Judge casts doubt on BAE’s deal with SFO

A DEAL between arms group BAE Systems and the Serious Fraud Office to settle a long-running investigation into allegations linked to an arms sale to Tanzania looked in doubt yesterday after a judge challenged it.

BAE and the SFO had agreed under the terms of the deal that BAE would not have to admit to allegations that it made payments to secure a radar deal with the Tanzanian government.

BAE had acknowledged paying commission money to a Tanzanian marketing adviser linked to the group’s sale of a radar to Tanzania in 1999, but denies corruption.

It is understood to have agreed to an ex-gratia payment of up to £30m to Tanzania and admitted failing to keep accurate records of the payment to the agent.

BAE had agreed to plead guilty to one charge of breach of duty to keep accounting records linked to payments “made to a former marketing adviser in Tanzania” and the judge had been expected to sentence the defence company on that basis.

BAE said in February: “In connection with the sale of a radar system by the company to Tanzania in 1999, the company made commission payments to a marketing adviser and failed to accurately record such payments in its accounting records.”

The firm added: “The company failed to scrutinise these records adequately to ensure they were reasonably accurate and permitted them to remain uncorrected.

“The company very much regrets and accepts full responsibility for these past shortcomings.”
BAE said it had improved its compliance policies to avoid a repetition of such issues.

But the judge at a hearing at Southwark Crown Court  said he was unable to pass sentence without hearing more evidence and said he wanted to call witnesses to testify.

He questioned why the payments to the businessman had been made and also whether some of the payments had been channelled to officials in Tanzania.