US: BAE chief detained as US turns up heat in bribes case

Publisher Name: 
The Independent (U.K.)

BAE Systems admitted yesterday that American authorities investigating
corruption claims over an arms deal with Saudi Arabia had issued a
series of subpoenas to senior executives, as the investigation
continues to gather pace. Two bosses of the defence giant were also
detained after they landed at a Houston airport last week.

BAE released a statement which said: "The Department of Justice
last week served a number of additional subpoenas in the US on our
employees as part of its ongoing investigation."

The statement added: "The company has been and continues to be in
discussion with the Department of Justice concerning the subpoenas
served in the course of its investigation."

The chief executive, Mike Turner, and an unnamed senior colleague were
held for 20 minutes by US law enforcement agents at George Bush
International Airport this week. The pair were served with subpoenas
while they were detained at the airport. A further three executives,
all based in the US, were served at home. The spokesman said Mr Turner
had now returned to Britain, but added that he had not been prevented
from entering the US last week. He declined to comment on the nature of
the subpoenas, which could range from requests for information, to
orders for a personal appearance in front of a jury to give

The US DoJ is investigating BAE over alleged corruption charges during
the 1980s and 1990s relating to the £43bn al-Yamamah fighter plane
deal. BAE denies any wrongdoing.

The Serious Fraud Office in London also launched an investigation into
the deal, but it was suspended in December 2006 over fears that it
would damage Britain's relations with Saudi Arabia. This has been
challenged by a High Court ruling, although the Government is
appealing against the decision.

News that Mr Turner and others were detained in Houston suggests that
the DoJ investigation is proceeding at some pace, 11 months after BAE
first disclosed its existence. On a single day in June last year, BAE
shares fell by 8 per cent amid concerns that the DoJ could impose
significant sanctions under its powerful Foreign Corrupt Practices Act
(FCPA), and that the problems could affect the company's lucrative and
deepening business ties with the US military.

The FCPA gives US authorities the power to prosecute offences of
corporate bribery, even if the company involved is not American and
the bribery is carried out overseas.

The Act has its roots in a string of scandals in the US aerospace
industry in the Seventies, when hundreds of firms admitted paying
bribes to secure contracts overseas. Last year the US government
collected more than $100m in fines from oil, chemical and telecoms
companies under the FCP. The number of foreign bribery cases filed by
criminal and civil investigators in the US has more than doubled since

Firms which issue shares or bonds in the US are subject to the Act, as
are any firms found to have used the US phone, mail or banking systems
as part of the bribery scheme. The now defunct Riggs bank in
Washington was used to channel some payments under the Al-Yamamah
deal, it was revealed last year, although BAE says those payments were

Separately, BAE will
today announce it has been awarded a £43.9m contract with the
Ministry of Defence to maintain the Royal Air Force's tanking and
transport fleet of VC10s.
AMP Section Name:Corruption
  • 204 Manufacturing