BAE-SFO settlement questioned by judge - sentence postponed

20 December 2010

The plea bargain agreed between arms giant BAE Systems and the UK Serious Fraud Office (SFO) to end the six-year bribery investigation was not, as expected, signed off this morning at Southwark Crown Court in south London by Mr Justice Bean.

Instead the judge forensically questioned barristers representing BAE and the SFO as to the exact nature of the payments made through shell companies Red Diamond and Envers to Mr Sailesh Vithlani. He was openly skeptical about the nature of the services offered Mr Vithlani and the amount paid to him - $12 million- between 30 and 40 per cent of the cost of the contract when the norm is around 3 per cent.

In the freezing weather supporters from Campaign Against Arms Trade (CAAT) and The Corner House held a colourful pageant outside the court house of a giant puppet of Dick Olver, BAE Chairman, hugging a uniformed Prince Andrew while handing giant peanuts. They urged the court not to fine BAE peanuts and pointed out that the proposed fine of £2 million would be a small cost to BAE.

Kaye Stearman of Campaign Against Arms Trade said:

We went into the court today with expectations that signing off the plea bargain with arms giant BAE would be a formality. Instead we have seen a judge question the nature and seriousness of the offence, openly suggesting that BAE was happy to channel funds to Mr Vithlani and not pursue what he did with them. We will be very interested to what the judge has to say tomorrow when he delivers the sentence.

For further information contact CAAT Media Co-ordinator Kaye Stearman email the press officer or ring 020 7281 0297 or 07990 673 232 or contact The Corner House at 01258 473795. Photos are available.


1. Campaign Against Arms Trade (CAAT) works for the reduction and ultimate abolition of the international arms trade together with progressive demilitarisation within arms producing countries. The Corner House aims to support democratic and community movements for environmental and social justice through analysis, research and advocacy.

2. Over the years the Serious Fraud Office (SFO) has investigated allegations of corrupt payments made in Austria, Chile, Czech Republic, Hungary, Qatar, Romania, Saudi Arabia, South Africa and Tanzania, totalling over £1 billion. The investigation regarding Saudi Arabia was dropped after the intervention of then Prime Minister Tony Blair in December 2006.

3. On 23 November 2010, BAE pleaded guilty to a single criminal offence charge at Westminister Magistrates Court, namely that:

Between 01/01/1999 and 31/12/2005 at . . ., being an officer of British Aerospace Defence Systems Limited, knowingly and wilfully authorised default to be made by the company in that it failed to keep accounting records which were sufficient to show and explain the company's transactions. Contrary to section 221 (5) and (6) of and Schedule 24 to the Companies Act 1985.

In effect, BAE is pleading guilty to “accounting errors” in relation to the sale of a military radar system to Tanzania in 1999, with BAE agreing to pay a sum of up to £30 million.

4. As part of the plea bargain the SFO underook never to prosecute any individual in future if doing so involves alleging BAE Systems was guilty of corruption. CAAT and The Corner House attempted to challenge the plea bargain through a judicial review earlier this year.

In their letter of 19 November to SFO Director Richard Alderman the two groups state:

We remain deeply concerned about the terms of the plea bargain that the SFO has struck with BAE. disclosed that:

"BAe requested an undertaking form [sic] the SFO that in any future proceedings (to which BAe was not a party) the prosecution would not allege that the company was guilty of corruption."

Despite repeated requests, the SFO has not released further details of this undertaking.

5. Further information about BAE's radar deal with Tanzania can be found here.

6. More information on the SFO's plea bargain with BAE and the legal challenge brought by CAAT and The Corner House can found here.


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