Good News, Bad News Week for Ethically Beset Defense Firm BAE

Aug 4th, 2008 • Posted in: News

Britain’s highest court rules that fraud office was right to suspend probe into bribery allegations because of national-security concerns, but officials say they’ll continue to pursue the company on other fronts

LONDON
BAE, the troubled British defense contractor beset by ethics problems, was the subject of three major news stories last week:

• Top jurists in the House of Lords ruled that fraud investigators acted properly when they aborted an investigation into bribery allegations related to an arms deal between BAE and Saudi Arabia, reports the Economist. Officials closed down the inquiry, which focused on an alleged slush fund supposedly used to bribe Saudi officials to award contracts to BAE, on the basis that it threatened national security. A previous court ruling held that ending the probe was improper, but yesterday’s ruling by the Law Lords, Britain’s equivalent of the U.S. Supreme Court, overruled that finding. The decision was criticized sharply by anticorruption campaigners in Parliament, reports the U.K. Guardian.
• The Financial Times reports that despite the Law Lords’ decision, government investigators will continue their probes into allegations of BAE misconduct in other venues, including the Czech Republic, Romania, South Africa, and Tanzania. British officials also are considering a request from the U.S. Department of Justice to help with a U.S. probe into the company. BAE consistently has denied any wrongdoing.
• BAE said it will implement all 23 recommendations in a company-sponsored report into its ethics, and will do so in a three-year program to be monitored by an external auditor. The recommendations were drawn up in the wake of the Saudi bribery scandal. BAE chairman Dick Oliver said his firm “hoped to be recognized as a global leader in ethical business conduct” once the reforms are completed, Reuters reports.

Sources: Financial Times, July 31 — Economist, July 31 — Guardian, July 31 — Reuters, July 22.

For more information, see: Related Newsline story, July 21 — Related Newsline story, June 30 — Related Newsline story, May 12 — Related Newsline story, Apr. 14 — Related Newsline story, Jan. 22.

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