Judge blocks legal challenge over Fraud Office's BAE deal

By staff writers
March 25, 2010

A judge in the High Court has refused to allow a legal challenge over a recent decision by the Serious Fraud Office (SFO) to abandon several corruption investigations into the multinational arms company BAE Systems.

The SFO triggered outrage last month by dropping its inquiries in return for a payout of £30 million and an admission of “accounting irregularities”.

But Mr Justice Collins yesterday (24 March) refused to grant permission to the Campaign Against Arms Trade (CAAT) and The Corner House, an anti-corruption NGO, to bring a judicial review of the issue. A judicial review would allow a court to decide whether the SFO had broken the law.

The two groups say that they are now taking legal advice on whether to appeal against the ruling.

Collins is the same judge who initially ruled against allowing CAAT and The Corner House to bring a judicial review in 2007, after the government pressurised the SFO into dropping its inquiries into BAE’s arms deals with Saudi Arabia.

On that occasion, Collins’ decision was overturned on appeal, the judicial review went ahead and the High Court found in favour of the campaigners, although the government eventually won before the law lords.

"We are obviously disappointed by the judge’s decision to refuse permission,” said CAAT’s Kaye Stearman, “It implies that the law allows a giant company to pay a small financial penalty for "accounting irregularities" rather than be charged and tried in open court on more serious criminal charges”.

She added that, “The law should apply to all without fear, favour or prejudice."

Under the SFO's proposed settlement, BAE would plead guilty in court only to "accounting irregularities" in its 1999 sale of a radar system to Tanzania and would pay penalties of £30 million. The SFO would not bring prosecutions relating to alleged bribery and corruption in BAE's arms deals elsewhere, including in the Czech Republic, South Africa and Romania, and would close all its BAE investigations.

“Corruption is a serious and harmful crime and should be treated as such,” said Nicholas Hildyard of The Corner House, “Prosecutors’ guidelines have been drawn up to ensure that it is”.

He insisted that a judicial review would be in the public interest, saying that “the public needs to have confidence that justice can be served by the new plea bargaining system in which corporates negotiate their crime and punishment.”

Mr Justice Collins also refused to grant permission to bring a full judicial review hearing against the SFO’s decision to discontinue its prosecution of the former BAE agent Alfons Mensdorff-Pouilly, who was arrested in January on suspicion of conspiracy to corrupt in connection with BAE's deals with eastern and central European governments.

However, the judge agreed to extend for eight days an injunction which prevents the SFO seeking final court approval for its settlement with BAE, giving CAAT and The Corner House the chance to lodge an appeal.


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