Court to consider injunction against BAE settlement

By staff writers
February 26, 2010

The High Court has been asked not to grant approval for a Serious Fraud Office (SFO) settlement with the arms company BAE Systems.

Campaigners reacted with outrage earlier this month when the SFO announced it would drop all corruption investigations into BAE in return for the company admitting to “accounting irregularities” and handing over £30 million. Activists are now seeking to overturn the decision in the courts.

Lawyers acting for the Campaign Against Arms Trade (CAAT) and anti-corruption NGO The Corner House formally lodged court papers today (26 February) that request an injunction delaying the SFO’s request for court approval of the settlement.

The SFO's deals with BAE attracted widespread derision when it was announced on 5 February. CAAT pointed out that £30 million is a "tiny sum" for a hugely probitable multinational such as BAE.

The Corner House’s Nicholas Hildyard said that the groups considered they had “no option but to seek an injunction”.

At the same time, they made a request for a judicial review – a process whereby a court considers if a public body, in this case the SFO, has itself acted unlawfully.

The legal action looks set to disprove BAE's assertion that the matter is now over.

CAAT and The Corner House argue that the proposed settlement is unlawful because the SFO did not follow the correct prosecution guidance (including its own guidance) on plea bargains.

The campaigners and their lawyers add that the agreement does not reflect the seriousness and extent of BAE's alleged corruption and does not provide the court with adequate sentencing powers. The SFO has agreed to drop investigations into BAE arms sales to South African, Romania and the Czech Republic as well as Tanzania, but the admission and payout relate only to aspects of a deal with Tanzania.

“The plea bargain in no way reflects the very serious allegations of bribery and corruption against BAE, limited as it is to minor book-keeping offences in one country,” said CAAT’s Kaye Stearman.

The campaigners insist that the SFO was wrong to conclude that the factors weighing against prosecuting BAE outweighed those in favour.

Hildyard added that, “The Serious Fraud Office should not seek legal approval of its proposed settlement with BAE before the courts have had an opportunity to assess whether the decision to make that settlement was lawful in the first place”.

The campaigners’ lawyers have also requested a judicial review of the SFO’s decision to discontinue the prosecution of Alfons Mensdorff-Pouilly, a former BAE agent who was arrested for bribery only days before the settlement was announced.

This is not the first time that CAAT and The Corner House have gone to court to prevent BAE being let "off the hook". In 2008, their legal action resulted in a High Court judge ruling that the government behaved unlawfully in dropping an investigation into BAE’s arms deals with Saudi Arabia, after lobbying by BAE and the Saudi regime.

The ruling was later overturned by the law lords, but not before widespread outrage had highlighted the level of BAE’s influence within government. The former Foreign Secretary Robin Cook wrote in his diaries that the chair of BAE had “the key to the garden door at Number Ten”.


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