Administration September 21, 2007

Pension Fund Accuses BAE of Bribing Saudi Officials for Business

September 21, 2007 (PLANSPONSOR.com) - A Michigan pension fund is suing the biggest defense contractor in Europe, BAE Systems Plc, over claims BAE spent more than $2 billion bribing Saudi Arabian officials to garner business, Bloomberg reported.
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In the shareholder derivative claim, the City of Harper Woods Employees’ Retirement System accuses BAE directors of breaching their fiduciary duty. The pension fund owns less than 10,000 of BAE’s 3.57 billion shares.

The suit charges London-based BAE of mismanagement and unethical behavior stretching back two decades, according to Bloomberg. Other defendants in the suit include Prince Bandar bin Sultan of Saudi Arabia, PNC Financial Services Group Inc. and former executives for Riggs National Corp, which was acquired by PNC in 2005.

The U.S. Justice Department is separately investigating alleged corruption tied to Saudi weapons purchases from BAE, and the U.K. Serious Fraud Office dropped a similar probe nine months ago after the government cited national security concerns, the news report said. “We have a civil right as shareholders of the company to conduct our own investigation and our own case,” Patrick Daniels, the San Diego-based lawyer representing the pension fund, told Bloomberg.

Saudi Arabia announced on September 17 a $8.86 billion contract to buy 72 Eurofighter Typhoon warplanes, which will be assembled by BAE.

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