Case Against BAE Systems in the Context of the Foreign Corrupt Practices Act – Case Study Example

Case Against BAE Systems Case Against BAE Systems Foreign Corrupt Practices Act (FCPA) It was legislated by the congress in 1977 with an aim of preventing influential government officials, heads of state, multinational businesses and officers in influential government positions form getting involved in fraudulent and unethical international transactions. The accounting provisions that is set out under the FCPA only apply to issuers mandated to keep accurate records that reflect all transactions. Accuracy of records is important in reflecting the various assets’ dispositions. In this regard, any one company remains liable if it deliberately or intentionally omits bribery and illegal transactions’ records in its records. The liability also applies to omission of improper payment details or disguised transactions in its records. The Act also provides that issuers shall remain liable for any unaccepted acts committed by their immediate subsidiaries. These include improper transactions made by the subsidiaries.
Case against BAE Systems
The BAE Systems, a global company involved in the development, delivery and support of advanced defense, security and aerospace systems, and with its headquarter in the U.K. is one that has committed foreign corrupt practice and is under investigation. It violated all the accounting provisions as prescribed by the FCP Act. Investigations launched in 2008 are currently on going by the department of justice. The company’s case involves a series of fraudulent transactions on international arms contract amounting to nearly $81 billion.
Also included in the investigation is to disclose fraudulent deals that preceded the acquisition of a fighter jet involving BAE Systems, U.K. and Saudi Arabia. At the forefront in masterminding the series of briberies and frauds was Prince Bandar bin Sultan, the then U.S. ambassador to Saudi Arabia. He was a close ally of President Bush and had close political and diplomatic relationship with the U.K. he was tasked with the responsibility of getting a new fighter jet for the Saudi forces to be used, in 1985.
Together, with Ronald Reagan and Margaret Thatcher, Prince Bandar organized to acquire arms from the U. K. British Aerospace was to be the l subcontractor that was to supply Saudi government with the aircraft and arms through a deal dubbed al Yamamah. By sealing the fraudulent deal, BAE rewarded Bandar’s friends and families with gifts. BAE’s top management justified their rewards to the Saudi government by offering travel services and honeymoon to the Saudi royal family. Prince Bandar also received a new airbus reward from BAE. The illegal transactions made to the Swiss bank account amounted to billions of US$. The investigations further revealed fraudulent transactions by the company to South Africa and Czech Republic. The investigation received political setback when Prime Minister Tony Blair stopped the investigation owing to possibility for economic set back. However, Prince Bandar and the Saudis are not eligible for charges under the FCP Act. It only applies to BAE that violated its accounting provisions
Forensic accountancy in the case against BAE Systems
Several measures would be applicable for a forensic accountant to investigate the case of BAE systems. Prosecution of all parties involved in fraudulent winning of tenders is an applicable measure. Proper auditing of all transactions conducted by BAE and Saudi officials would provide necessary during the investigation cases. Investigation of questionable payments during the contracts requires proper analysis of transactions made in other countries. Countries such as South Africa and Switzerland allegedly allowed operations of foreign accounts during the payments. Conspirators during the payments should undergo vetting to analyze available data and information in relevant to the case.
Reference
Drew, C. & Clark, N. (2010, February 5). BAE Settles Corruption Charges. The New York Times. Retrieved from: http://www.nytimes.com/2010/02/06/business/global/06bribe.html?_r=0