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BAE corruption probe turns to commissions
THISDAY REPORTER & AGENCIES
Dar es Salaam
THE UKs Serious Fraud Office (SFO) is escalating its probe into alleged bribery and corruption at BAE Systems, interviewing a number of executives under caution and sending the British defence manufacturer company an unprecedented number of requests for information.
According to a report in the latest edition of Britains Sunday Telegraph newspaper, several executives questioned by the SFO about their own role in the payment of commissions to sales agents have pointed to chief executive Mike Turner as having allegedly personally overseen a series of commission payments.
The SFO has narrowed its four-year investigation into BAE suspect operations to focus on arms sales in Tanzania, Romania, the Czech Republic and South Africa. But while the number of jurisdictions has been cut, the regulator has extended its probe to BAE executives.
The investigation is being led by SFO assistant director Helen Garlick.
BAE Systems sold an overpriced radar system to the Tanzanian government of former President Benjamin Mkapa for 28 million pounds sterling (approx. 70bn/-), and the 2002 sale has since become the subject of parallel investigations by the SFO and its Tanzanian counterpart, the Prevention and Combating of Corruption Bureau (PCCB).
The SFO and PCCB have been co-operating to complete investigations into why BAE used a British Virgin Islands company to enter into an agreement with a Panamanian company to provide advice and various services in connection with the Tanzanian radar deal.
Under this agreement, BAE is understood to have made payments in excess of $11m (approx. 13.2bn/-) to Shailesh Vithlani, a businessman of Asian origin who grew up in Tanzania but is reported to have since acquired British citizenship.
Vithlanis company, Merlin International, was the agent in the radar deal, and is reported to have also played a role in a number of other dubious Tanzanian defence procurements, including the supply of military trucks and helicopters.
Critics of the Tanzanian radar deal have included the World Bank � which objected to the sale as Tanzania was being granted debt relief of $2bn � and the then UK international development secretary, Ms Clare Short, whose own unsuccessful attempts to block it led to the opening of a rift in the British cabinet.
One of the big arguments against the deal was that such a sophisticated piece of equipment was far beyond the pocket and requirements of one of the world�s poorest countries.
As part of their investigations, SFO officials have already visited Dar es Salaam and interviewed both Vithlani and his former business partner, Tanil Somaiya of the Shivacom group of companies.
But while a Dar es Salaam court has issued an arrest warrant for Vithlani to face charges of perjury and lying to an investigating officer, the PCCB is surprisingly yet to bring any corruption charges against him in relation to the radar deal.
It is understood the SFO is concerned about a lack of documentation to show where sales commission payments of up to �32m (approx. 80bn/-) a time actually went.
BAE said: The company will not comment on an ongoing investigation in accordance with standard practice. BAE Systems has made its position clear repeatedly.
It is thought the company, which has always maintained the commissions paid are perfectly legal, legitimate and not bribes, believes its chief executive is being unfairly smeared.
It has also emerged that BAE kept documents detailing the payment of commissions outside the UK in the Swiss city of Zurich.
It is understood when the SFO asked BAE why they were kept in the super-secretive city, the company said it was because they were worried arms trade activists could seize them if they were on UK soil.
An SFO spokesman said: I can confirm there have, in recent months, been a number of requests and contacts. We are doing the job thoroughly and painstakingly.
Turner has announced he will step down from BAE in August this year, and the company is looking for a successor.
Although the BAE chief executive has won plaudits for his achievements on the job, his last few years at Britains biggest defence contractor have been blighted by the SFO probe.
A leaked SFO document published by a South African newspaper last year named Turner and BAEs former chairman Sir Dick Evans as suspects in the inquiry.
The document, which was an SFO request for assistance from the South African authorities, said there was reasonable cause to believe Turner, Evans and the company were all guilty of corruption.
THISDAY REPORTER & AGENCIES
Dar es Salaam
THE UKs Serious Fraud Office (SFO) is escalating its probe into alleged bribery and corruption at BAE Systems, interviewing a number of executives under caution and sending the British defence manufacturer company an unprecedented number of requests for information.
According to a report in the latest edition of Britains Sunday Telegraph newspaper, several executives questioned by the SFO about their own role in the payment of commissions to sales agents have pointed to chief executive Mike Turner as having allegedly personally overseen a series of commission payments.
The SFO has narrowed its four-year investigation into BAE suspect operations to focus on arms sales in Tanzania, Romania, the Czech Republic and South Africa. But while the number of jurisdictions has been cut, the regulator has extended its probe to BAE executives.
The investigation is being led by SFO assistant director Helen Garlick.
BAE Systems sold an overpriced radar system to the Tanzanian government of former President Benjamin Mkapa for 28 million pounds sterling (approx. 70bn/-), and the 2002 sale has since become the subject of parallel investigations by the SFO and its Tanzanian counterpart, the Prevention and Combating of Corruption Bureau (PCCB).
The SFO and PCCB have been co-operating to complete investigations into why BAE used a British Virgin Islands company to enter into an agreement with a Panamanian company to provide advice and various services in connection with the Tanzanian radar deal.
Under this agreement, BAE is understood to have made payments in excess of $11m (approx. 13.2bn/-) to Shailesh Vithlani, a businessman of Asian origin who grew up in Tanzania but is reported to have since acquired British citizenship.
Vithlanis company, Merlin International, was the agent in the radar deal, and is reported to have also played a role in a number of other dubious Tanzanian defence procurements, including the supply of military trucks and helicopters.
Critics of the Tanzanian radar deal have included the World Bank � which objected to the sale as Tanzania was being granted debt relief of $2bn � and the then UK international development secretary, Ms Clare Short, whose own unsuccessful attempts to block it led to the opening of a rift in the British cabinet.
One of the big arguments against the deal was that such a sophisticated piece of equipment was far beyond the pocket and requirements of one of the world�s poorest countries.
As part of their investigations, SFO officials have already visited Dar es Salaam and interviewed both Vithlani and his former business partner, Tanil Somaiya of the Shivacom group of companies.
But while a Dar es Salaam court has issued an arrest warrant for Vithlani to face charges of perjury and lying to an investigating officer, the PCCB is surprisingly yet to bring any corruption charges against him in relation to the radar deal.
It is understood the SFO is concerned about a lack of documentation to show where sales commission payments of up to �32m (approx. 80bn/-) a time actually went.
BAE said: The company will not comment on an ongoing investigation in accordance with standard practice. BAE Systems has made its position clear repeatedly.
It is thought the company, which has always maintained the commissions paid are perfectly legal, legitimate and not bribes, believes its chief executive is being unfairly smeared.
It has also emerged that BAE kept documents detailing the payment of commissions outside the UK in the Swiss city of Zurich.
It is understood when the SFO asked BAE why they were kept in the super-secretive city, the company said it was because they were worried arms trade activists could seize them if they were on UK soil.
An SFO spokesman said: I can confirm there have, in recent months, been a number of requests and contacts. We are doing the job thoroughly and painstakingly.
Turner has announced he will step down from BAE in August this year, and the company is looking for a successor.
Although the BAE chief executive has won plaudits for his achievements on the job, his last few years at Britains biggest defence contractor have been blighted by the SFO probe.
A leaked SFO document published by a South African newspaper last year named Turner and BAEs former chairman Sir Dick Evans as suspects in the inquiry.
The document, which was an SFO request for assistance from the South African authorities, said there was reasonable cause to believe Turner, Evans and the company were all guilty of corruption.
