Legal challenge launched
against UK Serious Fraud Office's BAE settlement

PRESS RELEASE, 12 February 2010

Lawyers acting on behalf of Campaign Against Arms Trade (CAAT) and The Corner House have today issued a letter to the Director of the Serious Fraud Office (SFO) laying out their intention to request a judicial review of the 5 February 2010 decision by the SFO to enter a plea agreement with BAE.

The basis for the legal challenge is that the SFO failed properly to apply prosecution guidance (including its own guidance). In particular, the plea agreement reached fails to reflect the seriousness and extent of BAE's alleged offending, which includes corruption and bribery, and to provide the court with adequate sentencing powers.

The groups argue that the SFO has unlawfully concluded that factors weighing against prosecuting the more serious charges of corruption outweigh those in favour of prosecution.

Nicholas Hildyard, for The Corner House, says:

"Plea bargains should only ever be entertained when companies have really come clean. BAE has not. Once again, an SFO decision has reinforced the UK's reputation for letting big companies get away with bribing. Once again, it has shown a blatant disregard for the rule of law."

Kaye Stearman, CAAT's spokesperson, says:

"The SFO plea bargain is unlawful. Investigations into alleged corruption in at least three countries have simply been dropped. It is in the public interest that BAE should not be let off the hook."

The groups' lawyers also requested that the Serious Fraud Office delay applying for court approval of its settlement with BAE Systems. If it does not do so, the two groups will seek an injunction against the court application.

ENDS

Background

In December 2006 the SFO dropped its bribery and corruption investigations into BAE's arms sales to Saudi Arabia, following pressure from BAE and Saudi Arabia and a direct intervention from then Prime Minister Tony Blair. The decision was subject to severe criticism and prompted CAAT and The Corner House to launch a Judicial Review of the decision. In April 2008, the High Court ruled that the SFO Director had acted unlawfully by stopping the investigation; a decision subsequently overturned by the House of Lords in July 2008, which ruled that he acted lawfully when faced with a threat to national security.

On 1 October 2009 the SFO began drawing up legal papers to recommend prosecution of BAE, following its six-year investigation into alleged bribery in BAE arms deals with several other countries (Chile, Czech Republic, Qatar, Romania, South Africa and Tanzania). BAE is alleged to have paid bribes, often in the form of commissions to "advisers" to clinch the deals.

Under the SFO settlement announced on 5 February 2010, BAE would plead guilty to minor charges of "accounting irregularities" in its 1999 sale of a radar system to Tanzania for which the SFO proposed it should pay penalties of £30 million. The SFO would not bring charges relating to alleged bribery and corruption in BAE's arms deals elsewhere.

This settlement was announced in conjunction with a much larger settlement made by the US Department of Justice with BAE. Under this settlement, BAE admitted making false statements in 2000-2002 in relation to BAE's arms deals with Saudi Arabia and passing covert payments through the United States in regard to its arms deals in Central European countries. It will be fined $400 million (£256 million). Because it has not pleaded guilty to corruption charges, BAE can continue to bid for US military contracts.

NOTES

Campaign Against Arms Trade (CAAT) works for the reduction and ultimate abolition of the international arms trade.

The Corner House aims to support democratic and community movements for environmental and social justice through analysis, research and advocacy.

Solicitors Leigh Day & co are acting for both groups.

Summary of Serious Fraud Office investigations into BAE