Events | 2009.10.07
The SFO is right to pursue BAE | Peter Goldsmith
I applaud the decision to seek to prosecute over bribery claims. But al-Yamamah comparisons are misleading
I applaud Richard Alderman, director of the Serious Fraud Office for his vigour in pursuing corruption cases in Africa and eastern Europe against BAE . Reports are that he had put an ultimatum to BAE to reach a plea agreement or suffer the full weight of prosecutions. He is right to do so for two reasons.
First, because these are serious cases which should be pursued if the evidence is there to support a prosecution – as I instructed Richard Alderman\'s predecessor, Robert Wardle, to do in 2006. As I said to the House of Lords on 1 February 2007: "I told the SFO that it should pursue those cases vigorously … as it is important to send out a clear message … that no company or individual is above the law." Of course, I do not know what is the strength and state of the evidence that the SFO has now gathered together leading it to announce that it is now seeking the current attorney general\'s consent to prosecute. But I knew enough about the cases in 2006 and 2007 when, as attorney general, I was the minister in charge of the SFO, to know they were sufficiently serious to be pursued. I even fought to get the money from the Treasury so the SFO would be able to do its job.
Comparisons here with the al-Yamamah case which the SFO dropped in late 2006 are inevitable. But they would be misleading. As the then director of the SFO repeatedly stated, it was their decision (and not one they had been ordered to take) that national security considerations and the risk to UK security interests meant the case should not be pursued. This had real resonance from the standpoint that there was a serious risk of our country losing vital Saudi anti-terrorist co-operation with the real and consequent risk to UK lives. Our highest court, the House of Lords subsequently upheld their decision.
For me, in agreeing to the SFO\'s decision, it was critical that, after a year of trying, the SFO had not succeeded in finding evidence that would counter the key problem with the Saudi case under the UK\'s current and discredited anti-bribery laws. The payments in question were, according to BAE, approved at the highest level within the Saudi government. Neither of these considerations – risk of loss of vital anti-terrorism intelligence and co-operation, or an apparently unanswerable defence on authority for the payments – apply, so far as I am aware, to any of the cases now being pursued by the SFO against BAE. So it is right that both old and new directors continued the investigations. And it is right that a tough stance is being taken.
Alderman was also right to offer inducements to BAE for co-operating. Experience in the US and Germany shows that where corporations are encouraged by strong inducements of reduced fines as well as the likelihood of executives escaping custodial sentences they are willing to co-operate with prosecutors. To date the biggest such inquiry into alleged improper payments involved Siemens which commissioned an independent internal investigation carried out by Debevoise & Plimpton, the law firm I now work for. According to US prosecutors this approach reduced the fines imposed on the company to a fraction of what they would have been otherwise. In the recent successful prosecution of Mabey & Johnson the SFO rightly pointed to the company\'s co-operation. The framework for encouraging such co-operation and even self-reporting was also laid down several years ago in the Fraud Review which I oversaw, as well as the Report into the SFO which I had commissioned. Alderman has plainly taken these lessons to heart and is making good use of the tools – co-operating with witness agreements, plea negotiation, immunity arrangements – that we laid down as a result of those reviews.
It is only by the carrot and stick of tough prosecutions together with inducements to co-operate that we stand the chance of rooting out problems before it is too late to prevent loss and hardship to innocent investors and employees. This approach, coupled with a modern anti-bribery bill currently before parliament, will cure the problems of hotchpotch of outdated legislation and is the best way forward to stamp out corruption.
For more information, please visit
http://www.guardian.co.uk/commentisfree/2009/oct/01/bae-sfo-bribery-claims
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