The U.K.’s Serious Fraud Office had to drop its prosecution of a Viennese count in order to push through its controversial settlement with BAE Systems over alleged bribes paid by the company around the world, the Financial Times reported Tuesday (subscription required).
According to court documents, the SFO halted its prosecution of Count Alfons Mensdorff-Pouilly because it had accepted BAE’s demand that it not accuse the company of corruption in future prosecutions, such as those against individuals allegedly involved in the case, the article said.
The SFO announced on Feb. 5 that BAE, one of the world’s largest weapons manufacturers, had agreed to plead guilty to failing to keep reasonably accurate accounting records in relation to its activities in Tanzania. The U.S. Justice Department simultaneously announced that BAE would pay $400 million in fines for making false statements to the U.S. government about its anti-corruption efforts.
Later in the day on Feb. 5, the SFO also announced that it would drop charges against former BAE lobbyist Mensdorff-Pouilly, just a week after accusing him of conspiring to pay bribes to win the company fighter jet deals in central and eastern Europe.
Under the U.K. agreement, BAE will pay £30 million to Tanzania. In turn, the SFO will end its investigation into widespread allegations of BAE bribery and corruption around the world. The SFO settlement was immediately criticized as a slap on the wrist for a company that has allegedly paid millions in bribes.
In March, the U.K.’s High Court granted an injunction to temporarily stop the BAE settlement so that it could consider a request by two British groups to review it. The two groups, the Cornerhouse and the Campaign Against Arms Trade, argued the settlement did not reflect the seriousness of BAE’s alleged crimes, among other things. The court ultimately refused to grant a judicial review of the BAE settlement, removing the only obstacle to judicial approval of the agreement.
The court documents referenced in the FT story were filed by the SFO in response to the legal challenge to the BAE settlement. The documents reveal that the SFO began settlement talks with BAE on Jan 29, when it received a call from the U.S. DOJ saying a deal in Washington was imminent, the article said.
In response, the SFO rushed to complete a deal with BAE so that it could announce its settlement alongside the U.S. on Feb. 5. According to the article, the SFO and BAE had been in talks on an agreement last year, but the office lost patience in October and announced that it would seek to prosecute the company.
The FT also said the BAE settlement allowed the wealthy count to file a claim with the government to cover his legal costs. People close to the count said he had filed such a claim.