6 Feb 2010

Defence firm fined $US450m

2:15 pm on 6 February 2010

Europe's biggest military contractor, BAE Systems, will admit two criminal charges and pay fines of more than $US450 million to settle long-running investigations in the United States and Britain.

It will hand over $US400 million to the US, which accused BAE of wilfully misleading it over payments made as the firm tried to win contracts.

The defence group will pay about 30 million pounds in the UK - a record criminal corporate fine - for separate wrongdoings.

The firm said the pleas did not relate to accusations of corruption or bribery but that it "regretted" shortcomings, the BBC reports.

The BBC said that pleading guilty to criminal charges in Britain and the US was "a serious embarrassment" to the UK's largest manufacturer.

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 co-ordinated such a corporate corruption "plea bargain".

In a deal with the US Department of Justice, BAE admitted a charge of conspiring to make false statements to the US government.

A charge filed in a District of Columbia court contains details of substantial secret payments by BAE to an unnamed person who helped the UK firm sell plane leases to the Hungarian and Czech governments.

The department also details services such as holidays provided to an unnamed Saudi public official and cash transfers to a Swiss bank account that it says were linked to a contract to supply military equipment to Saudi Arabia.

It gave a damning condemnation of BAE, which it said made millions of dollars in payments to third parties, knowing the money would probably go to foreign government decision-makers to favour BAE in the award of defence contracts.

There was also an infringement of restrictions on the supply of sensitive US technology in deals to supply aircraft in Hungary and the Czech Republic.

BAE has also reached agreement with the UK Serious Fraud Office to plead guilty to a breach of duty to keep accounting records, stemming from a contract in 1999 to supply a radar system to Tanzania.