Jobs in crossfire as defence giant faces fraud prosecution

Published on 01/10/2009 22:18

MAJOR defence contracts for Scottish firms could be threatened by the decision to seek to prosecute the UK's biggest arms company over bribery allegations.

Politicians have warned that the Serious Fraud Office's decision to pursue charges against BAE may impact on jobs on the Clyde.

After a six-year investigation, the SFO announced it would seek consent from Attorney General Baroness Scotland to prosecute BAE for offences "relating to overseas corruption".

Baroness Scotland's office said they would decide whether there was enough evidence and if it was in the "public interest" to mount a prosecution.

The defence contractor, which has thousands of employees in Scotland, has denied allegations that it paid millions of pounds to secure lucrative aircraft, warship, and radar technology contracts from numerous states, including Tanzania, South Africa, the Czech Republic and Romania.

If it goes ahead, the largest corporate corruption prosecution in British history could prove damaging for the UK government, as it may bring to light information about other contracts, including deals with Saudi Arabia, where the SFO was forced to drop investigations on national security grounds following the intervention of Tony Blair. It would not, however, spark a new probe of that case.

Former Liberal Democrat leader Sir Menzies Campbell warned that the government must not interfere in the prosecution, and told The Scotsman that "the sooner the case is dealt with, the better" for BAE's Scottish workers.

The SFO said: "The Serious Fraud Office has announced today that it intends to seek the Attorney General's consent to prosecute BAE Systems for offences relating to overseas corruption and will prepare its papers to be submitted to the Attorney when the SFO considers it is ready to proceed."

It is believed the SFO wanted BAE to accept a 500 million "fine" over the allegations, but the company did not meet a deadline set for Wednesday to accept a plea bargain.

Sir Menzies said yesterday's developments could bring to bear a "considerable impact" on several lucrative contracts, including work at BAE's Glasgow shipyards.

He told The Scotsman: "BAE is one of the major industrial companies in this country.

These are allegations, but the mere fact they have been made is extremely damaging. The sooner this matter is cleared up, the better it will be for BAE and the many thousands of people it employs, especially those on the Clyde."

BAE, which employs about 105,000 people worldwide, has been dogged by accusations corruption for years. Its 43 billion contract to supply more than 100 fighter jets to Saudi Arabia led to allegations that money was offered to intermediaries for contracts.

Sir Menzies sought assurances that no political intervention would be made in any prosecution.

He said: "The Attorney General's decision should be made on legal grounds and legal grounds only.

"This is a moment for Baroness Scotland to step away from her responsibilities to the government and to assert her independence. The rule of law must prevail."

But Nigel Evans, Tory MP for the Ribble Valley, warned that prosecuting BAE could have "huge ramifications" for UK manufacturing.

He said: "There are obviously concerns that BAE need to allay but, at a time of economic distress, a crippling blow to the UK's biggest manufacturer would be bad for all concerned."

In a statement, BAE insisted:

"BAE Systems has at all times acted responsibly in its dealings with the SFO, taking into account the interests of its shareholders and employees and the legal advice it has received.

"If the director of the SFO obtains the consent that he seeks from the Attorney General and proceedings are commenced, the company will deal with any issues raised in those proceedings at the appropriate time and, if necessary, in court."

Gavin Cunningham, head of corruption investigations at accountants BDO Stoy Hayward, said the prosecution would give the SFO a chance to redeem itself. He said: "The level of criticism levelled against the SFO over the dropping of the Saudi case means this is an opportunity to show it doesn't have a light touch when it comes to the enforcement of its corruption laws.

Lobbying organisations Campaign Against Arms Trade (CAAT) and The Corner House have long argued for transparency in the BAE case.

Kaye Stearman, a CAAT spokeswoman, said: "It would be scandalous if the Attorney General did not take this forward."

Sarah Sexton, spokeswoman for The Corner House, added: "We urge the Attorney General to give consent for prosecution without delay so that these serious allegations can be resolved in public by a jury and the truth can be known."