05 Feb 10. BAE Systems is to pay more than $400m in penalties to settle bribery allegations in a groundbreaking transatlantic settlement of Britain’s biggest and most politically contentious corporate corruption case. The company will pay the vast bulk of the fines in the US, while it will hand over £30m in the UK and plead guilty to a minor Companies Act accounting record offence. The agreement is bound to provoke sharp debate – particularly in the UK – about whether BAE is being punished sufficiently, given the size and scope of the corruption allegations against it. In a statement BAE said it regretted the incidents and accepted full responsibility for what it described as the “shortcomings”. “In the years since the conduct referred to in these settlements occurred, the Company has systematically enhanced its compliance policies and processes with a view to ensuring that the Company is as widely recognised for responsible conduct as it is for high quality products and advanced technologies,” said Chairman Dick Olver. The penalties are among the biggest ever exacted by the US department of justice over corruption allegations. It is the first time the US and UK authorities – which have been probing the case for a total of eight years – have coordinated a corporate corruption ”plea bargain” of this kind. The deal – struck months after the UK Serious Fraud Office publicly announced it would seek to charge the company over the alleged bribery of European and African government officials – would end a high-profile British criminal probe launched more than five years ago. UK prosecutors announced in October that they would seek to charge BAE after talks between the two sides broke down. The SFO had wanted to impose penalties of hundreds of millions of pounds, while the company was prepared to pay only a small fraction of that, according to people familiar with the matter. While the UK settlement involves admissions of wrongdoing only in relation to the company’s sale of a radar system to Tanzania, the broader US deal covers the high-profile allegations surrounding the company’s massive Saudi Arabian arms. The UK government drew heavy criticism three years ago for forcing the SFO to scrap its investigation into the company’s Saudi Arabian arms contracts worth tens of billions of pounds. The SFO last week announced the first prosecution of an individual in the case, charging Count Alfons Mensdorff-Pouilly, an Austrian national, with making illegal payments to central and eastern European government officials to win fighter jet deals for the company. (Source: FT.com)
03 Feb 10. BAE Systems was out of favour on Wednesday as the FTSE 100’s three-day rally ran out of steam. The defence contractor fell the most since October after Goldman Sachs forecast cuts to defence spending in the US and UK. “Based on historical defence budget down cycles, we believe BAE’s earnings could stagnate until the middle of this decade,” said Goldman, which added the stock to its “conviction sell” list.
Profits at BAE’s land division looked set to halve by 2012 after the US cut funding for several vehicle programmes in its 2011 budget, said analyst David Perry. The division generated about 27 per cent of group profit, he said. The analyst also expected news about the group’s Joint Strike Fighter programme to keep getting worse. Programme leader Lockheed-Martin this week warned it would share the burden among partners including BAE after the Pentagon withheld $614m in performance fees.
US defence procurement reform, BAE’s pension deficit and the Serious Fraud Office’s investigation into corruption allegations were among a further six reasons put forward by Goldman to sell the stock, which closed down 2 per cent at 340¼p. (Source: FT.com)
01 Feb 10. Private equity firm Warburg Pincus has completed the acquisition of specialist clothing business Survitec for a sum in the region of £280m. Belfast-based Survitec makes a range of survival products, such