BAE to pay 'final' $79m fine over US violations

BAE systems, the FTSE 100 defence contractor, has agreed to pay a further $79m (£49m) in fines in the corruption investigation that has dogged the company for most of the past decade.

The latest – and, BAE said, the final – settlement was agreed yesterday with the US State department, which alleged it had discovered 2,591 regulatory violations by the company, including failures to report the payment of fees or commissions in defence deals.

The State department oversees compliance with the US government's rules on international arms trading.

The new fine comes on top of $400m paid last year to the US Justice department, when BAE admitted a criminal charge of conspiring to make false statements to the US authorities in relation to the sale of arms to Saudi Arabia and other nations in the 1980s and 1990s. The misdemeanours were connected to payments made to an unnamed Saudi official as part of the £40bn al-Yamamah arms deal between the UK and Saudi Arabia. At the same time, BAE paid £30m to end a Serious Fraud Office investigation in the UK.

The State department said yesterday it would reduce BAE's settlement by $10m to $69m to offset the cost of introducing new export control compliance systems. Payment is being spread over three years. In addition, a number of the company's UK-originated export programmes will be subjected to enhanced administrative review in the US, which it told shareholders would not adversely impact the company's current or future export programmes.

"The company is grateful to the State department for the time and effort its staff have invested over the past year in reviewing the company's present compliance systems and processes," Dick Oliver, BAE's chairman, said yesterday. He added that the company's goal is "to be as widely recognised for responsible conduct as it is for high quality products and advanced technologies".

BAE admitted last year to "intentionally failing to put appropriate, anti-bribery preventative measures in place, despite telling the US government that these steps had been taken". It did not admit paying bribes.

Allegations of corruption in BAE's arms dealings were first investigated by the Serious Fraud Office in 2004, but an inquiry into sales to Saudi Arabia was controversially dropped two years later. The US launched its own investigation in 2007.