BAE Systems $446 million fine is nobody’s idea of small change – but the figure is far below some of the sums reportedly being sought by the U.K.’s Serious Fraud Office (SFO) last year.
The fine is the result of long-running investigations by the fraud office and the U.S. Justice Dept. In the end, BAE agreed to “plead guilty to one charge of breach of duty to keep accounting records in relation to payments made to a former marketing adviser in Tanzania,” concerning the SFO investigation. It will pay a £30 million ($46 million) fine in the U.K.
In the U.S. it has agreed to: “plead guilty to one charge of conspiring to make false statements to the U.S. government in connection with certain regulatory filings and undertakings. The company will pay a fine of $400 million and make additional commitments concerning its ongoing compliance.”
The U.S. investigation was related to the Al-Yamamah arms program with Saudi Arabia. BAE Systems practices in this U.K.-Saudi government-to-government deal had also been the subject of an SFO investigation, though this was brought to an end by the U.K. government in late 2006.
Embarrassing as the admissions may be – and the fines are not insignificant – if as the company contends the settlement “draws a line under the past”, then it will consider it to be money well spent.