Royal Dutch Shell Plc  .com Rotating Header Image

BAE reaches $450 million settlement with U.S., Britain

REUTERS

LONDON/WASHINGTON (Reuters) – BAE Systems Plc, Europe’s biggest defense contractor, will pay around $450 million in fines in Britain and the United States, ending long-running corruption investigations on both sides of the Atlantic.

Under a settlement with British and U.S. authorities, the company will plead guilty to one charge of conspiring to make false statements to the U.S. government, including on deals in Saudi Arabia, and in Britain one charge of breach of duty in relation to records of payments made in Tanzania.

“The company very much regrets and accepts full responsibility for these past shortcomings. These settlements enable the company to deal finally with significant legacy issues,” BAE Chairman Dick Olver said in a statement Friday.

“We are now seen as a company of good standing and a responsible company to do business in both the U.S. and the UK,” he added on a conference call to journalists.

In the United States it will pay out around $400 million, one of the largest ever fines levied against a defense contractor and comparable to the $402 million engineering and construction group KBR Inc agreed to pay in February 2009.

The gains to BAE from its false statements to the U.S. government exceeded $200 million, according to a criminal information document filed in a U.S. court Friday.

The court document also outlined a number of cases involving BAE’s dealings, including the sale of fighter aircraft and other defense material to Saudi Arabia.

“BAES did not subject these payments and benefits to the type of internal scrutiny and review that BAES had represented it would subject them to in the foregoing statements to the U.S. government,” the court document said.

An previous investigation by Britain’s Serious Fraud Office (SFO) into reports BAE paid about 1 billion pounds over a decade to Prince Bandar bin Sultan in connection with the al-Yamamah arms deal had been halted in December 2006 by former Prime Minister Tony Blair after the probe angered Saudi Arabia.

AIR TRAFFIC

Authorities had cited the risks the inquiry posed to Britain’s relationship with the oil kingdom, but the move attracted sharp criticism by anti-bribery campaigners and British media.

The settlement BAE has reached with the SFO relates to the sale of an air traffic control system in Tanzania, a contract worth 30 million pounds, according to an SFO spokesman.

BAE agreed to pay a 30 million pounds penalty, partly comprised of a fine to be decided by a court, with the remainder as a charity payment. The settlement is the highest ever imposed by the SFO.

BAE shares closed up 1.6 percent, as the market welcomed news of the settlement, which was not as high as some had forecast.

“While it’s a substantial figure, it’s less than the worse case scenario,” said analyst Tina Cook at brokerage Charles Stanley, noting initial media reports had suggested a figure of up to 1 billion pounds from the SFO alone, later revised down to between 200 million and 300 million.

“It also removes an overhang on the share price caused by uncertainty about the investigations.”

Gavin Cunningham, head of corruption investigations at accountancy firm BDO Stoy Hayward, said the SFO penalty “sends out a powerful message to UK business that corruption is going to be investigated and prosecuted.”

Some lawyers have said the SFO would want to show it had teeth by following the examples of Germany and the United States in dealing with international corruption..

In late 2008 German industrial conglomerate Siemens for instance agreed to pay just over $1.3 billion to settle corruption probes.

SFO director Richard Alderman said in a statement: “I am very pleased with the global outcome achieved collaboratively with the DoJ (Department of Justice). This is a first and it brings a pragmatic end to a long-running and wide-ranging investigation.”

(Additional reporting by Paul Sandle, James Davey, Rhys Jones and David Milliken in London, with Dan Margolies in Washington; Editing by David Holmes)

($1 = 0.6363 pound)

REUTERS ARTICLE

*Royal Dutch Shell played a major role in the Al Yamamah corruption scandal

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Comment Rules

  • Please show respect to the opinions of others no matter how seemingly far-fetched.
  • Abusive, foul language, and/or divisive comments may be deleted without notice.
  • Each blog member is allowed limited comments, as displayed above the comment box.
  • Comments must be limited to the number of words displayed above the comment box.
  • Please limit one comment after any comment posted per post.