BAE plea bargain gets unbargained for results
Court case has surprise result
For the first time, a High Court judge has said that arms giant BAE Systems appears to have benefited from corruption – just as the company was hoping to put the accusations behind it.
The judge’s comments came as a shock to observers who expected him simply to rubber-stamp a ‘plea bargain’ between BAE and the Serious Fraud Office (SFO).
Under the bargain, BAE admitted to accounting irregularities in a deal with Tanzania while the SFO dropped all corruption investigations into BAE – involving deals with the South African, Romanian and Czech governments as well as Tanzania.
Barristers for both the SFO and BAE were visibly taken by surprise when the judge, David Bean, made clear his disapproval of the bargain at Southwark Crown Court on 20 December. Bean returned again and again to issues of bribery as BAE and SFO staff held whispered conversations and campaigners looked on with delight. The press bench filled up as journalists learnt that the hearing was not the formality they expected.
Bean fined BAE £500,000 for the accounting offence, saying he had no power to pass sentence for corruption charges that had not been brought. But he said he was ‘surprised’ the SFO had agreed to the terms and hinted that a jury trial for corruption would have been preferable.
The case focused on BAE’s payments, via intermediary firm Red Diamond, to their agent Sailesh Vithlani. BAE maintains that a payment to Vithlani of £12.4m was for ‘lobbying’ services. Others allege he used the money to bribe Tanzanian decision-makers to spend public money on equipment the country did not need.
Bean insisted it would be ‘naive in the extreme to think that Mr Vithlani was simply a well-paid lobbyist’. He said that BAE was not directly a party to corruption because they ‘did not need to be’, as Vithlani appeared to ‘have free reign’ to make payments, about which BAE ‘didn’t want to know the details’.
The judge drew attention to former BAE chairman Richard Evans, who personally approved Vithlani’s re-appointment but who has not been charged with any offence.
As head of BAE, Evans was considered so influential that the former foreign secretary Robin Cook wrote that he had the ‘key to the garden door at Number Ten’.
Kaye Stearman of the Campaign Against Arms Trade (CAAT) told the Friend she was pleased to see the judge ‘asking the questions that the person in the street would ask’. Anti-corruption campaigner Nicholas Hildyard of The Corner House said that BAE were no longer ‘able to deny’ that they had concealed improper payments.
Quakers were among the activists who gathered in the snowy weather outside the court with a puppet of BAE’s current chairman Dick Olver handing out peanuts – an ironic comment on the ‘fine’ resulting from the plea bargain.
