BAE’s corruption allegations – make them face up to it this time

Corporate fraud 4 Comments

It was a sad day for British justice in 2006 when Tony Blair intervened to halt investigations into allegations that BAE Systems, the UK’s largest defence contractor, had paid bribes to officials in Saudi Arabia in order to be awarded lucrative contracts in that country.

Britain should not make the same mistake twice, and assurances on the part of Gordon Brown that his government will not intervene with investigations into similar allegations against the company relating to its dealings with the governments of Tanzania, the Czech Republic, South Africa and Romania are more than welcome.

(After a six year investigation, Britain’s Serious Fraud Office (SFO) announced on October 1 that it had sought consent from the Attorney-General to have BAE prosecuted with respect to these latter allegations.

The case currently rests with the Attorney-General, who will decide whether or not the evidence against BAE is sufficient at this time so as to take the case to court)

 
Saudi saga was a disgrace – don’t repeat it
The Saudi debacle in 2006 revolved around an investigation into allegations that BAE had made illegal payments (bribes) to officials and members of the royal family in Saudi Arabia in exchange for a large arms contract.

That investigation was abruptly shelved following personal intervention on the part of Tony Blair. Although national security concerns were sighted as the primary reason, there is little doubt that that action was driven by concerns over complications with regards to Britain’s relationship with the Saudis, who had threatened: (a) to pull out of an agreement with BAE to provide for the provision of new fighter aircraft – at the cost of up to 50,000 British jobs; and (b) to withdraw its cooperation in respect of the war on terror in the event that the investigation continued to proceed (refer article).

(The sensitivity on the part of the Saudis with respect to that investigation revolved around what any probe into BAE in this regard may reveal and expose with regard to the Saudi government’s own practices)

 
Hold them to account this time
That decision represented a shocking mistake, one which Britain should not repeat with regard to the allegations at hand.

These allegations should be handled in the appropriate manner – on their merits through the proper legal process without any form of political interference whatsoever.

Yes, these matters are sensitive. Risks to military operations and national security in the event of leakage of sensitive information should not be treated lightly, and any embarrassment on the part of foreign governments with regard to practices which are exposed as a result of any trial will certainly complicate relationships with key allies from Britain’s point of view.

But this is no reason for interference with regard to legal proceedings against BAE. Surely there are ways from which to hold the company to account without divulging sensitive military information, for example, by conducting some aspects of any resulting trial in secret or by expunging trial documents containing sensitive information from public record.

Moreover, concern about upsetting foreign governments should never deter countries from due and proper investigation of their own resident companies. The day any nation allows bullying or intimidation from foreign governments to prevent it from holding its own citizens and organizations to account is a sad day for that nation – no foreign relationship is worth that price.

 
If they’re so innocent – let them prove it
BAE claims that it has never made illegal payments of any kind. To be fair, they may not turn out to be guilty.

If so, they have nothing to hide – nor the foreign governments with whom they deal. Thus they would have no problem proving their innocence through the proper legal process.

But innocence should be established by proper legal proceedings, not political intervention.

If BAE is to avoid facing court, it should be because of a genuine belief on the part of the Attorney-General that there is insufficient evidence to support the case against them – NOT because British politicians cower to intimidation from foreign governments.

Gordon Brown should keep to his word, and he and his ministers should stay right out of this affair and simply let justice run its proper course.

4 Responses to “BAE’s corruption allegations – make them face up to it this time”

  1. Brad Shorr Says:
    October 8th, 2009 at 2:28 am

    Andrew, It is very galling that our countries have to do business with regimes such as Saudi Arabia in the first place; the complexities of the political situation in that part of the world seem to make it impossible to conduct business with clean hands; we are forced to make ethical compromises at every turn. As much as I loathe cover ups and double dealing, in cases like this I have some sympathy for corporations and even our government – with so much at stake, it’s a very difficult balancing act. On the other hand, if corporations and governments are using this political environment as a mere excuse for blatant greed, then I guess we have to rely on a free press to bring perpetrators to justice. Governments can be shamed or pressured into action by a public that cares.

  2. Andrew Says:
    October 9th, 2009 at 7:00 am

    Brad,

    I can certainly appreciate the dilemmas facing western companies during the process of vying for business in countries where contracts are difficult to obtain in absence of the payment of bribes.

    That said, I feel that the western world should strive to be a shinning example with regard to best practice in all areas of business, including that of ethical dealings with foreign governments. If western companies are not held responsible for their actions, that will serve only to entrench poor practices throughout much of the world.

  3. Fred Schlegel Says:
    October 9th, 2009 at 9:37 pm

    You raise hard questions here Andrew. While I agree completely that standing as an example is the right thing to do, removing yourself entirely from the world due to an idealistic standpoint may make the example you’re setting moot. Knowing where the line is, when the bad is overwhelming the good is very difficult. In situations like BAE where the business and politics of a situation are so intertwined you have to wonder if the government wasn’t winking as the deal was being put through.

  4. Andrew Says:
    October 10th, 2009 at 7:36 am

    Fred,

    Yes, I wonder how much the British government was either involved in or knew about any untoward behavior which was going on at the time that the Saudi contract was made, or at the time in which any of the other contracts to which the allegations relate were being made. Could there perhaps be something that the British government itself is hiding?

    As you say, it is very difficult to know where the line is in situations like this. Certainly, it would be unfair to expect BAE to just sit back and miss out on multi-billion dollar contracts because it decided to take a stand based on integrity. But I am still very uncomfortable with any allegations of bribery not being properly investigated, and in spite of the difficulty facing BAE, I do not feel that the answer is for politicians to intervene in order for the company to avoid proper scrutiny.

    Naturally, it must be borne in mind that BAE may not indeed turn out to have knowingly paid bribes (innocent until proven guilty). But I still think that this is something which should be decided through proper legal proceedings, not through political intervention to avoid scrutiny

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