DoJ Opens Investigation Into Bandar Payments, Others

Josh Meyer at the Los Angeles Times makes it official: the Department of Justice has opened an investigation into whether BAE Systems, the British defense corporation accused of bribing ex-Saudi Ambassador to the U.S. Prince Bandar bin Sultan, has violated the Foreign Corrupt Practices Act. The Act is meant to prevent companies engaged in bribery from doing business in the United States. Bandar’s alleged payoffs are only one element in the inquiry, as the British government’s Serious Fraud Office has linked BAE to fraud cases in Tanzania, South Africa, Chile, the Czech Republic, Qatar and Romania.

The Justice Department is investigating whether British defense giant BAE Systems, which supplies Bradley fighting vehicles to the U.S. military and is becoming a major player in the U.S. defense industry, paid bribes to win contracts in Saudi Arabia, Chile and elsewhere, federal officials confirmed Thursday.

The Justice Department’s fraud section, with the FBI’s help, has begun a preliminary investigation to review allegations that the company conducted an ambitious campaign of payoffs to key officials to win contracts to sell fighter jets and other major weapons systems, according to several federal law enforcement officials familiar with the case. The key officials included Prince Bandar bin Sultan, former Saudi ambassador to the United States and a close Bush administration ally.

Yet according to the LAT, it’s far from certain whether investigators will assemble a prosecutable case:

The investigation is in its early stages, according to the officials. At least one senior Justice Department official questioned the likelihood of a successful prosecution that would have to rely on uncooperative suspects and witnesses overseas, and, in some cases, alleged transactions dating back more than 20 years.

But the federal law enforcement official said the allegations against BAE were too serious for federal authorities to overlook.

A second federal law enforcement official familiar with the probe said prosecutors were gathering information to determine whether they had the proper grounds and evidence to move forward. “It’s not full-steam ahead, on the verge of prosecution,” the official said. “It is something that we are reviewing, to decide whether to move forward with it.”

It would be a decision with huge consequences. Last month, BAE announced plans to purchase Armor Holdings — the largest Defense Department contractor for armored wheeled vehicles like Humvees and Strykers — in a deal estimated to be worth over $4 billion. Any DoJ prosecution would scotch the purchase, something very costly to both Armor Holdings (headquartered in the swing state of Florida) and the U.K. Not surprisingly, the State Department, fearing damage to the U.S.-U.K. relationship, has sent emissaries to the Senate and House foreign-affairs committees in the hopes of preempting any congressional action.

That appears to have been successful — for now — but a Justice Department investigation both puts a wrench into the BAE-Armor Holdings deal and risks further exposure of Bandar’s relationship with the company. Earlier this month, the Guardian and the BBC reported that Bandar has been the recipient of $2 billion in kickbacks from BAE stretching back over 20 years, due to a massive Saudi purchase of British aircraft in the 1980s. Both Bandar and the company deny the charges.