Britain’s biggest arms company BAE has paid its way out of corruption charges. The corrupt arms dealer BAE has always believed itself above the law – and proved on Friday last week that it is. BAE paid a £288 million bribe to courts in the US and Britain to be let off, in its own words, “conspiring to make false statements... in connection with certain regulatory filings and undertakings”. In the British settlement, the company admits to, “payments made to a former marketing adviser in Tanzania” in connection with an air traffic control system. The US settlement refers explicitly to paying bribes. The deal means that investigations into BAE corruption in South Africa, Romania, Chile, the Czech Republic, Qatar, Bosnia, Nigeria, Zambia, Costa Rica and Egypt have now all been dropped. Alfons Mensdorff-Pouilly faced trial for making “corrupt payments to unknown officials and other agents”. He has now escaped prosecution. Mensdorff was BAE’s key secret agent in central Europe. He denied the accusations against him “wholesale.” “BAE adopted and deployed corrupt practices to obtain lucrative contracts for jet fighters,” the Serious Fraud Office (SFO) told the courts.
It was a “sophisticated and meticulously planned operation involving very senior BAE executives”. BAE conspired with Mensdorff and spent more than £10 million funding a bribery campaign in Austria, the Czech Republic and Hungary. Mensdorff paid bribes “to public officials to favour BAE’s bids to supply Gripen jets”. More than $17 million in total was transferred to Mensdorff, but all he officially did in return was produce “marketing reports”. All charges against Mensdorff were dropped in the “public interest” – because of the BAE bribe deal. The company has now admitted to one case of corruption – in Tanzania. In 2001 BAE sold Tanzania a £28 million air traffic control system. Even the World Bank said it was unnecessary and overpriced. It was a high-tech military system – but Tanzania barely had an air force. The deal was pushed through by then British prime minister Tony Blair. More than a third of the contract price went in bribes to Tanzanian officials. As part of the settlement, further investigation into the air traffic control system will stop and the facts so far established will be kept secret. BAE is the world’s third largest arms dealer. It makes fighter aircraft, warships, tanks, armoured vehicles, artillery systems, missiles, munitions and much more.
In September 2003 The Sunday Times reported that BAE had hired a private security contractor to collate information about individuals working at the Campaign Against Arms Trade and their activities. In February 2007, it again obtained private confidential information from CAAT. Like many arms manufacturers, BAE has received criticism from various human rights and anti-arms trade organisations due to the human rights records of governments to which it has sold equipment. These include Indonesia, Israel, Saudi Arabia, and Zimbabwe. BAE's US subsidiary makes several subsystems for F-16s, 236 of which have been supplied to the Israel Defense Forces. In 2006, BAE was excluded from the portfolio of the government pension fund of Norway "because they develop and/or produce central components for nuclear weapons". "According to the ethical guidelines for the Government Pension Fund – Global, companies that produce weapons that through normal use may violate fundamental humanitarian principles shall be excluded from the fund." BAE is indirectly engaged in production of nuclear weapons - through its 37.5% share of MBDA it is involved with the production and support of the ASMP missile, an air launched nuclear missile which forms part of the French nuclear deterrent. BAE is also the UK's only nuclear submarine manufacturer and thus produces a key element of the UK's nuclear weapons capability.
BAE Systems has been under investigation by the Serious Fraud Office, into the use of political corruption to help sell arms to Chile, Czech Republic, Romania, Saudi Arabia, South Africa, Tanzania and Qatar. In response, BAE Systems' 2006 Corporate Responsibility Report states "We continue to reject these allegations...We take our obligations under the law extremely seriously and will continue to comply with all legal requirements around the world. In June 2007 Lord Woolf was selected to lead what the BBC described as an "independent review.... [an] ethics committee to look into how the defence giant conducts its arms deals." The report, Ethical business conduct in BAE Systems plc – the way forward, made 23 recommendations, measures which BAE has committed to implement. The finding stated that "in the past BAE did not pay sufficient attention to ethical standards in the way it conducted business," and was described by the BBC as "an embarrassing admission." In September 2009, the Serious Fraud Office announced that it intends to prosecute BAE Systems for offences relating to overseas corruption. The Guardian claimed that a penalty "possibly of more than £500m" might be an acceptable settlement package. On 5 February 2010, BAE Systems agreed to pay £280 million in criminal fines to the US and UK authorities.
In September 2005 The Guardian reported that banking records showed that BAE paid £1 million to Augusto Pinochet, the former Chilean dictator. The Guardian has also reported that "clandestine arms deals" have been under investigation in Chile and the UK since 2003 and that British Aerospace and BAE made a number of payments to Pinochet advisers. BAE has been criticised for its role in disposing of surplus Royal Navy warships. HMS Sheffield was sold to the Chilean Navy in 2003 for £27 million, however the government's profit from the sale was £3 million, after contracts worth £24 million were placed with BAE for upgrade and refurbishment of the ship. The SFO's Czech Republic investigation related to alleged bribery as part of the deal to lease BAE/Saab Gripen fighters to that country. BAE is alleged to have paid "secret offshore commissions" of over £7 million to secure the sale of HMS London and HMS Coventry to the Romanian Navy. BAE received a £116 million contract for the refurbishment of the ships. The Tanzania inquiry relates to the sale of a radar system to that country in 2002. The sale was criticised by then Secretary of State for International Development Clare Short, opposition MPs and the World Bank. Clare Short, the former Secretary of State for International Development, claimed that BAE had "ripped off" developing nations.
Last year the company, worth an estimated £19bn, made a profit of over £18.5 million from selling weapons. BAE Systems is the predominant supplier to the UK Ministry of Defence, being the only company to receive more than £1 billion from the MOD in 2004/2005. Oxford Economic Forecasting states that in 2002 BAE's UK businesses employed 111,578 people, achieved export sales of £3 billion and paid £2.6 billion in taxes. These figures exclude the contribution of Airbus UK. Since its creation BAE had a difficult relationship with the MOD. This was attributed to deficient project management by the company, but also in part to the deficiencies in the terms of "fixed price contracts". BAE CEO Mike Turner said in 2006 "We had entered into contracts under the old competition rules that frankly we shouldn't have taken". These competition rules were introduced by Lord Levene during the 1980s to shift the burden of risk to the contractor and were in contrast to "cost plus contracts" where a contractor was paid for the value of its product plus an agreed profit. BAE Systems Australia is the largest defence contractor in Australia, having more than doubled in size with the acquisition of Tenix Defence. The Al Yamamah agreements between the UK and Saudi Arabia require "the provision of a complete defence package for the Kingdom of Saudi Arabia"; BAE employs 4,600 people in the kingdom. BAE Systems Land Systems South Africa, 75% owned by BAE, is the largest military vehicle manufacturer in South Africa, and is currently taking part in the US MRAP programme. Apart from its share of Saab, BAE's interests in Sweden are a result of the purchases of Alvis Vickers and UDI, which owned Hägglunds and Bofors respectively; The companies are now part of BAE Systems AB and have a combined workforce of approximately 1,750. Also, BAE Systems owns 49% of Air Astana, Kazakhstan.
Weapons manufacturer BAE paid a bribe to avoid bribery charges last week; those who protested in Britain against the use of those weapons in Gaza face jail this week. Manufacturers of weapons of mass destruction can pay their way out of the courts. Young people protesting against war crimes are subject to harsh jail terms. This is the reality of British justice – an upside down system where BAE can win contracts worth £50 billion through bribes and then, when it is found out, pay less than a 0.5% of the loot to go free. Tony Blair called off a corruption inquiry in 2006. BAE supplied key components for the Israeli assault on Gaza, which began at the end of 2008. Demonstrators faced police attacks and arrests when they marched against the slaughter and destruction. The police have hounded some protesters for many months. Two young women involved in the protests have already been sent to prison. More demonstrators faced jail this week. War criminals go free; anti-war marchers get locked up. Welcome to democracy under capitalism.
A blog for the socially and politically conscious, written by a young, gay activist who strongly believes in equality and justice.