Friday, 24 December 2010

UK: England and Wales: BAE's accounting records

A copy of the judgment R v BAE Systems Plc [2010] EW Misc 16 (CC) has been published on BAILII: see here. This is the decision of Mr Justice Bean, sitting at the Crown Court in Southwark, in which BAE was fined £ 500,000 (and ordered to pay £ 225,000 towards the prosecution's costs) in respect of its breach of Section 221 ("Companies to keep accounting records") of the Companies Act (1985) (see now Section 386 of the Companies Act (2006)).  Section 221(2) provides that "accounting records shall be sufficient to show and explain the company's transactions". The trial judge sentenced BAE on the basis that (at para. [15]):

... by describing the payments in their accounting records as being for the provision of “technical services” the Defendants [BAE] were concealing from the auditors and ultimately the public the fact that they were making payments to Mr Vithlani, 97% of them via two offshore companies, with the intention that he should have free rein to make such payments to such people as he thought fit in order to secure the Radar Contract for the defendants, but that the defendants did not want to know the details".

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