Risk register · entry
Q-F · FraudBAE Systems Al-Yamamah bribery scandal
Decades of Saudi jet contracts, and a guilty plea for false accounting. No bribery charge was ever brought.
The fifth quadrant, where the thing was never real. The tell is that the story is too clean.
Why this quadrant
The placement rests on what BAE admitted, not on what was alleged. It told US agencies between about 2000 and 2002 that it had built an FCPA compliance programme and then, on its own guilty plea, knowingly failed to create one, while routing payments to marketing advisors through offshore companies it controlled and booking them as technical services. The compliance programme and the accounting description were the parts that were never real. No bribery charge was brought in either jurisdiction.
The record
- BAE Systems plc was sentenced on 1 March 2010 in the U.S. District Court for the District of Columbia to pay a $400 million criminal fine, after pleading guilty to conspiring to defraud the United States, to make false statements about its FCPA compliance programme, and to violate the Arms Export Control Act and ITAR.certain
- The DOJ put BAE's gain from the false statements and non-disclosures to the U.S. government at more than $200 million.certain
- Through a British Virgin Islands entity it beneficially owned, BAE made payments from May 2001 onward totalling more than £135 million plus more than $14 million to advisors, in situations where it was aware of a high probability that part would be used to favour BAE in foreign government purchasing decisions.certain
- In connection with the Saudi deals, BAE agreed to transfer more than £10 million plus more than $9 million to a Swiss bank account controlled by an intermediary, aware of a high probability the intermediary would pass part of it to a KSA public official, and did not verify more than $5 million of invoices submitted by a BAE employee for benefits provided to that official.certain
- In the UK, BAE pleaded guilty to one count of failing to keep accounting records under s.221 Companies Act 1985 over the $39.97m Tanzania radar contract, and on 21 December 2010 Mr Justice Bean fined it £500,000 with £225,000 costs, on top of a £30 million ex gratia payment for the people of Tanzania; about $12.4 million had gone to the intermediary's companies, 97% of it via BAE's offshore vehicle Red Diamond.certain
Sources
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