Accountancy Magazine
BAE admits accounts records breach
BAE pays £285m in criminal fines
08 February 2010
BAE has reached agreement with the Serious Fraud Office to plead guilty to a breach of duty to keep accounting records in relation to a £25.2m contract to supply a military radar system to Tanzania.
The arrangement – under a deal announced simultaneously in London and Washington – means that the defence group will agree to penalties in the US and UK, totalling several hundred million pounds to settle all the long-running corruption allegations against it.
Under the deal, BAE will pay $400m (£255m) in the US, which accused BAE of ‘wilfully misleading’ it over payments made as the firm tried to win contracts. BAE will pay a record criminal corporate fine of about £30m in the UK.
'In connection with the sale of a radar system by the company to Tanzania in 1999, the company made commission payments to a marketing adviser and failed to accurately record such payments in its accounting records. The company failed to scrutinise these records adequately to ensure that they were reasonably accurate and permitted them to remain uncorrected,' BAE said in a statement.
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’.
The US charges relate to secret payments BAE made to an unnamed person who helped the firm sell plane leases to the Hungarian and Czech governments, and to services and cash provided to a Saudi official linked to a £40bn contact to supply military equipment to Saudi Arabia.
BAE chairman Dick Olver said the company ‘very much regrets and accepts full responsibility’ for its ‘past shortcomings’.
The SFO said part of the fine would be a charity payment that will go to Tanzania.
The arrangement – under a deal announced simultaneously in London and Washington – means that the defence group will agree to penalties in the US and UK, totalling several hundred million pounds to settle all the long-running corruption allegations against it.
Under the deal, BAE will pay $400m (£255m) in the US, which accused BAE of ‘wilfully misleading’ it over payments made as the firm tried to win contracts. BAE will pay a record criminal corporate fine of about £30m in the UK.
'In connection with the sale of a radar system by the company to Tanzania in 1999, the company made commission payments to a marketing adviser and failed to accurately record such payments in its accounting records. The company failed to scrutinise these records adequately to ensure that they were reasonably accurate and permitted them to remain uncorrected,' BAE said in a statement.
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’.
The US charges relate to secret payments BAE made to an unnamed person who helped the firm sell plane leases to the Hungarian and Czech governments, and to services and cash provided to a Saudi official linked to a £40bn contact to supply military equipment to Saudi Arabia.
BAE chairman Dick Olver said the company ‘very much regrets and accepts full responsibility’ for its ‘past shortcomings’.
The SFO said part of the fine would be a charity payment that will go to Tanzania.
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