LONDON (Reuters) - Britain's Serious Fraud Office wants to prosecute Europe's biggest defense contractor, BAE Systems, for corruption and bribery, and lawyers said big fines were possible, though securing a conviction would be difficult.
The SFO said on Thursday it would seek government consent to prosecute BAE after a long-running probe into arms deals in the Czech Republic, Romania, South Africa and Tanzania dating back to the 1990s.
"The SFO ... intends to seek the Attorney General's consent to prosecute BAE Systems for offences relating to overseas corruption," it said, though a spokesman would not say when it would be ready to submit documents to the Attorney General.
BAE, which has denied the allegations, said in a statement it would continue to attempt to resolve the matter.
"The company will deal with any issues raised in those proceedings at the appropriate time and, if necessary, in court," the group said in a statement.
BAE shares were down 4.5 percent at 333.5 pence by 1054 GMT, having risen nearly 12 percent last month, valuing the firm at around 11.5 billion pounds.
Reuters last week quoted sources close to the case as saying that the SFO wanted BAE to plead guilty and agree to a substantial fine by September 30 or face possible criminal prosecution.
HUNDREDS OF MILLIONS
In December 2006, the SFO dropped an investigation of allegations of bribery of Saudi Arabia officials in an arms deal involving BAE after then-Prime Minister Tony Blair said the probe threatened national security. The investigation continued, however, into bribery allegations related to BAE sales to the other four countries.
Lawyers said BAE faced huge penalties if it was found guilty, but that such cases were notoriously difficult to prove.
"I would have thought it would go into hundreds of millions. The UK authorities will want to show that there is some sort of comity in relation to the way in which one deals with international corruption and will want to follow the lines of Germany and the U.S," said George Brown, partner in Global Regulatory Enforcement at law firm Reed Smith.
Late last year German industrial conglomerate Siemens agreed to pay just over $1.3 billion to settle corruption probes in the U.S. and Germany.
Howard Wheeldon, senior strategist at BGC stockbrokers, said the Anti-terrorism, Crime and Security Act 2001 extended UK corruption law to include bribery of overseas officials, but that if the case referred to events before that date it would be "very difficult for the SFO to build a case."
Reed Smith's Brown also noted that it was much easier to convict individuals of bribery or corruption than companies.
"To get a prosecution of the company you have to prove that the person who is the controlling mind and body of the company was involved in making the decisions," he said, adding that a case could take 12-24 months to reach a conclusion.
Statement from the Serious Fraud Office:
BAE SYSTEMS plc
The Serious Fraud Office has announced today that it intends to seek the Attorney General's consent to prosecute BAE Systems for offences relating to overseas corruption and will prepare its papers to be submitted to the Attorney when the SFO considers it is ready to proceed. This follows the investigation carried out by the SFO into business activities of BAE Systems in Africa and Eastern Europe.
Issued by the Serious Fraud Office, October 1 2009
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