BAE, Europe's Largest Defense Contractor to Plead Guilty to Bribes

Europes Largest Defense Contractor to Plead Guilty to BribesABC News Photo Illustration
Europe's Largest Defense Contractor to Plead Guilty to Bribes

Europe's largest defense contractor , U.K -basedBAE Systems and the Justice Department have reached a settlement in a wide ranging bribery investigation that spans back to the 1990s. Under the settlement, the firm is expected to plead guilty and pay over $400 million in fines for lying to the Department of Defense and the State Department about how they were conducting their operations to obtain U.S. licenses for military contracts around the world.

The conspiracy charges focus on the company for failing to address anti-bribery measures outlined under the Foreign Corrupt Practices Act.

The information released by the Justice Department today notes that "Beginning in 1993 BAES knowingly and willfully failed to identify commissions paid to third parties for assistance in the solicitation or promotion or otherwise to secure the conclusion of the sale of defense articles."

Gary Grindler, the Acting Deputy Attorney General said in a statement, "Any company conducting business with the United States that profits through false statements will be held accountable. As BAE Systems has stated publicly today, the company is expected to plead guilty to this crime, to pay a $400 million fine, and to agree to conduct its defense business in the future with integrity and in compliance with global anti-corruption standards, including the Foreign Corrupt Practices Act."

The Justice Department investigation found that BAE Systems established offshore shell companies and used "marketing advisors" to sell and push sales of their products and systems around the globe while the company paid large undisclosed payments to the advisors. "BAES possessed no adequate evidence that its advisors performed legitimate activities to justify the receipt of substantial payments," Grinder said in his statement.

In the United Kingdom, BAE has been under scrutiny for allegations of funneling $2 billion into slush funds controlled by then Saudi Arabian Ambassador to the United States Prince Bandar bin Sultan bin Abdul Aziz al-Saud in order to secure huge defense contracts for the company.

The documents filed today note that the firm paid large sums to a Saudi Arabian official related to the sale of Tornado and Hawk fighter jets but the charging documents filed today do not specifically mention Prince Bandar. The criminal information in the conspiracy charge notes that the payment mechanisms flowed through entities in the United States and elsewhere.

A spokesman at the Saudi Embassy in Washington declined to comment on the allegations and the references to the Kingdom of Saudi Arabia. The spokesman instructed ABC News to contact Prince Bandar's attorney in the United States, Louis J. Freeh, the former FBI Director. Calls to Freeh Group International were not returned when contacted by ABC News.

The investigation remains ongoing according to Justice Department officials briefed on the case.

The charging documents filed on Friday also mention defense contracts from around the world including the Grippen fighter jet in the Czech Republic and Hungary.