Foreign Policy Blogs

Crackdown on BAE

Last week the UK’s Serious Fraud Office brought bribery charges against an agent of British defense contractor BAE. These are the first criminal charges to be brought against a company that has been under investigation for more than five years.

The status of BAE is highly contentious. Unlike Siemens, another major company accused of bribery, BAE has thus far dodged criminal charges. Most contentiously, in 2006 the UK government halted an investigation into allegations that BAE had bribed Saudi officials. At the time, then Prime Minister Tony Blair justified the decision on the grounds that the investigation would have harmed British jobs as well as security ties with Saudi Arabia. Corruption watchdogs deplored the UK’s breach of the OECD’s anti-bribery convention as it withheld information relevant for review of UK compliance. It was a defining case for the image that the UK is not serious about fighting bribery by its companies overseas, a view supported by evidence discussed in a previous post.

And thus the latest charges are a very positive sign. They do not involve Saudi Arabia but rather bribes paid to promote the sale of fighter jets to the Czech Republic, Hungary, and Austria. While the protection of the Saudis means that there are still strings attached to the UK’s anti-bribery commitment, the fact that BAE faces allegations in other countries indicates a trend, and the first charges that might break that trend are welcome. Unfortunately, the attorney general has not yet agreed to let the case proceed, raising concerns that it might be the defense contractor and not the Saudis that are being protected.

Transparency International’s Bribe Payer’s Index implies that companies from OECD countries act differently when operating abroad than when at home: BAE is far more likely to pay off a Czech bureaucrat than a British one. However, as long as their home governments are signatories to the OECD anti-bribery convention, such inconsistency is not legal. The UK is overdue for burnishing its anti-corruption credentials, and the case against Siemens has shown that it is possible to change an entire company culture against bribery. It can be hoped that the attorney general will put the law ahead of private interests and pursue charges against BAE.

 

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