BAE Systems to pay $450 million to settle bribery charges

The world's second-largest defence company, BAE Systems Plc (BAE) reached a landmark settlement yesterday with the US Department of Justice (DoJ) and the UK's Serious Fraud Office (SFO), under which BAE will pay around $450 million in fines as it pleaded guilty of bribery over arms deals primarily with Saudi Arabia and Tanzania.

BAE said in a statement that under the agreement with the DoJ, the company will plead guilty to a charge of conspiring to make false statements to the US government in connection with certain regulatory filings and undertakings and will pay a fine of $400 million.

The 2007 DoJ case relates to the £43-billion (over $67 billion) Al-Yamamah arms deal between Britain and Saudi Arabia in the 1980s and 1990s and other BAE deals with Hungary and Czech Republic. The DoJ said BAE had admitted "intentionally failing to put appropriate, anti-bribery preventative measures in place, despite telling the US government that these steps had been taken".

Although UK's SFO which is responsible for the investigation and prosecution of complex cases, had started an enquiry on the Al-Yamamah deal in 2004, it was dropped two years later due to political reasons.

The SFO said in a statement that it reached an agreement with BAE that the company will plead guilty of failing to keep reasonably accurate records in relation to its activities in Tanzania. BAE will pay £30 million ($47 million) comprising a financial order and the balance paid as ex gratia payment for the benefit of the people of Tanzania.

BAE chairman Dick Olver said: ''In 2000, the company gave a commitment to the US government that it would establish and comply with defined US regulatory requirements within a certain period and it subsequently failed to honour this commitment or to disclose its shortcomings.''