DOJ concluded its long-running FCPA investigation into BAE Systems plc. The company pled guilty to conspiring to defraud the U.S., to make false statements about its FCPA compliance program and to violate the Arms Export Control Act and International Traffic in Arms Regulations. U.S. v. BAE Systems plc, (D.D.C. Filed March 1, 2010).

The case, which has been under investigation for years in this country and the UK as discussed here, centers on conduct from 2000 to 2002. According to the court papers, the company falsely represented to DOJ and other agencies that it would create and implement policies and procedures to ensure compliance with the FCPA and similar foreign laws implementing the Organization for Economic Cooperation and Development Anti-bribery Convention. Instead the company:

• Knowingly and willfully failed to create mechanisms to ensure compliance resulting in a gain from the false statements to the U.S of $200 million;

• Made a series of substantial payments to shell companies and third party intermediaries that were not reviewed in accord with representations made to the U.S. government;

• Regularly retained “marketing advisors” to assist in selling defense items without scrutinizing the relationships and at times took steps to conceal these relationships, using off-shore entities and accounts;

• Through a British Virgin Islands entity, made more than $150 million in payments that were in probability used to influence foreign government decisions;

• After the UK Government and the Kingdom of Saudi Arabia entered into a formal understanding, began providing substantial benefits to a foreign public official of the Kingdom in a position to influence the sale of fighter jets;

• Made false and incomplete statements to the U.S. government in connection with the administration of certain regulatory functions;

• Knowingly and willfully failed to identify commissions paid to third parties in soliciting and promoting the sales of defense items in violation of Arms Export Control Act and International Traffic In Arms Regulations; and

• Filed false applications for export licenses for Gripen fighter jets to the Czech Republic and Hungary by failing to tell the export license applicant or the State Department of payments made to an intermediary with a high probability that they would be used to influence the tender process.

BAE, which does business in the U.S. through a Rockville, Maryland subsidiary not implicated in the violations, will pay a $400 million criminal fine and adopt a comprehensive FCPA compliance program.