The Department of State has announced that it entered into a civil settlement with BAE Systems plc for alleged violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). According to the Department of State release, under the four year-term of the Consent Agreement, BAE “will pay in fines and in remedial compliance measures an aggregate civil penalty of $79 million, the largest civil penalty in Department history.”
The improper conduct set forth in the State Department documents includes actions relating to the lease and the lease/sale of Gripen aircraft to the Ministries of Defense in the Czech Republic and Hungary and BAE’s use of advisers for defense transactions and proposed defense transactions involving U.S. defense articles and services without obtaining authorization from the State Department.
The violations were identified by the Department of State during a review of BAE’s conduct following its criminal conviction in March 2010 in which BAE pleaded guilty to “conspiring to defraud the United States by impairing and impeding its lawful functions, to make false statements about its FCPA compliance program, and to violate the Arms Export Control Act and International Traffic in Arms Regulations.” According to the Proposed Charging Letter, BAE allegedly committed an estimated 2,591 violations of the ITAR in connection with unauthorized brokering of U.S. defense articles and services, failure to register as a broker, failure to file annual broker reports, causing unauthorized brokering, failure to report the payment of fees or commissions associated with defense transactions, and failure to maintain records involving ITAR-controlled transactions. BAE was sentenced to pay a $400 million criminal fine in connection with the DOJ action.
According to the release, in response to the criminal conviction, the Department had initially determined to impose a statutory debarment on BAE. However, after reviewing the circumstances surrounding the conviction and finding that appropriate steps had been taken to mitigate law enforcement concerns, the Department determined to rescind the statutory debarment.
BAE Systems plc is a multinational defense contractor with headquarters in the United Kingdom. None of the alleged wrongful conduct involved the actions of BAE Systems Inc., a subsidiary of BAE which is headquartered in Rockville, Md.