Essays and Reports

BAE ordered to name payment agents

(March 17, 2006) BAE Systems, Britain’s biggest and most influential arms company, has been ordered to reveal the identity of agents it uses to make secret payments abroad.

BAE Systems, Britain’s biggest and most influential arms company, was yesterday ordered to reveal the identity of agents it uses to make secret payments abroad.

These multimillion-pound commission payments, often through Swiss bank
accounts, are alleged by anti-corruption campaigners to be channels for
bribery.

The trade minister, Ian Pearson, announced that BAE and other exporters
would no longer get government insurance and guarantees for their arms
deals, unless they revealed the names and addresses of the agents they
were paying. “Applicants for support will now be requested to provide
the identities of agents,” he said. This would “reduce the risks of the
Export Credit Guarantee Department supporting contracts involving
bribery or corruption”.

The move was welcomed yesterday as a significant step by
anti-corruption campaigners Corner House. BAE, which is under
investigation by the Serious Fraud Office over corruption allegations,
has spent the last two years trying to block the introduction of new
rules first proposed by trade minister Mike O’Brien in 2004.

BAE, together with its partners Airbus and Rolls-Royce, is the ECGD’s
main client. BAE’s political influence is widespread. Charles Powell,
the brother of Tony Blair’s Downing Street chief of staff Jonathan
Powell, is a consultant.

In 2004 the firm mounted a lobbying operation which succeeded in
getting the new regulations blocked. The then trade and industry
secretary, Patricia Hewitt, was persuaded to tear up the new rules,
saying they “would not work in practice”.

Only when anti-corruption campaigners took her to court was the issue
re-opened. After another year of argument, the ECGD’s new rules were
finally confirmed yesterday. This enables Britain to announce tough
action in time for the next meeting on April 24 of the OECD’s action
group against bribery. Britain has been criticised by OECD inspectors
for bringing no prosecutions for overseas bribery since outlawing it in
2002.

Susan Hawley from Corner House said yesterday: “This is a genuine and
important step in the right direction which will help go some way to
restoring the ECGD’s and the UK government’s reputation on fighting
corruption.”

David Leigh and Rob Evans, The Guardian, March 17, 2006

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