The U.S. State Department’s settlement with BAE Systems PLC of the United Kingdom highlights the increasing focus on international fraud committed by multinational companies in the tax, securities, export and bribery (Foreign Corrupt Practices Act) areas.
BAE, Europe’s largest military contractor, paid a total civil penalty of $79 million for alleged violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). It is the largest civil penalty the State Department has ever levied.
In a related criminal case, BAE pleaded guilty last year to two criminal charges involving Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR) violations and payments made to win huge contracts in Saudi Arabia and other countries. BAE paid nearly $450 million in criminal penalties.
As Congress has put in place whistleblower reward laws that reach such violations (the False Claims Act, a stronger IRS whistleblower program and the Dodd-Frank SEC whistleblower program), we can expect to see more and larger cases brought by insiders who have lacked any incentive to come forward until now.