BAE Systems pays $450 million to settle bribery scandal charges

By Mike Musgrove
Washington Post Staff Writer
Saturday, February 6, 2010

The world's second-largest defense contractor, BAE Systems, agreed on Friday to pay nearly $450 million in penalties to settle U.S. and British charges related to a long-running bribery scandal.

The British company had been accused of making payments, amounting to hundreds of millions of dollars, to foreign authorities to illegally win defense contracts in countries such as Saudi Arabia and Hungary. The company agreed to pay $400 million in fines and to plead guilty to one count of conspiring to make deceptive statements -- about whether the firm had created an anti-corruption program -- to the U.S. government. The charge was filed with the U.S. District Court for the District of Columbia.

In a statement, Gary G. Grindler, acting U.S. deputy attorney general, said "the alleged illegal conduct undermined U.S. efforts to ensure that corruption has no place in international trade."

The Justice Department said the settlement was part of a coordinated law enforcement effort with Britain's Serious Fraud Office, which charged BAE Systems on Friday with having failed to record payments made to a consultant in 1999 over the sale of a radar system to the government of Tanzania. The defense contractor also pleaded guilty to that charge and agreed to pay $50 million in fines.

In a statement, BAE Systems Chairman Dick Olver said his company "has systematically enhanced its compliance policies and processes" in the past several years and "very much regrets and accepts full responsibility for these past shortcomings."

The U.S. subsidiary of BAE Systems is headquartered in Arlington and is a top contractor for the U.S. Defense Department.

"The settlement today is basically good news for BAE Systems because it lifts a cloud of allegations that have been hanging over the company for more than a decade," said Loren Thompson, a defense industry consultant.

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