Tuesday, September 28, 2010

FBI Awards BAE $40 Million Contract

Yesterday's post (here) discussed the shortcomings of HR 5366 (the Overseas Contractor Reform Act). As highlighted in that post, HR 5366 represents impotent legislation because it exhibits little understanding of how conduct violating the FCPA is typically resolved.

One matter discussed in the post was the February 2010 enforcement action against BAE in which the DOJ alleged, among other things, that the company “provided substantial benefits,” including through U.S. payment mechanisms, to a Saudi public official “who was in a position of influence regarding” a lucrative fighter jet contract. (See here). The bribery was so extensive per the DOJ's allegations, that just one BAE employee submitted $5 million in invoices for benefits to the official during a one year period.

Yet, these bribery, but no bribery allegations (see here) did not result in any FCPA anti-bribery charges against BAE - the largest defense contractor in Europe and the fifth largest in the U.S. as measured by sales.

Thus, even if HR 5366 was enacted prior to February 2010, it would not have prevented BAE from securing federal government contracts because the DOJ did not charge BAE with any FCPA anti-bribery offenses.

How many federal government contracts has BAE secured since the DOJ alleged that the company “provided substantial benefits” to a Saudi public official “who was in a position of influence regarding” a lucrative fighter jet contract?

Judging just by BAE's press releases (see here) many - so many that separate links would be distracting.

None stand out more than the $40 million contract BAE was recently awarded by the FBI "to provide critical information security safeguards, including certification and accreditation, to ensure the confidentiality and privacy of FBI computer networks in the United States and around the world." (see here).

BAE's conduct giving rise to the February 2010 enforcement action, in which BAE agreed to pay a $400 million criminal fine, "was investigated by FBI special agents who are part of the Washington Field Office’s dedicated FCPA squad." (See here).

In connection with the BAE resolution, the FBI issued its own press release (see here).

In the release, Shawn Henry, Assistant Director in Charge of the FBI’s Washington Field Office stated: “competition is one of the foundations of our economic system,” and “corporations and individuals who conspire to defeat this basic economic principle not only cause harm but ultimately shake the public’s confidence in the entire system.”

I agree.

The public's confidence in the entire system is shaken, but not for the reason Henry articulated.

1 comment:

  1. Mike,

    This is an important issue which needs to be emphasized and discussed so greater transparency can lead to more informed civil political discourse. Your particular primary complaint however is more accurately that you are dissatisfied with the way in which the prosecutorial authorities exercise their discretion; maybe even to the fact that they have such a degree of unreviewable discretion, which is inherent in our system of plea-bargaining and charge-bargaining. The legislation itself, viewed within this context, is not problematic if one has confidence in the administration of justice in the US.
    Similarly, you must also wonder why, even in the absence of debarment legislation, U.S. government officials vested with responsibiity in matters of national security and defense seem almost compelled to do business with a company that has committed serious and well-publicized criminal offenses.