BAE criticised by UK MPs over Tanzania corruption
- 19 July 2011
- From the section Africa
The British arms and aircraft firm BAE Systems has been severely criticised by a UK parliamentary inquiry into a corruption case surrounding an air-traffic-control deal with Tanzania.
MPs accused BAE of unilaterally setting up a compensation arrangement for Tanzania that was a "complete sham".
BAE admitted to not keeping full accounting records of £8m ($12m) it paid to an agent who brokered the deal.
After a plea bargain, it was not found guilty of any wider corruption charges.
The controversy relates to the supply in 1999 of an air-traffic radar control system.
But it could also be a test case for campaigners who say bribery and corruption are a brake on economic development.
In a plea bargain with the prosecuting authorities, the Serious Fraud Office, BAE agreed to pay £30m to the Tanzanian people.
The £30m was effectively a compensation payment to Tanzania - because of the revelation of the embarrassing £8m payment and allegations that the military-style air-traffic system was unnecessarily complex and expensive.
BAE and the Serious Fraud Office said they could not say if the £8m was used for bribery to seal the radar sale.
A top BAE lawyer, Philip Bramwell, said the company sincerely apologised for events of the past - and he agreed it would not make payments similar to the £8m now.
MPs on the watchdog International Development Committee dismissed some of the company's positions as "waffle" and "dissembling".
They repeated a judge's comments that it was "naive in the extreme" to think the £8m was used legitimately and that there was "a high probability" that the sum had been used in the negotiating process to "favour" the BAE bid to supply the radar.
The MPs also asked BAE executives why none of the £30m had yet been paid.
They questioned the right of the company to set up its own advisory board to decide on how the money should be spent - rather than give the money directly to the government of Tanzania, as a group of Tanzanian MPs had requested.
Committee chairman Malcolm Bruce MP asked whether it was not "offensive" for the company to suggest it knew better how to spend the money than the government of Tanzania.
With the Tanzanian government, British aid ministry the Department for International Development has drawn up a plan to spend the money on the Tanzanian education system - for desks, text books and teachers' accommodation.
Mr Bruce advised BAE to hand the money over to this project "as soon as possible".
The director of the Serious Fraud Office, Richard Alderman, who also appeared before the committee, said he was surprised the money had not yet been disbursed as promised by BAE.
He undertook to write to the company to ask why not - and said there would be "consequences" if there were further delays.