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Legal challenge to SFO plea bargain decision

Leigh Day is challenging the decision of the SFO to enter a plea bargain with BAE

High Court in London

26 February 2010

Leigh Day & Co has today issued judicial proceedings challenging the decision of the Director of the Serious Fraud Office (SFO) to enter a plea bargain agreement with BAE Systems Plc.  The challenge is being brought on behalf of Corner House and Campaign Against Arms Trade (CAAT). [link grounds & application for urgent consideration]

In a negotiated settlement announced on 5 February 2010, BAE agreed to plead guilty to accounting offences relating to the controversial sale of a military air traffic control system to Tanzania and to pay a fine in the region of £30 million.  In return the SFO dropped the far more serious charges of bribery in relation to BAE’s dealings in a number of countries.

Leigh Day & Co is also asking for the SFO’s decision to drop charges against Count Mensdorff-Pouilly, a BAE agent, to be reversed.

Leigh Day & Co is seeking an injunction to prevent the settlement going through.  Despite asking the SFO to refrain from commencing the criminal proceedings until resolution of the legal challenge, the SFO have indicated that they will be pressing ahead which would frustrate the legal challenge.

Leigh Day & Co argues that the Director of the SFO has acted unlawfully in compromising the investigations into BAE on the basis of this plea agreement.  The guidance under which the Director must operate makes clear that once the decision to prosecute has been taken, the charges agreed in any plea must reflect the seriousness of the offending concerned.

The fine BAE has agreed to pay is of the same order as the value of the alleged bribe involved in the Tanzania deal.  BAE’s share price actually rose on the announcement.  Crucially, BAE has by striking this deal managed to avoid the possibility of a conviction for bribery which would have led to far more wide ranging sanctions (including debarment from public contracts) and the possibility of individual directors facing charges.

While the SFO has announced that part of the fine being paid by BAE will be paid to the people of Tanzania in compensation for losses allegedly suffered as a result of the BAE deal, the potential victims in other countries now have no prospect of receiving compensation or discovering the details of the fraud committed on them.

The SFO has been investigating allegations of bribery and corruption by BAE since 2004.  In 2006, the SFO, under pressure from Downing Street, controversially dropped its investigation into bribery allegations relating to Saudi Arabian royal family.  Leigh Day & Co represented Corner House and CAAT in proceedings challenging this decision. Although successful in the High Court, where it was held that the decision to end the investigation breached the rule of law, the House of Lords overturned that decision and found that threats to national security made by the Saudis could not be ignored.

Jamie Beagent, solicitor at Leigh Day & Co, said:

“The plea bargain announced on 5 February has unsurprisingly attracted a great deal of public criticism. The fine BAE has agreed to does not reflect the seriousness of the many allegations it faced.  The SFO’s decision seems entirely at odds with its own prosecutorial guidance and our clients will be asking the Courts to review the legality of that decision.”

Information was correct at time of publishing. See terms and conditions for further details.

Information was correct at time of publishing. See terms and conditions for further details.

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