BAE admits guilt over corrupt arms deals

Arms firm pays out £300m after long-running Guardian investigation

David Leigh and Rob Evans

The arms giant BAE yesterday agreed to pay out almost £300m in penalties, as it finally admitted guilt over its worldwide conduct, in the face of long-running corruption investigations.

For 20 years, the firm refused to accept any wrongdoing, despite mounting evidence of alleged bribes and kickbacks, much of it uncovered by the Guardian.

But BAE yesterday said it would plead guilty to charges of false accounting and making misleading statements, in simultaneous settlement deals with the Serious Fraud Office in the UK and the department of justice in Washington.

The admissions in the US covered BAE's huge £43bn al-Yamamah fighter plane sales to Saudi Arabia and smaller deals in the Czech Republic and elsewhere in central Europe. In the UK, the admissions cover a highly controversial sale of a military radar to poverty-strickenTanzania, which the development secretary Clare Short said at the time "stank" of corruption, but which the then prime minister, Tony Blair, forced through the cabinet.

The Serious Fraud Office said in its announcement yesterday that some of the £30m penalty BAE was to hand over in the UK would be "an ex gratia payment for the benefit of the people of Tanzania".

Another $400m (£257m) would be paid in penalties to the US authorities. BAE will not face international blacklisting from future contracts, because it has only admitted false accounting, not bribery.

MPs admitted to mixed feelings about BAE's admission and are still furious that the SFO's own extensive inquiry into the al-Yamamah deal was shut down in 2006, following pressure from the firm and from Saudi officials, who reportedly threatened to withdraw co-operation over security matters. The then attorney general, Lord Goldsmith, cited national security when he announced the inquiry was being abandoned. Blair said he took full responsibility for the decision.

The Liberal Democrats' deputy leader, Vince Cable, said last night that BAE Systems had succeeded in ensuring that key details of its arms deals would remain hidden. "The one positive thing is we have now had an acknowledgement from BAE Systems that unacceptable practices were being conducted. But nobody has been brought to account." He added: "The British government was up to its neck in this whole business. Government ministers were almost certainly fully aware of what was happening".

The former Labour minister Peter Kilfoyle said: "I certainly think there is now an argument to be made for an independent judicial inquiry into the whole affair. This raises serious questions on what [Blair's] motivation was in intervening in the [al-Yamamah investigation in the UK] and what influences were brought to bear on him."

Richard Alderman, director of the SFO, called the pioneering deal "pragmatic". It later emerged that the only prosecution of an individual by the SFO – Count Alfons Mensdorff-Pouilly – was being dropped. Alderman added: "This brings to an end the SFO's investigations into BAE's defence contracts".

In Washington, the deputy attorney general, Larry Grindler, was more pointed. "Any company conducting business with the US that profits through false statements will be held accountable," he said. "The alleged illegal conduct undermined US efforts to ensure that corruption has no place in international trade".

Britain had previously been subject to condemnation at the OECD after Blair intervened to halt the British investigation into allegations of Saudi corruption.

Yesterday's announcement in Washington focused on BAE's acceptance of guilt of the Saudi deals, and described secret shell offshore companies for making covert payments, and specific payments into a Saudi intermediary's Swiss account. It also identified £19m secretly paid to lubricate Czech and Hungarian weapons deals. BAE admitted writing an untrue letter to US authorities in 2000, denying it was paying any secret commissions.

Yesterday's statement said BAE was now free of threats of corporate prosecution. BAE said the deal "draws a line under the past", and it regretted what it called "the lack of rigor in the past".

A government spokesman said last night: "It's right that these historical allegations have been addressed".

But two anti-corruption campaigners – Sue Hawley of the Cornerhouse NGO, and the former South African ANC MP Andrew Feinstein – said they reacted to the deal, under which no trials will take place, with "dismay". They said it "betrays the people of Tanzania, South Africa, the Czech Republic and Romania, who have the right to know the truth about corruption in their countries perpetrated by British and other companies. It … sends the message that large enough corporations are able to pay their way out of trouble".

The Guardian

Munich S-Bahn victim may have thrown the first punch

The two youths who allegedly beat to death businessman Dominik Brunner at a Munich S-Bahn station had been drinking but it was Brunner who threw the first punch, news magazine Der Spiegel reported Saturday.

One of the attackers, Markus Sch., 18, had drunk half a bottle of vodka and five bottles of beer, while the other, Sebastian L., 17, had consumed two bottles of beer, the report said.

They allegedly beat Brunner, 50, to death in September last year after he tried to stop them bullying a group of children.

But according to sources close to the evidence in the Munich court where the case is expected to begin in April, Brunner, who had trained for at least a year in a boxing school, had thrown the first punch, striking one of the accused in the face.

The tragic confrontation began when Brunner intervened while the two accused and a third youth were attempting to extort money out of some children on an S-Bahn commuter train.

Brunner offered to escort the children out of Solln station but the accused pair followed him off the train.

Witnesses say Brunner called out to the train driver, “There’s trouble back here” before the violence began on the train platform.

There appears to be conflicting accounts from witness concerning who was aggressive, according to Spiegel. However, witnesses said the attack by the accused was particularly brutal.

Markus Sch. used a bunch of keys as a weapon while Sebastian L. held a cigarette lighter in his fist while he struck Brunner, the report said. They continued to punch and kick Brunner even after he had struck his head on a metal handrail and fallen to the ground.

The Local | Germany

Chinese FM highlights 'changing China in changing world'

(Xinhua)

Chinese Foreign Minister Yang Jiechi delivered a major foreign policy speech at the Munich Security Conference on Friday, saying that while focusing on its own peaceful development, China is undertaking more international responsibilities in a transforming and closely-linked world.

Addressing the Munich gathering of senior diplomats and security officials, Yang said that it is a strategic choice that China has made to "seek a peaceful international environment to develop ourselves and at the same time contribute to the cause of world peace through our own development".

Stressing that China is committed to a path of peaceful development, Yang said that a more developed China is an opportunity rather than a threat to the world.

"The argument that a strong nation is bound to seek hegemony finds no supporting case in China's history and goes against the will of the Chinese people," he said.

He also stressed that a more developed China will continue to treat others as equals and will never impose its own will on others.  

"The equality we call for is not just equality in form, but more importantly equality in substance," he said, adding "all of us should embrace a diverse world with an open mind".

"We must respect the values and independent choice of the development path of other countries, respect other countries' core concerns and refrain from interfering in their internal affairs".

"In the same vein, China, like any country in the world, will stick to principles on issues affecting its core interests and major concerns, and defend its hard-won equal rights and legitimate interests," Yang said.

With the world peace and development still severely threatened, the Chinese foreign minister also pledged that a more developed China will undertake more international responsibilities commensurate with its strength and status and will never pursue self interests at the expense of the interests of others.

He noted that China has played an active role in the international cooperation on the financial crisis, promoted the establishment of an Asian foreign exchange reserves pool, cancelled the debts of 49 heavily indebted poor countries, and actively taken part in international peacekeeping missions.  

"Our own interests and those of others are best served when we work together to expand common interests, share responsibilities and seek win-win outcomes," Yang added.

He urged all countries to strengthen cooperation to tackle the grave challenges to the world security and foster a security outlook featuring "mutual trust, mutual benefit, equality and coordination, respect each other's security interests and pursue security for all."  

During his much-anticipated speech, the Chinese top diplomat also elaborated on China's positions on some hotspot issues.

He urged the international community to stay patient and step up diplomatic efforts to seek solutions to the Iranian nuclear issue, saying "Iran has not totally shut the door" on the IAEA proposal on nuclear fuel supply.

Yang called for another meeting of the so-called P5+1 dialogue, which gathers the five permanent members of the UN Security Council plus Germany, to search for a mutually acceptable formula on the issue.

He also said that there was now new opportunity to restart the six-party talks that aims to resolve the Korean Peninsula nuclear issue.

"China will work tirelessly with other parties concerned and the international community as a whole for the denuclearization of the peninsula, the normalization of relations between relevant countries and the achievement of enduring peace and stability in Northeast Asia," Yang said.

On Afghanistan, he affirmed that China would "continue to take an active part in Afghanistan's reconstruction process, and work with the rest of the international community for the early realization of stability and development there".  

The presence of Yang has been become the biggest highlight of the Munich Security Conference on its opening day. It is the first time that a Chinese foreign minister has attended the 46-year-old annual forum, dubbed as "Davos of security policy".

China Daily

Mandatory evacuations ordered for 500 homes in La Canada Flintridge, La Crescenta and Acton as rain bears down

Critical debris basins along the San Gabriel Mountains are near capacity or overflowing as another band of rain and thunderstorms bears down on the charred foothills this afternoon, prompting officials to order more evacuations as they brace for the possibility of more damaging mudslides.

Evacuation orders are in place for about 500 homes in parts of La Cañada Flintridge, La Crescenta and Acton. At least 41 houses have been damaged or destroyed in a hillside neighborhood in La Cañada Flintridge. The city of Sierra Madre, where saturated foothills are threatening to break loose, has also issued evacuation orders.

"I hate to say this, but there might be more damage," said Nicole Nishida, spokeswoman for the Los Angeles County Sheriff's Department, noting that two large debris basins above La Cañada Flintridge are full. A Red Cross shelter has been set up at La Cañada High School. Residents whose cars were destroyed or stuck in mud have been ferried to the shelter by deputies.

The evacuations in Sierra Madre include all streets above Churchill and Canyon Crest; all streets above Brookside and Sturtevant; all streets above Lotus Lane at Camillo; and the private sections of Auburn Avenue above Elm Street.

The Los Angeles County Department of Public Works said mud and debris flows are also possible in La Cañada Flintridge, La Crescenta, Glendale, Sunland-Tujunga, Soledad Canyon, Acton and Aliso Canyon. Information is available at the Department of Public Works website. 

The National Weather Service has extended its flash-flood warning for the San Gabriel Mountain foothills until 2:45 p.m. as more showers and thunderstorms move into the region.

"Any additional rainfall will result in continued mud and debris flow activity at least through the mid-afternoon hours," according to a National Weather Service statement.

The storm that moved in Friday had not been expected to sit over the Los Angeles region so long, but an overnight high pressure ridge over the central United States unexpectedly stalled and preventing the weather front  from swiftly moving out. The intensity of the predawn rains appeared to catch residents and officials alike by surprise.

Authorities are most concerned this afternoon about the northern edge of Ocean View Boulevard near Manistee Drive in La Cañada Flintridge, a neighborhood that was deluged by a river of mud, rocks and trees as it bore the double blow of a collapsing hillside and an overflowing debris basin overnight.

At least five homes have been tagged as uninhabitable and at least six other are inundated with mud and debris. About 25 vehicles were damaged when they were struck by the K-rails that were put in place to protect homes. The sound and smell of hissing gas wafted through the neighborhood in the late morning and workers were out capping gas lines.

Crews were taking advantage of a respite from the heavy rains and were feverishly working to clear out the clogged and overflowing Mullally Debris Basin, at the northern tip of Ocean View Boulevard, and the Pickens Canyon debris basis near Ocean View and Foothill boulevards. Bulldozers were shoveling out muddy water, boulders and debris in anticipation of more rain.

Debris basins are designed to hold in mud, rocks and trees to prevent them from smashing into homes.

L.A. County Fire Capt. Richard Baligad said that he estimates one boulder inside the Mullally basin weighs between six to ten tons. That caused the flooding, he said.

"It came from who knows where up there," he said, pointing up at the muddy hillside. "Once that thing got plugged, they [residents] were done."  A forklift was digging away at the boulder, and in early going was able only to scratch it.

A public works official on the scene said workers hoped to be able to clear away enough debris to free a clogged 60-inch drain pipe.

The hillside above the homes at Ocean View and Manistee came down just as the basin began to overflow, inundating them in a rumbling instant.

"We are just going to keep monitoring the situation and be ready for emergencies," said Capt. Drew Smith of  the Los Angeles County Fire Department.

The homes that were most severely damaged are at the base of hills charred by the Station Fire, where blackened trees are now washed away.

Elsewhere, the flooding led to the closing of portions of several Southern California freeways Saturday. The Long Beach Freeway was closed in both directions at Willow Avenue in Long Beach at about 4:30 a.m. because of flooding, CHP Officer Francisco Villalobos said. Caltrans was called, and some lanes were opened at 8:33 a.m. and the entire freeway was back to normal about a half hour later.

All lanes of the northbound Interstate 5 at Lankershim Boulevard in Sun Valley were closed from 7 a.m. to 9 a.m. until Caltrans could clear the way, Villalobos said.

Just after the I-5 was opened, flooding caused authorities to close the transition of the southbound 110 to the northbound U.S. 101 near downtown Los Angeles for about a half-hour.

Topanga Canyon Boulevard was closed at about 4 a.m. between Pacific Coast Highway and Grand View, south of Malibu,  Villalobos said. The CHP did not know when it would open. Villalobos said there had been reports of a rock slide but no confirmation.  

In addition, the Balboa Boulevard offramp off the eastbound 118 in Granada Hills was closed at 7:25 a.m. because of flooding. It remained closed.

Brian Humphrey, a spokesman for the Los Angeles Fire Department, said the calls his department has received have been minor, including reports of mud on the curbs and trees down. There have been no mandatory evacuation orders within the city's 470 square miles, but the department was closely monitoring hillsides. Scattered power outages have affected thousands of customers served by Southern California Edison and the Department of Water and Power.

-- Victoria Kim and Ruben Vives, reporting from La Cañada Flintridge, and Rong-Gong Lin II and Jeff Gottlieb, reporting from Los Angeles

Photo credit: Irfan Kahn

Los Angeles Times

Portuguese police find ETA base

Associated Press

Portuguese police seized a large amount of explosives yesterday at a home being used by Basque separatist group ETA as a base to prepare attacks in neighboring Spain, officials said.

About 500kg of explosives were found inside a garage at the house, bomb squad commander Helder Barros said at a news conference. A considerable amount of bomb-making equipment was also found, he said.

The discovery was made after two occupants of a stolen van containing material, including detonators, had fled from a police control near the central town of Obidos, police spokesman Nelson dos Santos said.

A search of the area led to a house which police believe was used as a base by suspected ETA members Andoni Zengotitabengoa Fernandez and Oier Gomez Mielgo, Dos Santos said.

ETA has killed more than 825 people since launching a violent campaign in 1968 aimed at carving an independent Basque homeland straddling northern Spain and southwestern France. France has for decades been used by ETA as its favored cross-border destination from which to plan attacks.

The latest discovery in Portugal is likely to have dealt a blow to ETA's efforts to create a new base, bordering Spain to the west.

Two suspected ETA members were arrested in Portugal on 10 January when they fled across the border after one had been stopped while driving a van loaded with explosives near a Spanish police barracks.

The Independent