Monday, March 8, 2010

BAE Systems Pays $400 Million Fine To Settle FCPA Problems

BAE Systems, plc, a UK-based defense contractor with operations in the US, pleaded guilty last week to conspiring to defraud the United States by impairing and impeding its lawful functions, to make false statements about its Foreign Corrupt Practices Act (FCPA) compliance program, and to violate the Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR). According to court filings, from approximately 2000 to 2002, BAE Systems represented to various U.S. government agencies, including the Departments of Defense and Justice, that it would create and implement policies and procedures to ensure its compliance with the anti-bribery provisions of the FCPA, as well as similar, foreign laws implementing the Organization for Economic Cooperation and Development (OECD) Anti-bribery Convention. Further, BAE Systems "knowingly and willfully" failed to create mechanisms to ensure compliance with these legal prohibitions on foreign bribery. Prosecutors alleged that BAE Systems made a series of "substantial" payments to shell companies and third party intermediaries that were not subjected to the degree of scrutiny and review to which the company told the U.S. government the payments would be subjected. The company admitted it regularly retained what it referred to as “marketing advisors” to assist in securing sales of defense items without scrutinizing those relationships. In fact, prosecutors alleged that BAE Systems attempted to conceal its relationships with some of these advisors and its undisclosed payments to them.

Read the story here and here.

Read the DOJ announcement here.

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