UK fraud agency says lost data from BAE deal probe

LONDON Thu Aug 8, 2013 11:20am EDT

Flags fly outside the BAE Systems site in Brough, northern England October 1, 2009. REUTERS/Nigel Roddis

Flags fly outside the BAE Systems site in Brough, northern England October 1, 2009.

Credit: Reuters/Nigel Roddis

LONDON (Reuters) - Britain's fraud agency said it lost 32,000 pages of data and 81 audio tapes linked to a bribery investigation involving Britain's biggest defense contractor, BAE Systems (BAES.L), in another embarrassment for the organization.

The Serious Fraud Office said on Thursday the lost data made up just 3 percent of the information related to BAE's Al-Yamamah deal with Saudi Arabia, Britain's largest arms sale, and no national security material was included.

It said it lost the data when it returned more material than intended to one of the sources involved in the investigation. It said it had already recovered 98 percent of the lost data.

The SFO, under former director Richard Wardle, dropped the highly political investigation into the Al-Yamamah deal in 2006 after an intervention by former Prime Minister Tony Blair.

The SFO has had a chequered past. Notable successes, such as last year's conviction of fraudster Asil Nadir, have been eclipsed by failures, including a botched probe into the Tchenguiz property moguls that left it nursing a 300 million pound ($460 million) damages claim.

A BAE spokeswoman said the company was concerned to hear about the lost data but understood the incident had now been dealt with by the relevant authorities.

"Ultimately, this is a matter for the SFO and as far as BAE Systems is concerned it is now closed," she said.

The SFO said the data loss, which also included electronic media, took place between May and October in 2012.

It discovered the loss in May this year and has since contacted the 59 suppliers of data for the investigation to inform them of the situation.

The Al-Yamamah investigation was among a number of SFO probes into BAE. In 2010 BAE paid around $450 million in fines in Britain and the United States, ending long-running corruption investigations on both sides of the Atlantic.

Under a settlement with British and U.S. authorities, the company pleaded guilty to one charge of conspiring to make false statements to the U.S. government, including on deals in Saudi Arabia, and in Britain one charge of breach of duty in relation to records of payments made in Tanzania.

(Reporting by Brenda Goh and Rhys Jones; Editing by David Cowell)

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