Companies

US opens formal BAE probe

BAE Systems, the UK arms manufacturer, has become the subject of a formal investigation by the US Department of Justice (DoJ), which is examining the company’s compliance with anti-corruption laws. This includes the BAE’s business dealings with Saudi Arabia, which have already been the subject of a controversially abandoned investigation by the UK’s Serious Fraud Office (SFO). BAE is currently seeking to expand in the US.

James Harding, The Times’ business editor, commented (27 June) that the DoJ enquiry may in fact be good for BAE: the company has long avoided a review of its ethical standards, and in the process has lost public confidence. However, added Harding, as the role of the government in the Saudi deal is understood more, it will be the whole UK military establishment that is under scrutiny.

Jeremy Warner in The Independent added that US motives in opening the investigation are not entirely altruistic, with the DoJ having been lobbied hard by BAE rivals to take up where the SFO left off. Furthermore, said Warner, most of these rivals have been just as guilty in the past of paying commissions for contracts.

The editorial in the Financial Times (28 June) argued the DoJ’s decision to open an investigation shows the UK government’s arguments for suspending the original probe – that it would it would destroy a vital national security relationship and cost thousands of jobs – to be “specious realpolitik and economic excuses”.

July 2007