It began with a $40 million deal to supply an air traffic control system to an African country that could barely afford it. Thirteen years later, one of the most controversial episodes in recent British corporate history will end with BAE Systems buying new textbooks for eight million Tanzanian schoolchildren.
Europe’s largest defence company said yesterday that after months of bureaucratic wrangling it had agreed the terms of a £29.5 million compensation payment to Tanzania.
The agreement, reached with the Government of Tanzania and the Serious Fraud Office and Department for International Development, stipulates that the money will be used to fund education projects, officials said.
Textbooks will be bought for each of the country’s 16,000 primary schools, and 175,000 teachers will receive upgraded equipment. Up to £5 million will be spent on buying new desks.
BAE agreed to the payment as part of a £30 million settlement with the SFO in 2010, which brought to an end a long-running investigation into suspected corruption. BAE had been accused of paying bribes to Tanzanian officials to win the contract but the company denied corruption and agreed only to plead guilty to a lesser book-keeping charge. BAE was fined £500,000 for the violation, with the remainder going to Tanzania.
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The company separately agreed with American authorities to pay more than $400 million in fines relating to its dealings in Eastern Europe and the Middle East. Again it did not admit corruption.
In July last year a parliamentary committee accused BAE of “deliberately delaying” the Tanzanian payment. The company had been reluctant to go along with a plan devised by the Department for International Development to distribute the money and wanted to set up its own structure. It backed down under pressure from MPs.
Dick Olver, the BAE chairman, said: “We are glad to finally be able to make the payment to the Government of Tanzania and bring this matter to a close.”