* Admits failure to live up to anti-bribery commitments
* Agrees to pay $400 million fine to U.S. government
* Judge says conduct involved duplicity on enormous scale
Source: DTN News / Reuters By Dan Margolies
(NSI News Source Info) WASHINGTON, - March 2, 2010: BA
E Systems Plc (BAES.L), Europe's biggest military contractor, pleaded guilty in U.S. court to conspiring to make false statements in connection with foreign arms contracts and will pay a $400 million fine.
BAE had announced last month it would resolve a long-standing inquiry by the U.S. Department of Justice into questionable payments it made to secure arms contracts in Saudi Arabia, the Czech Republic, Hungary and other countries.
The Justice Department said BAE had violated commitments it made to the U.S. government in 2000, when it was seeking to expand into the United States, to comply with the anti-bribery provisions of the U.S. Foreign Corrupt Practices Act (FCPA).
The act makes it illegal to pay bribes to foreign officials in order to secure or retain business.
U.S. District Judge John Bates said the company's conduct involved "deception, duplicity and knowing violations of law, I think it's fair to say, on an enormous scale."
As part of its plea, BAE will retain a corporate monitor for up to three years and implement a program to ensure its compliance with the FCPA.
David Parkes, BAE's company secretary, entered the plea on BAE's behalf.
Giving "yes" or "no" answers to the judge's questions, Parkes did not elaborate on the company's conduct. He declined to comment on leaving the court.
The $400 million fine is one of the biggest levied against a defense contractor, comparable to the $402 million that engineering and contracting group KBR Inc (KBR.N) and its former owner Halliburton Co (HAL.N) agreed to pay in February of 2009 over its dealings with Nigerian officials.
BRITISH SETTLEMENT
BAE last month also agreed to pay $50 million to settle a parallel action by Britain's Serious Fraud Office (SFO).
An earlier inquiry by the SFO into allegations BAE had paid about 1 billion pounds over a decade to Prince Bandar bin Sultan in connection with the al-Yamamah arms deal was halted in December 2006 by then Prime Minister Tony Blair.
Blair cited possible harm to Saudi-UK relations, but the move drew fierce criticism from anti-bribery campaigners and the British media.
BAE's settlement with the SFO relates to the sale of an air traffic control system in Tanzania.
Court documents filed in the United States said BAE had set up "an elaborate system" to conceal its relationships with marketing advisors and to make secret commission payments to them.
BAE "was aware that some or part of those payments would be passed on to others" to influence the award of defense contracts to BAE, the documents stated.
The criminal information filed against BAE alleged that BAE's contracts with third parties were held by "secretive legal trusts in offshore locations."
U.S. prosecutors calculated that BAE made about $200 million in improper payments. Under the law, BAE was fined twice that amount.
Judge Bates said none of the company's current officials or board members knew about or was involved in the payments in question.
Since the Justice Department launched its criminal investigation in 2005, BAE has replaced its chief executive and chairman, and hired a new chief legal officer.
In court documents, U.S. prosecutors said BAE also no longer employs senior management implicated in its criminal misconduct, "although it does continue financial and advisory relationships with at least one individual involved in the criminal conduct and undisclosed payments."
The identity of the individual was not disclosed. (Reporting by Dan Margolies; Editing by Tim Dobbyn)
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