BAE Systems, the British weapons manufacturer, is to pay criminal fines totalling approximately £285 million. This deal closes a coordinated eight-year investigation by the British Serious Fraud Office (SFO) and the U.S. Department of Justice (DoJ) into longstanding allegations of bribery, slush funds, and unrecorded payments to clients. The U.K. levy of £30 million is a national record for a corporate criminal fine. BAE has accepted only the U.K. charge of failing to keep accounting records and the U.S. charge of not instituting appropriate anti-bribery preventive measures. The issues date as far back as the firm’s 1985 al-Yamamah deal to supply military equipment to Saudi Arabia, and include more recent contracts with Tanzania, the Czech Republic, South Africa, and Hungary. BAE had apparently been bracing itself for fines of up to £1 billion and would have been under no illusions as to the damage its reputation, as well as that of the British government, faced in any criminal trial.

Most importantly, BAE has not admitted any corruption allegations. The plea-bargained settlement has been severely criticised by NGOs like the Campaign Against the Arms Trade (CAAT) and by British MPs. Public accusations have been made that Prime Minister Tony Blair caved in to Saudi pressure to halt the British criminal investigation into the £43-billion al-Yamamah affair. CAAT says the fine is a ‘tiny price’ in relation to the value of the contracts. Preliminary English criminal procedures against a key BAE agent, the Austrian Count Alfons Mensdorff-Pouilly, have also been abandoned. The collapse of those proceedings has, however, enabled The Observer to reveal that the SFO prepared detailed allegations of systematic procedures through which BAE paid bribes to foreign politicians and officials. The company may have escaped the blacklisting that would have followed a criminal conviction for bribery and its shareholders will no doubt be relieved that it can continue selling weaponry and related equipment around the world. But the clear implication is that none of the parties involved, namely BAE, the British government, and the U.S. government, wanted to see the evidence tested in the criminal courts. It seems that states are terrified of pursuing even serious accusations of corporate criminality.

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