
However, BBC business editor Robert Peston said that pleading guilty to criminal charges in Britain and America was "a serious embarrassment to BAE". US and UK authorities have been investigating the case for about eight years, and it is believed to be the first time the two countries have coordinated such a corporate corruption "plea bargain".
Saudi deal
The US fine, agreed with the Department of Justice, relates to undertakings it gave to the US government in 2000 and 2002 in relation to the probity of the way it conducts business.
BBC business editor Robert Peston: "This is a very serious embarrassment"BBC business editor Robert Peston: "This is a very serious embarrassment"
It is understood that the Department of Justice concluded that BAE breached these undertakings in relation to payments and support services provided to an unnamed Saudi official, as part of the £40bn al-Yamamah contract to supply military equipment to Saudi Arabia. In a deal with the US Department of Justice (DoJ), BAE admitted a charge of conspiring to make false statements to the US government.
It is believed to relate to payments made to a Saudi official, as part of £40bn al-Yamamah contract to supply military equipment to Saudi Arabia.
The DoJ gave a damning condemnation of BAE which it said had accepted "intentionally failing to put appropriate, anti-bribery preventative measures in place, contrary to the representations it made to the US government, and then making hundreds of millions of dollars in payments to third parties, while knowing of a high probability that money would be passed on to foreign government decision makers to favour BAE in the award of defence contracts".
The British charge stems from an $39.5m contract signed in 1999 to supply a radar system to Tanzania, and relates to payments to a former marketing adviser in the east African country.
Part of the fine will be a charity payment which will go to Tanzania.
'Satisfied'
BAE's directors are relieved at what they see as a final settlement of a controversy that has dogged the company for years Robert Peston Read Robert's blog How are arms deals done?
There was also an infringement of restrictions on the supply of sensitive US technology in deals to supply aircraft in Hungary and the Czech Republic.There was also an infringement of restrictions on the supply of sensitive US technology in deals to supply aircraft in Hungary and the Czech Republic.
Although the UK penalty is far less than Britain's Serious Fraud Office was seeking, it is thought to be a record for a criminal offence by a company in the UK. BAE, the UK's largest defence group has also reached agreement with the UK Serious Fraud Office to plead guilty to breach of duty to keep accounting records.
The British charge stems from an $39.5m contract signed in 1999 to supply a radar system to Tanzania. The last of the offences was committed in 2002. BAE has since reformed the way it conducts business.
"Although the fines will be seen by some as damaging to one of the UK's most significant companies, BAE's directors are relieved at what they see as a final settlement of a controversy that has dogged the company for years," added our business editor. "We're satisfied with that global settlement," said chairman Dick Olver.
BAE has been advised by its lawyers that the fines are fair. "It allows us to draw a very heavy line under the legacy, the historical issues. We're obviously pleased to see uncertainty removed for our shareholders."