British Prime Minister David Cameron has promised full cooperation in a Czech probe of one of its biggest ongoing corruption investigations, the Kč 60 billion purchase of jet fighters from a consortium of BAE Systems and SAAB.
Czech authorities have complained that their investigations into the deal have stalled over lack of cooperation from Britain, which is believed to have key information which could pinpoint Czechs involved in suspected graft.
“British authorities will make sure that the Serious Fraud Office (SFO) responds to any and all requests it receives from the Czech Republic and we will do our best to respond to those inquiries. I believe there are some new inquiries we have received, and we will obviously look at those carefully and do our best to help bring this issue to a close,” said Cameron when asked a question during a joint news conference. ‘British authorities will make sure that the Serious Fraud Office (SFO) responds to any and all requests it receives from the Czech Republic.’
Czech Prime Minister Petr Nečas (Civic Democrats, ODS) insisted that the Czech demands for help did not seek to implicate any British companies or citizens, but only to find out Czech who might have been involved in corruption. He said he valued greatly the British PM’s pledge of help in the investigation.
The original Kč 60 billion deal signed by the Czech Social Democrat (ČSSD) government in 2002 was for the purchase of 24 JAS Gripen jets from the Anglo-Swedish consortium of BAE Systems and SAAB. The deal was eventually dumped when it did not win support in Parliament, but not before a flurry of corruption suspicions were raised. Eventually, the Czechs signed a deal to lease 14 Gripen fighters for 10 years at a cost of Kč 20 billion.
SFO’s worldwide probe
Britain’s Serious Fraud Office has been looking into corruption allegations regarding BAE Systems worldwide, in particular regarding the massive £40 billion Al Yamamah arms contract to Saudi Arabia. The investigations also covered the suspected use of middlemen in Central Europe who paid bribes to land Gripen contracts.
BAE was also subject to corruption investigations in the US, but these were halted when it did a deal with the US Department of Justice at the start of 2010 under which the company agreed to a $500 million worldwide settlement.
Most of the British investigations were in effect stopped in their tracks when this happened with the SFO unable to continue pursuing BAE systems for offences covered by the US settlement, an official at the SFO told Czech Position. “The only ongoing case which we have concerning BAE Systems is that covering a Tanzania radio contract,” he added.
This US settlement was particularly important for the ongoing Czech investigation into corruption. In February 2010, the SFO announced that it was dropping proceedings against Austrian aristocrat Count Alfons Mensdorff-Pouilly on the grounds that it “was no longer in the public interest to continue the investigation into the conduct of individuals.”
As a result, a charge brought against Mensdorff-Pouilly less than a week earlier was withdrawn. The charge of corruption concerned Mensdorff-Pouilly’s involvement in defense contracts between BAE Systems and countries in Eastern and Central Europe.
Mensdorff-Pouilly has been accused of conspiring to give or giving payments between January 2002 and December 2008 to “unknown officials and other agents of certain Eastern and Central European governments, including the Czech Republic, Hungary and Austria as inducements to secure, or as rewards for having secured, contracts with those governments for the supply of goods to them, namely SAAB/Gripen fighter jets by BAE Systems.”
At the time, the SFO said its case was based on cooperation between the Ministry of Defence Police in the UK and collaboration with Austrian, Czech, Hungarian and Swiss authorities and coordination by European police cooperation organization, Eurojust.
The Austrian aristocrat originally from Vienna, but who also owned a Scottish castle, had even appeared and been bailed by a London court pending the full opening of the case. He denied conspiracy to corrupt. BAE admitted paying bribes totaling £19 million in Central Europe as part of the settlement with US authorities.
The decision by the director of the SFO to drop the case against Mensdorff-Pouilly caused outrage in sections of the British press, in particular for the fact that no good reason for the decision was given. A court case to try and overturn that decision was launched by the British-based Campaign Against Arms Trade (CAT) and non-profit advocacy and social justice advocacy group, Corner House. They cited in the evidence the fact that BAE admitted paying bribes totaling £19 million in Central Europe as part of the settlement with US authorities.
With the Gripen lease deal running out, the Czech Defense Ministry is looking at future options to safeguard its airspace and fulfill its NATO commitments. PM Nečas has recently warned that SAAB and BAE Systems do not stand a chance in a new tender unless they help solve the ongoing corruption probe.