Having long followed the tawdry story of BAE’s deal-making in the Czech Republic, it is great to see the company finally brought to book – almost. Even though BAE has not admitted corruption as such, everyone knows that companies don’t pay out fines of £300m for no reason, and its admittance of false accounting and making misleading statements is a good start. The publicity around BAE’s deal with the US authorities and the UK’s Serious Fraud Office should have a suitably shaming effect, and hopefully serve notice to other companies thinking of paying bribes in foreign countries (even if BAE hasn’t admitted to that). For a full reckoning of the various cases, in the Czech Republic and elsewhere, look no further than the Guardian’s archive, or this excellent blog which rounds up everything from 2007 or so onwards.
Two points:
1) Unfortunately, the deal between BAE and the US/UK does nothing to formally condemn the people who allegedly facilitated the bribes-paying, despite the ways in which it was done being unusually well documented. Though the £300m deal is a form of contrition, there is nothing naming actual individuals. Having sat down with the likes of Steve Mead – BAE’s former Czech head – and heard him say point-blank that no money was paid to politicians, it would have been nice to see him held up for what he did, allegedly (and for lying about it – allegedly). As it is, we have to content ourselves with the quality of detail on record, and that the likes of Mead had to endure hours of police questioning. (According to this Swedish TV report, Mead had photos of Czech politicians on his walls, each scored by their loyalty to the Gripen campaign). Incredibly, the alleged perpetrators are still with BAE. Mead’s LinkedIn profile, says he is working in central Europe. His former boss, Julian Scopes , who was also questioned by the police, is now BAE’s rep in India. That both these individuals are still with the company somewhat undermines BAE’s contention that it has turned over a new leaf – even if, officially speaking, they haven’t done what we know they probably did.
2) Although the deal demonstrates that the SFO is prepared to be more “innovative” in how it brings cases like this to a close, the UK system has been badly shown up compared to its US counterpart. The UK is getting only £30m of the £300m total fine, despite BAE being a British company. That is because the greatest pressure came from the US Justice Department, which was able to show that BAE had knowingly misled the US government over its activities, and had the useful weapon of being able to kill BAE’s US license if it didn’t co-operate. In the last few months, the SFO started to get tougher, but for years it was hamstrung by political pressure (eg from Blair, who visited Prague on BAE’s behalf in 2002), civil service connivance, and by the SFO’s own disorganisation and incompetence. For a revealing look at the SFO, read the 2008 report prepared by Jessica de Grazia, a former Manhattan assistant district attorney. Perhaps her tough criticism is starting to have some effect. Having said all this, however, it is not surprising that a foreign justice department was more aggressive towards BAE than its own. As BAE’s defenders in Prague used to say, the US government had an incentive to dirty BAE’s name, as its own companies – notably Lockheed – would benefit. It’s a fact that national governments tend to help their own, in any way they can. I’m sure that not all governments behave the same way, but it’s unrealistic to think that the US is much different from the UK.
(Image: Merlin 1)
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