BAE grilled by MPs on £29.5 million Tanzania payment

19 July 2011

Arms giant BAE Systems was grilled this morning (19 July) by the House of Commons International Development Committee over the methods by which it proposes to pay almost £30 million in "reparations" to the people of Tanzania ordered by the court in December 2010 between the company and the Serious Fraud Office (SFO).

Campaign Against Arms Trade (CAAT) has denounced the process by which BAE Systems, the wrongdoer, is planning to distribute the funds, bypassing the government of Tanzania and disregarding the advice and expertise of the UK's Department of International Development (DfID).

The Committee repeatedly asked why it was taking BAE so long to pay the £29.5million, a delay which baffled the Director of the Serious Fraud Office. The company could have made provisional plans as soon as the plea bargain was agreed in February 2010 and the money paid immediately after the Court hearing.

BAE's reluctance to implement the plan drawn up by DfID and the Government of Tanzania was also questioned.

DFID told the Committee that funds should be distributed in accordance with an agreement between itself and the Tanzanian government, with money spent by schools on teaching materials and improved classroom facilities, including 4.4 million textbooks and 2 million desks, and teacher accommodation. The process would be independently monitored, evaluated and audited. DfID stated that there would be "legitimacy issues" if BAE ignored the will of the Tanzanian government.

The Committee urged BAE to think again on this and distribute the money fully in accordance with the plan before the Committee's report is completed in early October.

Ann Feltham, CAAT's Parliamentary Co-ordinator, attended the hearing. She said:

"If unaccountable arms company appointees are allowed to determine which projects this payment should go to, it would be a highly retrogressive and irresponsible step for democracy and parliamentary processes in Tanzania. BAE admitted criminal responsibility in court and the judge made damning remarks about BAE's culpability. BAE should not be involved at all. The elected representatives of the Tanzanian Parliament must have proper oversight of the BAE payment."

ENDS

For further information or an interview please contact CAAT's Media Coordinator, Kaye Stearman on 020 7281 0297 or mobile 07990 673 232 or email media(at)caat·org·uk.

NOTES

  1. The Campaign Against Arms Trade (CAAT) in the UK works to end the international arms trade.The arms business has a devastating impact on human rights and society and damages economic development. Large-scale military procurement and arms exports only reinforce a militaristic approach to international problems Around 80% of CAAT's income is raised from individual supporters.
  2. In February 2010, the Serious Fraud Office (SFO) secured BAE agreement to a “plea bargain” under which the company would pay £30 million (less court penalties) for the benefit of the people of Tanzania. The SFO says that the amount was chosen as “equivalent to the value of the Tanzanian contract.” This refers to a contract for a military radar system which Tanzania was pressured to buy in 1999, although cheaper and more appropriate equipment was available.
  3. In February 2010 the SFO approached DfID and requested its advice "on an appropriate mechanism for ensuring that the money was used for the benefit of the people of Tanzania while ensuring propriety and transparency”. Following this request, and with detailed input, advice and facilitation from DfID and other UK and Tanzanian officials, the Government of Tanzania presented to the SFO on 16 November 2010 a detailed proposal on how it would use this payment to support education. The Tanzanian Government was given to understand that this proposal would form part of the papers and legal settlement presented to the courts in December 2010.
  4. The amount of £30 million (less court fees) was levied by Mr Justice Bean in December 2010 at the court hearing which effectively signed off the plea bargain. Mr Justice Bean did not refer to the agreement between the SFO and DfID - he may not have been aware of it.
  5. In May 2011, BAE announced that it had appointed committee members to advise on distribution of funds, which would be channelled through non-government organisations in Tanzania. BAE made no reference to the prior agreement between DfID and the Tanzanian government.
  6. The advisory board that BAE has chosen comprises four BAE executives and two external advisers. Despite a press report in May 2011 that the non-BAE advisers would have a “non-corporate” background, the board’s chair is an investment banker who has chaired a tobacco company and an insurance company and has business rather than development experience of “working in Africa”. The other non-BAE appointee has business experience, including in military industry, but no development experience or experience of working in Africa.
  7. The International Development Committee has eleven members and is chaired by MP Malcolm Bruce (Liberal Democrat). The 19 July session was to examine links between Financial Crime and Development, specifically the background to the agreement between BAE and the SFO arising from BAE's admitted criminal offence of improper book-keeping in connection with the sale of a military radar system to Tanzania, and how the people of Tanzania would benefit from the repayment of reparations by BAE
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