Business as Usual
BAE to face new bribes probe in US
Executives to be quizzed by Congressional panels
Oliver Morgan, industrial editor
Sunday May 13, 2007
Staff from the foreign affairs committees of the US Senate and House of Representatives are expected to write to the company, led by chief executive Mike Turner, before the end of the current Congressional session in two weeks to request meetings with executives.
Congressional aides told The Observer they were briefed on Tuesday by officials from the US State Department on investigations by the Serious Fraud Office into allegations of bribery relating to the £40bn al-Yamamah deal with Saudi Arabia, controversially halted in December, and continuing probes into deals with Tanzania, the Czech Republic, South Africa, Chile, Qatar and Romania.
It emerged recently that the UK government had a complaint from the US about the dropping of the Saudi inquiry, and it has been criticised by the OECD.
Aides were also told that BAE had previously failed to request prior authorisation from the Department of State for the sale of its subsidiary BAE Systems Avionics to Finmeccanica of Italy.
Staff are now considering whether, if allegations of bribery were proved, they could be taken into account by officials examining the Armor Holdings deal. The key body is the committee on foreign investment in the United States (CFIUS).
BAE maintains it has not broken any laws and insists it has not received any signals US authorities are investigating the deals. A spokesman said it had made 15 US acquisitions since 2000 involving sensitive defence technology and had not encountered problems.
However, one aide told The Observer: 'These ongoing investigations raise the obvious question of whether the Saudi case is an aberration. Is this an aberration or does it speak to a pattern of conduct which would be in fairly flagrant contravention with regard to obligations under the OECD's charter and British law?
'It raises a further issue of the Armor transaction in the light of the Foreign Corrupt Practices Act and whether CFIUS would take into account whether there may have been a breach under US law.'