BAE protesters win SFO injunction

The Serious Fraud Office was yesterday barred from closing its corruption investigation into the arms manufacturer BAE Systems after two charities won an injunction forcing the High Court to consider a judicial review of the decision to settle the case.

Corner House and Campaign Against Arms Trade successfully asked for an injunction to enable them to seek a review of the SFO's plea agreement with BAE, under which Europe's biggest defence contractor has agreed to pay a record £30m fine.

The court's decision came after BAE pleaded guilty in the US to conspiracy to make false statements in connection with overseas contracts. It accepted a $400m fine, taking responsibility for payments it made to secure weapons deals in Saudi Arabia, the Czech Republic, Hungary and a number of other countries.

US District Judge John Bates said BAE's actions involved "deception, duplicity and knowing violations of the law, I think it's fair to say, on an enormous scale".

The two charities bringing the action in the High Court yesterday say the fine imposed on the company here does not reflect the seriousness of the allegations. A decision on the judicial review will be made on 20 March. The case in the UK concerns a series of corruption allegations, and BAE's failure to record commission payments made to a "marketing adviser" relating to the sale of a radar system to the Tanzanian government in 1999.

"The SFO's proposed settlement with BAE is unlawful because the SFO did not follow the correct prosecution guidance on plea bargains; the agreement does not reflect the seriousness and extent of BAE's alleged corruption and bribery offences, and because it does not provide the court with adequate sentencing powers," the two charities said in a statement.

"[The charities] also hold that the SFO unlawfully concluded that the factors weighing against prosecuting BAE on bribery and corruption charges outweighed those in favour of prosecution."

BAE, which has not yet appeared in a UK court since agreeing the settlement with the SFO, refused to comment last night. The case in the US came after the Justice Department accused BAE of reneging on a commitment the company made to comply with anti-bribery laws. America's Foreign Corrupt Practices Act makes it illegal to make payments to officials in order to win business.

On 5 February, when the deal with the SFO and the US authorities was reached, BAE's chairman, Dick Olver, said: "In the years since the conduct referred to in these settlements occurred, the company has systematically enhanced its compliance policies and processes with a view to ensuring that the company is as widely recognised for responsible conduct as it is for high-quality products and advanced technologies."

A spokesman for the SFO said it would be "inappropriate" for the organisation to comment on the High Court judgment, or the US hearing.

As part of the plea bargain with the SFO, bribery charges against a former BAE agent, Count Alfons Mensdorff-Pouilly, were also dropped. Count Alfons was charged in January.

In a separate case, an investigation by the SFO into alleged payments of as much as £1bn made by BAE to Prince Bandar bin Sultan, a member of the Saudi royal family, was dropped in 2006 after the intervention of the then Prime Minister, Tony Blair. The Government claimed that investigating the £43bn Yamamah deal would threaten the UK's national security.