BAE faces US lawsuit over Saudi allegations

BAE faces US lawsuit over Saudi allegations
By Stephen Foley in New York
Published: 21 September 2007
The storm over alleged corruption at the British arms supplier BAE Systems took a new legal twist, as one of America's most aggressive law firms launched a lawsuit against executives of the company.

Mike Turner, chief executive, and the rest of the board are among the defendants in a legal action filed in Washington, along with Saudi Prince Bandar Bin Sultan, who is alleged to have received hundreds of millions of pounds in bribes as part of BAE Systems' agreement to supply military aircraft and other equipment to Saudi Arabia.

"Through a systematic abuse of national and international anti-corruption laws, coupled with a flagrant disregard of their fiduciary duties, BAE current and former executives have caused serious and lasting damage to the company and undermined its competitive position," said Patrick Daniels, an attorney at Coughlin Stoia Geller Rudman & Robbins, which has launched the lawsuit.

"BAE's reputation is in tatters and there are huge, and still unanswered, question marks over its corporate governance standards. Through this lawsuit, the directors and executives will be called to account and held personally liable for their actions." BAE has denied making any improper payments, and moved to shore up its reputation in June with the appointment of an independent ethics committee. Prince Bandar, too, has denied the allegations.

The Serious Fraud Office called off an investigation last year, citing national security concerns. BAE said it hadn't been given prior notice of the lawsuit and hasn't yet been served with the claim, but it "intends vigorously to defend any such proceedings".

The lawsuit accuses directors of "intentional, reckless and negligent breaches of their fiduciary duties of care, control, compliance and candour in relation to the company" and of repeatedly misrepresenting how they were running BAE.

The plaintiff in the case is the City of Harper Woods Employees' Retirement System, a public pension scheme in Michigan, which holds a small BAE shareholding.