BAE Systems, the company hired by the Patrick Manning administration to supply Offshore Patrol Vessels (OPVs) to Trinidad and Tobago, has been implicated in a bribery scandal in the United Kingdom. The Telegraph reported yesterday that years of bribery investigations into BAE Systems by Britain's Serious Fraud Office were brought to a close when the company was fined after pleading guilty to failing to keep proper accounting records in Tanzania.
A judge at Southwark Crown Court has suggested that part of a secret £7.7m payment made by BAE Systems to a businessman in Tanzania was a bribe to help secure a radar contract. Justice Bean said the "obvious inference" was that "part of the money was used to bribe decision-makers" in Tanzania. BAE has admitted paying the money to its agent, Sailesh Vithlani, for his part in securing the £28 million contract. However, the company denies any corruption.
BAE also conceded that most of the money paid to Vithlani was funnelled through a secretive company it set up in the British Virgin Islands. It also admitted that it did not keep proper accounts of the transactions, which it disguised as "payments for technical services." However, the judge said the arrangements meant the company "would have no fingerprints on the money." He added: "They didn't want to know how much was paid and to whom." He described BAE's behaviour as "hear no evil, speak no evil."
The company is in court for sentencing over its behaviour. It has already agreed to a deal with the Serious Fraud Office, under which it offered to make an ex-gratia payment of up to £30 million to Tanzania, and admitted failing to keep accurate records of the payments to Vithlani. According to the Telegraph, this was the timeline of investigations into the company:
1985: Britain signs the Al Yamamah arms-for-oil deal with Saudi Arabia, the biggest export contract in UK history. The agreement was Government to Government, but BAE Systems (then British Aerospace) was the prime contractor because the deal included the sale of 120 Tornado fighter jets, Hawk trainer planes and other defence kit.
1989: A UK newspaper first reports that an investigation is underway into claims huge payments were made to BAE agents as commission, by inflating the sale price of the Tornados in the Al Yamamah deal.
2000: BAE first failed to accurately account for payments made to its Tanzanian agent, Shailesh Vithlani, a process which went on until 2005.
2004: The Serious Fraud Office starts an investigation into suspected accounting irregularities related to BAE and the Al Yamamah deal, focusing on the relationship between BAE and two small travel firms which made arrangements for Saudi officials on behalf of BAE. 2006: In November, BE confirms the SFO and Ministry of Defence are probing allegations that BAE paid "backhanders" to the Tanzanian government for a US$40 million (£28 million) military radar system.
In April 2007, the former People's National Movement (PNM) Government entered into a US$234 million agreement with the UK's VT Group to deliver three 90m OPVs.Ownership of the programme passed first to BVT Surface Fleet, a joint venture shipbuilding company created in mid-2008 by BAE Systems and VT Group and subsequently to BAE Systems Surface Ships when BAE Systems acquired sole ownership of the venture in September 2009. There had been several cost and time overruns on the project and last September the new People's Partnership Government served notice that it would terminate the contract.
At that time, according to Prime Minister Kamla Persad-Bissessar, $61 million was overdue and payable by BAE to the T&T Government. The notice of cancellation was served on September 17, and there was a 30-day notice period before it became effective.After the cancellation notice took effect, Government was entitled to a full refund of monies paid to BAE for the undelivered vessels. When the contract was terminated, the first of the three OPVs, Port-of-Spain, was going through final work before acceptance by the Trinidad and Tobago Coast Guard. The second, Scarborough, has completed sea trials with an anticipated October 2010 delivery date and work was continuing on the third, San Fernando, with sea trials scheduled for last month.