BAE Scandal Up-date

Below is the letter of June 21, written by the Honorable Senator John Kerry to Mr. Alberto Gonzales, Attorney General of the United States.

This scandal, now beginning to be revealed, appears to possibly involve the breaking of U.S. law. This is doubly important due to the attempt of BAE, a British concern, to take over Armor Holdings, Inc., a United States company.

Although not the first to post information on this scandal to the web, I do appear to be one of the first.


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June 21, 2007

The Honorable Alberto R. Gonzales
Attorney General
Office of the Attorney General
United States Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530


Dear Mr. Attorney General:


I am writing you concerning recent reports that the British defense company BAE Systems (BAE) may have violated U.S. anti-bribery laws in relation to its international arms deals. As you are undoubtedly aware, BAE is currently seeking approval for the acquisition of Armor Holdings, Inc., the U.S. maker of armor for Humvees. BAE also currently supplies Bradley Fighting Vehicles to the U.S. military.

According to published reports, Britain's Serious Fraud Office was investigating an $80 billion transaction, known as the Al-Yamamah deal, involving a series of illegal payments by BAE through the now defunct Riggs bank in Washington, D.C., to former Saudi Ambassador to the U.S., Prince Bandar bin Sultan. That investigation was halted last December by the British Attorney General, Lord Goldsmith, on the grounds that it was not in the national interest to pursue the inquiry.

It appears that U.S. officials have also been concerned about BAE's business practices for some years. In July 2002, a State Department memorandum noted persistent allegations that BAE Systems pays bribes to obtain business. The memorandum concluded that this volume of allegations about one company would have triggered a Department of Justice criminal division investigation long ago. More recently, in October 2006, a high ranking official at the Department of Justice indicated that foreign-owned companies, such as BAE, could be targeted by U.S. investigators: The Department will not hesitate to enforce the Foreign Corrupt Practices Act, just as it does against American companies.

Recently published reports indicate that the Department of Justice's Fraud section, in cooperation with the Federal Bureau of Investigation, has begun a preliminary investigation to review allegations that BAE may have illegally paid key officials to win contracts to sell fighter jets and other major weapons systems. However, representatives of both BAE and Saudi Arabia have told media sources that they have not been notified of any investigation by the Department of Justice.

Given BAE's prominent role within the U.S. defense industry, their pending application before the Committee on Foreign Investment in the United States for approval of the Armor Holdings sale, and the serious nature of the allegations against this company, full disclosure of the facts is essential. Accordingly, I would appreciate receiving from you a formal clarification on the following points:

1. Have there ever been any investigations, preliminary or otherwise, of BAE by the Department of Justice?

2. Is there an ongoing investigation of BAE by the Department of Justice?

3. If any investigation of BAE was ever initiated by the Department of Justice and subsequently dropped, what were the specific reasons for this decision?

4. Was the Attorney General's office, or any other office or official in the Department of Justice, ever contacted by any other officials, agencies or departments of the U.S. government, including the White House , concerning this matter? If so, please list any and all such contacts.

5. Is the Attorney General's office aware of any past or present investigation of BAE by any other agency or department of the United States government? If so, has the Justice Department requested access to any information relevant to this investigation? Has the Justice Department requested any information related to BAE from Britains Serious Fraud Office?

6. What contact, if any, has the Attorney General's office had with the Committee on Foreign Investment regarding the sale of Armor Holdings to BAE?

I look forward to a reply no later than June 30, 2007. I would also encourage you to share any information you may have related to this issue with the Committee on Foreign Investment.


Sincerely,

Senator John F. Kerry

Cc: Senator Joseph Biden, Chairman, Senate Foreign Relations Committee
Senator Patrick Leahy, Chairman, Senate Judiciary Committee