BAE Ordered to Pay Criminal Fine of $400 Million

BAE Systems pleaded guilty in U.S. District Court in D.C. on Monday and sentenced to pay a criminal fine of $400 million for conspiring to defraud the United States by jeopardizing its lawful functions.

BAE Systems was ordered to pay one of the largest criminal fines in the history of DOJ's efforts in combating international business corruption and U.S. export control regulations. BAES pleaded guilty to making false statements to U.S. government agencies which in turn, impeded U.S. efforts to uphold and maintain international trade as a corruption free enterprise.

According to official reports, during a two-year period BAES represented to the Departments of Defense and Justice and other U.S. government agencies they would implement policies and procedures to comply with anti-bribery regulations set by the Foreign Corrupt Practices Act (FCPA). BAES knowingly failed to create any policies to ensure compliance with these agencies' prohibitions. The monetary gain BAES incurred from these false representations to make the required admissions was more than $200 million.

In addition, official documents revealed BAES made substantial payments to shell companies and third party intermediaries that were not subjected to the close audit to which BAES informed the U.S. government the payments would be required to undergo. BAES made payments upwards of £135 million, knowing that some of the payment would be used to ensure they were favored in foreign government decisions regarding the purchase of defense articles. BAES went on to admit to making false statements and providing false documents in connection with regulations required by AECA and ITAR.

As part of their guilty plea, BAES has agreed to maintain a compliance program designed to disclose and avert violations of the FCPA and agreed to a three year, independent compliance monitor to assess the compliance program, with a series of reports to the company and Justice Department.

The security and aerospace company out of Hampshire, England was formed in 1999 by the merger of two UK companies, Marconi Electronic Systems and General Electric Company plc. Along with its subsidiary BAE Systems Inc. in North America, BAE Systems is the world's second largest defense contractor and largest in Europe. U.S. subsidiary, BAE Systems Inc., headquartered in Rockville, Maryland was not involved in the criminal actions or consequences.