The BAE Files (UK)

The Guardian, 2003-2010

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About the Investigation

Over a period of more than seven years, British journalists David Leigh and Rob Evans set out to investigate a network of alleged global bribery by one of the world’s biggest arms companies. Over time, they were able to document the way in which BAE Systems set up secret subsidiaries in the British Virgin Islands and Switzerland, to channel cash to politicians in the Middle East, Europe, and Africa in return for major arms contracts. They were also able to obtain documents showing British government collusion in this. The Guardian journalists worked with colleagues in Sweden, Tanzania, Romania and South Africa.

Impact

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The Guardian series caused a scandal in the UK, which turned into political outrage when then-Prime Minister Tony Blair attempted a cover-up — to protect arms sales to Saudi Arabia — by ordering a halt to police investigations sparked by the stories. The ultimate impact of the investigation was far-reaching: new laws, changes in corporate conduct, heavy fines, and a crackdown on foreign bribery.

BAE Systems accepted misconduct and agreed to pay $400 million in penalties in the US and £30 million in the UK to settle corruption allegations against it. The company also changed internal compliance policies and procedures, and instituted  a global code of ethics.

Screen Shot 2014-07-21 at 12.05.29 PMBritish officials, meanwhile, reformed the nation’s bribery laws (which dated to the 1880s). Experts called the new Bribery Act “one of the most significant reforms to corporate criminal law in a century.” The law introduced tougher punishment for large British companies making payments to officials overseas to facilitate business.

The scandal also impacted Britain’s reputation, causing it to slip on Transparency International’s “corruption index” to 17th place, behind Japan, Hong Kong, and Austria. More importantly, the case helped transform British business ethics. Until the BAE scandal, there was an attitude among business leaders that foreign bribery was normal. As a result of the scandal, British authorities were emboldened to investigate and convict other UK firms and individuals making payoffs overseas. “The effect was traumatic,” noted David Leigh, “and has permanently shifted UK public opinion.”

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