BAE fined over Tanzania deal

ARMS group BAE Systems yesterday received a £725,000 penalty after a probe into allegations about an arms sale to Tanzania, but a judge criticised a deal it struck with the Serious Fraud Office (SFO) to end the investigation.

A London court handed down the sentence, including a £500,000 fine plus costs of £225,000, to BAE for failing to keep proper records of payments to a Tanzanian marketing adviser.

But Justice David Bean criticised a plea bargain deal with the SFO, under which it avoided admitting to claims it made payments to win a £28m radar deal with Tanzania, which it denies.

Under the deal, BAE agreed to pay a £30m fine and last month pleaded guilty to a charge of breach of duty over keeping of accounting records covering payments made to the adviser.

Bean said the agreement was hastily drafted and he was unable to “sentence (BAE) for an offence which the prosecution failed to charge”, such as false accounting or conspiracy to corrupt.

The judge wanted to know what the cash paid to the adviser had been used for before deciding on the fine.

“The victims of this way of obtaining business, if I have correctly analysed it, are not the people of the UK, but the people of Tanzania,” Bean said.

BAE acknowledged paying commission money to the agent, but denied corruption. “The company accepts the decision of the court and will abide by it,” BAE said.

After the sentencing, SFO director Richard Alderman said: “I expect BAE to honour the agreement. I expect the company to pay it as quickly as possible.”