MEMBERS OF THE TANZANIA PARLIAMENT WHO ARE IN LONDON TO ON A FACT FINDING MISSION ON HOW TANZANIA SHOULD BE PAID THEIR MONEY OWED BY BAE
In early 2011, the International Development Committee of the House of Commons (the lower house of the UK’s parliament) announced an Inquiry into Financial Crime and Development. The inquiry’s premise is that “financial crimes undermine development when public money is diverted from necessary legitimate expenditure programmes in order to enrich private individuals.”
Its example was that of BAE Systems, convicted in December 2010 of failing to keep proper books and records in relation to the sale of an air traffic control system to Tanzania. BAE agreed to pay £29.5 million for the benefit of the people of Tanzania, an amount representing the price of the sale minus the company’s fine of £500,000
This Corner House submission states that those found guilty in the UK of financial crimes in developing countries should be required by the court to make reparations, which are more than simply financial payments. The evidence stresses that BAE’s proposed payment for the benefit of the people of Tanzania is not reparations, compensation or damages, but simply a refund a decade later of money paid for goods that were not fit for purpose. The UK court did not require BAE to make any payments; the agreement to do so is solely between the SFO and the company.
The submission stresses that reparations and payments must be completely separated from fines, confiscation orders, sentences and other penalties for financial crimes. It states that BAE should have no say over this payment.
To ensure that the payment is used for the benefit of the people of Tanzania, many questions need to be asked and wider advice sought in a transparent decision-making process. In general, the UK authorities need to give further thought to carrying out reparations and payments without contributing to the problems that triggered the crime in the first place.
Evidence was also submitted to this Inquiry by Campaign Against Arms Trade, Christian Aid, Global Witness, Transparency International (UK), Tearfund and CAFOD, DfID, SFO and BAE Systems
Campaign Against Arms Trade and The Corner House are challenging the blanket immunity from prosecution given by the Serious Fraud Office (SFO) to BAE Systems as part of its February 2010 plea bargain settlement with the company.
The immunity clause states that:
"There shall be no further investigations or prosecutions of any member of the BAE Systems Plc group for any conduct preceding 5 February 2010."
Solicitors Leigh Day & Co (acting for the two groups) have written to the SFO Director arguing that this clause should be quashed.
The immunity covers any criminal conduct, including that unrelated to bribery, corruption and serious fraud and including that not disclosed by BAE to the SFO. It is not limited to the alleged bribery that the SFO had been investigating.
This clause became public only when the terms of the SFO's BAE settlement agreement were read out in open court on 21 December 2010 by Mr Justice Bean. In his highly critical judgment of the "loosely and perhaps hastily drafted agreement", Justice Bean stated:
"I am surprised to find a prosecutor granting a blanket indemnity for all offences committed in the past, whether disclosed or otherwise."
In exchange for securing this immunity, BAE pleaded guilty to a relatively minor accounting offence in its complex scheme of offshore companies used to pass and make payments relating to its supply of a radar system to Tanzania.
The legal letter states that "no public prosecutor . . . could properly enter into a settlement agreement guaranteeing immunity in respect of serious criminal offences of which it was entirely unaware."
If BAE has disclosed all relevant conduct to the SFO, however, there is no reason for the immunity clause. "The inference must be that BAE still has something to hide, of which the SFO is currently unaware," says the letter.
In these circumstances, the two groups state that "it is impossible to understand how the public interest is served" by the "exceptional, unusual and entirely unnecessary" immunity clause.
Update 25 February 2011
The SFO accepted (on 19 January 2011) that the agreement was not well drafted, and both BAE and the SFO accepted that they will interpret the settlement agreement very narrowly, particularly Paragraph 8 stating "There shall be no further investigations or prosecutions of any member of the BAE Systems Plc group for any conduct preceding 5 February 2010." BAE’s lawyers stated (on 22 February 2011):
". . . we confirm that our client would not dispute that paragraph 8 should properly be interpreted as meaning that the SFO will not prosecute our client's group in relation to matters which were the subject of its investigations or of which the SFO was otherwise aware before the date of the settlement."
On this basis, both groups decided not to pursue the matter further as these replies achieved the substance of what we were asking for: BAE has not been given blanket immunity.
In sentencing BAE, Mr Justice Bean said (paragraph 5):
"The Settlement Agreement is, with respect, loosely and perhaps hastily drafted. In paragraph 6 "any person" is not defined, and paragraph 10 is not, at least expressly, confined to conduct preceding the agreement. But the heart of the matter is paragraph 8, whereby the SFO agreed that there would be "no further investigation or prosecutions of any member of the BAE Systems Group for any conduct preceding 5 February 2010." It is relatively common for a prosecuting authority to agree not to prosecute a defendant in respect of specified crimes which are admitted and listed in the agreement: this is done, for example, where the defendant is an informer who will give important evidence against co-defendants. But I am surprised to find a prosecutor granting a blanket indemnity for all offences committed in the past, whether disclosed or otherwise. The US Department of Justice did not do so in this case: it agreed not to prosecute further for past offences which had been disclosed to it."
TANZANIA MPS IN LONDON ON BAE PAYMENT CASE
By Ayoub mzee -London
Today a group of Tanzania all party parliamentarians visited Britain as a part of a fact find mission on how the people of Tanzania will get their money as a result of a ruling in a case where the Arms company BAE Systems which pleaded guilty at a Cfrown Court in London to minor charges of false accounting relating to its controversial sale of military radar equipment to Tanzania in 1999.This group led by the Deputy speaker Hon Job Ndugai Mp comprised of Hon. Mussa Zungu MP Angelah Kairuki MP, John Cheyo MP, Ms Justina Shauri from the Parliament of Tanzania ,Grace Shangali ,assistant Director of Europe and America Department , Assah Mambene , Head of information -Foreign Affairs and Olivia Maboko ,desk officer (UK) at the Department of Europe and America The sale has been surrounded by allegations of corruption.
During the court ruling it was stated that that British Aerospace Defense Systems Limited failed:
"to keep accounting records which were sufficient to show and explain payments made pursuant to (a) a contract between Red Diamond Trading Limited and Envers Trading Corporation, (b) a further contract between British Aerospace (Operations) Limited and Merlin International Limited." Under the settlement, BAE pleaded guilty to not accounting accurately for $12.4m of payments made between 1999 and 2005 to a Tanzania-based businessman, Shailesh Vithlani, for his work as a marketing agent in helping to secure a £28 million radar contract from the Government of Tanzania in 1999.
Mr Justice Bean said he accepted "there is no evidence that BAE was party to an agreement to corrupt". But pointed out that they "did not need to be" because the company had deliberately structured the payments to the agent via an offshore company controlled by BAE to another Panama-based company controlled by Mr Vithlani so that they were placed “at two or three removes from any shady activity”.
Moreover, in the basis of the plea accompanying the agreement, BAE admitted the following:
"Although it is not alleged that BAE plc was party to an agreement to corrupt, there was a high probablility that part of the $12.4 million [paid to the Tanzania agent] would be used in the negotiation process to favour British Aerospace Defence Systems Ltd."
As Mr Justice Bean said of this high probability:
"indeed there was. Otherwise it is inexplicable . . . why the payments . . . exceeded $12m; and even more inexplicable why 97% of that money should have been channelled via . . . an offshore company controlled by BAE, and paid to . . . another offshore company controlled by Mr Vithlani."
The problem is that BAE has decline to pay the people of Tanzania the said sum citing corruption. Intead it has set up A panel of advisory board on Tanzania which will be chaired by Lord Cairns. Philippa Foster Back, OBE will serve as Deputy Chair. .This panel will advise them on how to pay Tanzania