Exaro News Archive

BAE faces demand to answer ‘bribery’ claims in Austrian court

Chief prosecutor: BAE executives gave court in Vienna ‘the finger’ by refusing to testify

By Frederika Whitehead | 24 January 2013

BAE faces demand to answer ‘bribery’ claims in Austrian court
Count on it: BAE sold Gripen fighters like this in central and eastern Europe / Pic: Peter Gronemann

“The whole affair stinks, but it does not stink enough”
– Stefan Apostol, presiding judge, Austria

Executives at British defence giant BAE Systems face pressure to testify in court in Austria over bribery allegations in central and eastern Europe.

It follows the end of the trial last week of Alfons Mensdorff-Pouilly, a colourful Austrian count who was BAE’s alleged fixer for the region. He was cleared of the more serious charges, but given a suspended two-month prison sentence for falsifying evidence.

The chief prosecutor, Michael Radasztics, said that the trial was hampered by BAE’s refusal to co-operate with the court. He says that he will lodge an appeal.

He told Exaro that he wants BAE executives to attend future court hearings.

Mensdorff, also known as Count Ali, was cleared of laundering €12.6 million between 2000 and 2008 on behalf of BAE to “decision-makers” to help win contracts to supply Gripen fighter jets to the Czech Republic, Hungary and Austria.

The presiding judge, Stefan Apostol, was quoted by AFP as saying: “The whole affair stinks, but it does not stink enough.” He called the verdict “more than unsatisfactory” given the “morally questionable business practices” outlined to the court.

Radasztics said that BAE had “created illegal structures”. By not testifying, he said, it had given the court “the finger”.

BAE did not attend, he continued, “because there is no legal explanation for what happened.”

A BAE spokeswoman responded to the prosecutor’s comments by saying that the company was not on trial.

The case was about the count, she said. “We were not asked to participate in that inquiry, nor were we notified directly about the case.”

But Radasztics told Exaro that the judge had summoned five current and former BAE executives to be questioned in the trial, but they had refused to go.

He said: “The people from BAE were not willing to come to Austria for the trial. They have a duty to come, but if they say, ‘We shall not come,’ there is no possibility for the Austrian court to bring them in or subpoena them.”

The trial, in the Austrian capital of Vienna, heard from witnesses who said that Mensdorff, who was an agent for BAE, received envelopes stuffed with cash.

But the judge said that the court was shown “insufficient” evidence to prove that this money was used to bribe people.

Radasztics told the court that he did not bring bribery charges because he could not prove who was paid off.

Mensdorff’s attorney, Harald Schuster, said that this showed the accusations to be a desperate attempt to salvage a 10-year investigation that had failed to identify a single bribe recipient.

His client would not appeal the conviction for falsifying evidence.

Mensdorff, who is married to the former Austrian health minister, Maria Rauch-Kallat, is a flamboyant figure who has hosted lavish hunts at his castles in Scotland and Austria.

The Serious Fraud Office (SFO) dropped charges against Mensdorff as part of a settlement reached with BAE in 2010.

In the settlement, BAE agreed to pay £30 million over alleged corrupt payments linked to the supply of radar equipment to the African state of Tanzania. It admitted false accounting, but otherwise denied that it had done anything wrong.

After the SFO dropped its case against Mensdorff, he sued for wrongful imprisonment and won £372,000 in compensation. He complained that he was denied a comb and clean underpants during his six days in jail.

The judge told him: “You were lucky that the British did not come after you, that the proceedings had been halted and that evidence was unable to be stood up. Otherwise the situation would have looked completely different.”

In 2006, Tony Blair’s government forced the SFO to abandon a separate investigation into alleged bribe payments by BAE to secure massive defence sales.

The Viennese trial comes after Exaro made a series of disclosures about payments made to two mysterious offshore companies by a British subsidiary of EADS, the large European defence group, linked to a massive defence deal in Saudi Arabia.

BAE and EADS have always denied that they, their subsidiaries or agents pay bribes.

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