Anti-bribery stand hits defence firms

BRITISH companies may not like it but bribery and corruption can be part and parcel of doing business when winning contracts with some foreign governments, defence industry officials say.

As debate swirls around an alleged £20m slush fund said to be used by BAE Systems to pander to key foreign officials, industry sources concede that thousands of British jobs and the country's position as the world's second largest exporter of defence equipment can sometimes depend on satisfying the interests of a handful of key individuals. British companies often lose out because they refuse to 'play the game'.

Bribery and corruption 'are everywhere around the world in one way or another', said Brinkley Saltzman, director of exports for Britain's Defence Manufacturers' Association. 'I know some British companies that have stood against it and have lost business as a result.'

One official at last week's Defence Systems Equipment International exhibition in Docklands said his company had recently lost a major Middle East order to a US rival amid suspicions that a foreign government official had been bribed.

'There are a lot of circumstances when you lose the business although you know you have the best product, the best conditions and the best price, and the procurement officials are not able to come up with an explanation of why you've lost,' said Saltzman.

'Since the early 1990s, international defence has shrunk to half the size it was, so for many firms it is absolutely essential that they win. We have heard of occasions when bidders realise they are about to lose and start to cast aspersions on the winner about bribery and corruption.'

Such may have been the case last year, he said, when BAE Systems was going to supply Swedish-made Gripen fighters to the Czech Republic. It was 'the only compliant bid', he said, and the other suppliers 'walked away'. US government officials later sent bribery allegations to the Ministry of Defence, which concluded that there was no evidence to warrant a police inquiry.

A Ministry of Defence spokesman said that the Ministry was unaware of any illegal activity by British exporters. If it became aware of such activity, it would be reported to the police immediately, he added.