Judge criticises 'hastily drafted' BAE plea deal

SFO corruption investigation concludes with £500,000 fine

A judge yesterday attacked the plea bargain between BAE Systems and the Serious Fraud Office (SFO), concluding a six-year corruption investigation, as "loosely and perhaps hastily drafted".

Handing down a £500,000 fine and £225,000 in costs, Mr Justice Bean told Southwark Crown Court he was "surprised" the prosecutor had given BAE indemnity for all past offences, disclosed or otherwise, as part of the deal.

The fine concludes an inquiry into payments of £8m to businessman Shailesh Vithlani in the run-up to a £28m military radar contract for Tanzania. It will be paid out of the £30m compensation fund for the Tanzanian people, agreed as part of a US-style plea bargain between BAE Systems and the SFO.

The Tanzanian investigation was just one part of a multi-year, multi-jurisdiction investigation covering the company's activities in South Africa, Saudi Arabia, Tanzania and Eastern Europe. And the plea bargain was one element of a global settlement agreed last February, under which the company paid $400m (£259m) to the US Department of Justice over arms sales to Saudi Arabia in the 1980s and 1990s.

Passing sentence yesterday, Mr Justice Bean said he had kept the fine to a minimum to ensure as much money as possible made it through to the Tanzanian people. "The structure of this settlement agreement places moral pressure on the court to keep the fine to a minimum so that the reparation is kept at a maximum," he said.

Although the case was part of a global corruption investigation, the charges brought by the SFO – and agreed by BAE – specified only accounting irregularities in respect of the payments to Mr Vithlani. BAE denies corruption.

On hearing the case on Monday, Mr Justice Bean said the "obvious inference" was that at least part of the money paid by to Mr Vithlani was "used to bribe decision makers".

Under current legislation covering "extra-territorial bribery", a charge of corporate corruption requires the prosecution to prove beyond reasonable doubt that there was a "controlling mind" – namely that a member of the board was aware of and complicit in the corruption. In practice, it is almost impossible to secure a conviction, not least because of the difficulty of collecting evidence in countries whose politicians might themselves be implicated in a guilty verdict. In order to maximise its chances of success, the SFO instead offers the company a bargain, under which the group admits a lesser charge of financial irregularity, while agreeing to pay compensation.

Gavin Cunningham, a director at BTG Global Risk Partners, said the plea bargain had allowed BAE to "get off lightly", given the scale of UK and US investigations. "The common sense view is that the charges did not reflect the underlying allegations of corruption," he said.

But the law is about to change. Under a new Bribery Act, which comes into force in April, the prosecution will have to show only that bribery took place, against which it will be up to the company to prove that it has adequate measures in place to prevent corruption.

Neill Blundell, the head of fraud at Eversheds law firm, said: "There is about to be a fundamental change in the law, which moves the onus of proof on to the company and makes it much, much easier to secure a prosecution."

Welcoming the conclusion of the Tanzanian investigation yesterday, SFO director Richard Alderman said: "I am delighted that the judge stressed the seriousness of BAE's actions and that he recognised that the true victims were the people of Tanzania."

BAE Systems said the judgment "draws a line under a historical matter", and stressed that the company has "systematically enhanced its compliance policies" since the Tanzanian radar deal was concluded in 1999.

Start your day with The Independent, sign up for daily news emails
Barn owls are among species that could be affected
charity appeal
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas