BAE Systems: Corruption Allegations

Corruption is a recurrent feature of BAE dealings. A multimillion-dollar “slush fund” during the Al Yamamah deal went towards entertaining prominent Saudi Arabian figures on their visits to the West.[1] In 2006, Prime Minister Tony Blair forced his attorney-general to halt the Serious Fraud Office’s investigation into BAE activities abroad as they pertained to Saudi Arabia.[2]
In 2010, BAE pled guilty to conspiring to defraud the U.S. Government and was fined $400 million by the U.S. Department of Justice. A U.K. court ordered a £30 million penalty for the controversial sale of military radar equipment to Tanzania.[3]
The U.S. Department of State subsequently fined BAE $79 million in May 2011 for violations of the Arms Export Control Act. BAE only narrowly escaped debarment from U.S. government contracts.[4]
Former international banker Terry Crawford-Browne claimed that loan agreements between Barclays and BAE covering a BAE arms deals were fraudulent, and that BAE paid bribes of £115 million in order to secure contracts.[5]
BAE attempted to clean up its image by commissioning the Woolf Committee to deliver a report on their ethics policies. However, the report said that BAE “failed to pay sufficient attention to ethical standards.”[6] At BAE’s 2013 AGM, Chairman Dick Olver claimed that BAE was “one of the leading and most ethical companies.”[7]

[1] David Leigh and Rob Evans (2010): “BAE and the Saudis: How secret cash payments oiled £43bn arms deal”, The Guardian, 5 February, accessed 11.09.2013

[2] David Leigh and Rob Evans (2007): “How Blair put pressure on Goldsmith to end BAE investigation”, The Guardian, 21 December, accessed 11.09.2013

[3] Leigh, D., & Evans, R. (2010): “BAE admits guilt over corrupt arms deals”, The Guardian, 6 February, accessed 19.09.2013

[4] U.S. Department of State (2011): BAE Systems plc Enters Civil Settlement of Alleged Violations of the AECA and ITAR and Agrees to Civil Penalty of $79 million, 17 May, accessed 11.09.2013

[5] 17.07.2012 SAPA (2012): Call to probe Barclays links to arms deal, 17 July, accessed 11.09.2013

[6] Gray, S., Leigh, D., & Evans, R. (2008): “BAE paid too little heed to ethics, says report”. The Guardian, 6 May, accessed 13.09.2013

[7] Campaign Against Arms Trade (2013): BAE Systems, accessed 11.09.2013

Affected topics
  • Corruption
Directly and indirectly (through shareholding) involved companies Indirect investors through shareholding

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