Okay, so here's the scene from a few months ago:
Huuuuge British corporation. Blatantly in violation of federal law on several counts spanning four continents, involving violations worth billions of dollars. Has no legal leg to stand on. Department of Justice is ready to bury the company in prosecution, under a much-ballyhooed law written just for that purpose.
But wait - there's one catch:
If the company is found guilty, it will no longer be able to do business with the United States government, a punishment that will cost the company billions of dollars a year in sales.
So what happens . . . ?
Well, contrary to the righteous bluster from certain parties, the company pleads guilty to a single minor charge of "conspiring to make false statments," writes a check for an amount equivalent to three days' worth of sales, and then walks away, free to continue doing exactly what it has long been doing: corruptly selling arms around the world.
Meet BAE Systems, the biggest arms dealer in the world - "BAE Systems sales [in 2008] were greater than the gross domestic product of 105 countries" - and undoubtedly the most corrupt.
For a bit of background about how corrupt BAE is, read this diary. And I don't mean "corrupt" like handing-the-police-officer-a-twenty-with-your-driver's-license corrupt. I mean "corrupt" like maintaining a multimillion-dollar slush fund to put clients up in 30-room Beverly Hills mansions. Like paying Saudi princes a billion dollars in bribes. Like buying the governments of second-world countries.
That kind of corrupt.
In 2007, the Department of Justice began its investigation looking for evidence to support widespread allegations of BAE's bribery around the world.
And, given that a simple Google search of the terms "BAE" and "corruption" produces about 2,600,000 hits - well, let's just put it this way: I'm sure the DOJ's investigation must've found something, right?
Well, based on the outcome of the prosecution, I guess what the DOJ must have found in its investigation was that its investigators had been, ahh, misinformed when BAE told them that well, shucks, the company was just a law-abiding corporate citizen like anyone else.
And I guess misinforming Justice Department investigators about whether you are breaking the law is serious.
SERIOUS.
Evidently more serious than, you know, actually breaking the law.
Because that's the charge DOJ ultimately let BAE plead guilty to: a single count of conspiring to make false statements -
"So, Bugsy, tell us: did you whack those guys?"
"'course not! I would nevah do nuttin' like dat!"
"Better be tellin' us the truth, Bugsy, because if we find out later that you actually whacked those guys, it won't go easy for ya: you're gonna be cleaning out all that change in your ashtray there and handing it over to us. You'll have to figure out some other way to buy your donuts for a day or two . . . "
"So, dat's what I get fuh whackin' dose guys?"
"Nahhh - we don't care about you whacking them - we just wouldn't want you making false statements to us about whacking them, see?"
If BAE were to have been found guilty of violating the Foreign Corrupt Practices Act (FCPA), it undoubtedly would have been debarred as a federal contractor, and thus been rendered unable to do business with the United States government - which accounted for $8 billion of BAE's sales in 2007.
With that in mind, read what the DOJ said in its press release about the settlement, and notice how it danced around the stark effing reality of clear-cut FCPA violations about which it had ample evidence:
The FCPA makes it illegal for certain businesses and individuals, or anyone taking action within U.S. territorial jurisdiction, corruptly to make payments to foreign government officials for the purpose of obtaining or retaining business. In addition, the FCPA prohibits corruptly making payments to a third party, while knowing that all or a portion of the payments will go directly or indirectly to a foreign government official for the purpose of obtaining or retaining business.
- this is an excellent summation of the purpose and provisions of the FCPA. So - what exactly did BAE do with respect to the FCPA? Keep reading (emphasis added):
Despite BAES’s [note: DOJ refers to BAE Systems as "BAES"] representations to the U.S. government to the contrary, BAES knowingly and willfully failed to create sufficient compliance mechanisms to prevent and detect violations of the anti-bribery provisions of the FCPA.
Sounds great, but it begs the obvious question: How could the DOJ have known that BAE "failed . . . to prevent and detect violations of the anti-bribery provisions of the FCPA" unless the DOJ knew that such violations had in fact occurred? And would it not therefore naturally follow that the DOJ should have prosecuted BAE for those violations?
Silly questions, I know.
The DOJ release goes on,
According to court documents, BAES made a series of substantial payments to shell companies and third party intermediaries that were not subjected to the degree of scrutiny and review to which BAES told the U.S. government the payments would be subjected. BAES admitted it regularly retained what it referred to as "marketing advisors" to assist in securing sales of defense items without scrutinizing those relationships. In fact, BAES took steps to conceal from the U.S. government and others its relationships with some of these advisors and its undisclosed payments to them. For example, after May 2001, BAES contracted with and paid certain advisors through various offshore shell companies beneficially owned by BAES. BAES also encouraged certain advisors to establish their own offshore shell companies to receive payments from BAES while disguising the origins and recipients of these payments. BAES admitted that it established one company in the British Virgin Islands (BVI) to conceal its marketing advisor relationships, including who the advisor was and how much it was paid; to create obstacles for investigating authorities to penetrate the arrangements; to circumvent laws in countries that did not allow such relationships; and to assist advisors in avoiding tax liability for payments from BAES.
This paragraph is a recounting of multiple violations of FCPA - but it stresses the point that BAE lied to federal investigators about its culpability in those violations. In other words, "You guys broke the FCPA law. But we're not gonna charge you with that. No - we're gonna charge you with lying to us when you promised us you WEREN'T breaking the law."
Here's what MainJustice.com had to say about the Kafka-esque scenario:
[T]hroughout today’s hearing on the plea agreement in federal court in Washington, the judge, prosecution and defense were all careful not to allege that BAE, one [of] the world’s largest weapons manufacturers, had in any way violated the FCPA.
"BAE paid $19 million to a contractor even though they were aware that there was probability the funds would be used to benefit BAE in contract negotiations," DOJ prosecutor Nathaniel Edmonds said at the hearing.
According to John Davis, chairman of Miller Chevalier’s International Department, the charges almost sound like FCPA violations.
"It is interesting in the sense that their description of the facts effectively enumerates what could be an FCPA violation straight up, but they’re not charging them with that," said Davis.
Huh. Now, why in the world would the Justice Department go out of its way not to charge BAE with violations of FCPA?
Oh, that's right: because BAE then would be debarred, forbidden from doing business with the U.S. government. D'oh!
"Debarment would be a problem for [the Department of Defense] given the size of BAE and what they do for them," [Davis] said.
BAE was the fourth largest supplier of arms to DOD in 2009 and is one of the largest arms manufacturers worldwide in terms of sales.
In fact, BAE's lawyers - those clever fellows - were verrrry careful about what they wrote:
[A]t Monday’s hearing. Defense attorney Lawrence Byrne, a partner at New York-based Linklaters LLP, asked that the record reflect that BAE did not know payments would be used for bribes, only that there was high probability they might be used in that fashion.
"There could be other proceeding in the jurisdiction or other jurisdictions going forward and these transcripts will be closely reviewed," said Byrne.
- in other words,
"We want this court on record as stating that WE DIDN'T BRIBE ANYBODY, even if in fact we did, because otherwise we will lose a metric shitload [in tonnes, no doubt]
of Pentagon business."
And We Can't Have That, now, can we?
So - what does the above-cited laughable "prosecution" of a major British corporation have to do with anything in the news right now?
Oh, I dunno - just caught my eye, I suppose.