We have previously blogged on the SFO’s controversial decision not to prosecute BAE Systems in relation to an investigation into corruption of Tanzanian government officials who purchased a highly expensive air traffic control package which was over specified for Tanzania’s needs. On 21st December 2010 BAE Systems Plc was fined £500,000 after admitting it had failed to keep adequate accounting records in relation to this defence contract. Here is the SFO’s press report on it.

To recap: the Judge took into account in sentencing BAE that the group had committed itself to a process of change following the Report of Lord Woolf and that BAE would be making a payment for the benefit of the people of Tanzania of £30 million less the fine. The Judge said that the people of Tanzania were the real victims. The Judge decided in these circumstances to impose a fine of £500,000. The Judge, Mr Justice Bean, was not pleased at all about the decision not to prosecute the company for corruption and he suggested that the fine which had been agreed for the offences to which BAE pleaded guilty was totally inadequate. He said in his judgment:


“I also cannot sentence for an offence which the prosecution has chosen not to charge. There is no charge of conspiracy to corrupt, nor of false accounting contrary to section 17 of the Theft Act 1968. More obviously still, the Court does not decide who should be prosecuted”


On 5 February this year BAE concluded settlement negotiations with the US Department of Justice in relation to contracts with Saudi Arabia and Central and Eastern Europe, and with the SFO in relation to the Tanzania contract.

This week it was reported that a British cross-parliamentary committee, the International Development Committee, also wants any others involved in the deal to face prosecution including those individuals in Tanzania. The Commons committee is reported as saying that it is appalled to find that the compensation has still not been paid.

BAE Systems says it is now working with the Department for International Development as to how the money should be spent.

It is noteworthy how long this type of investigation and prosecution last. Even though it was disposed of by the court almost one year ago in the UK, the bad publicity for BAE Systems continues in the media and is still now being debated by senior politicians within the British government and the Tanzanian government.

Commenting on today’s report, Chandu Krishnan, Executive Director of Transparency International UK said:

“This report should be welcomed by all those who are concerned about bribes paid overseas by British companies. Bribery is not a victimless crime and it is important that reparations are also made to the countries whose citizens suffer when bribes are paid.
“The long saga of allegations about corruption involving BAE Systems has been a national embarrassment to both the UK and Tanzania, and it is astonishing that no individual has yet been found guilty despite the company having to pay fines and reparations of $450 million for Tanzania and other cases. We are pleased to hear that the Tanzanian government may prosecute individuals, and hope that the UK authorities will cooperate fully if UK nationals are found to have broken Tanzanian law.  We particularly endorse the suggestion that the Government’s Anti-Corruption Champion should publish annual reports on his work.”

Let’s also not forget that the $400m fine which was paid in the US for related corruption offences was one of the largest imposed in the last year, so that very fact too attracts further publicity of the wrong kind (not all publicity is good publicity, contrary to the old saying) around the world.