Publication: The Guardian Issued: Date: 2004-03-08 Reporter: David Leigh Reporter: Rob Evans

BAE's Secret Vault in Geneva Uncovered

 

Publication 

The Guardian

Date 2004-03-08

Reporter

David Leigh, Rob Evans

Web Link

www.mg.co.za

 

Papers 'moved out of reach of the law'

The Guardian has discovered a secret vault in Switzerland, where BAE, Britain's largest arms company, is alleged to have hidden filing cabinets full of evidence of covert payments to foreign politicians.

Allegations of corruption surrounding BAE's arms sales around the world have been frequently made, but this is the first concrete information that the firm, a large British public company with intimate relations with the Blair government, may be deliberately concealing evidence outside the jurisdiction of its own legal authorities, exploiting Switzerland's secrecy rules.

At 48 Route des Acacias, Geneva, we found high-security premises leased under the name of Novelmight Ltd. This is an offshore firm linked to BAE whose existence has never been disclosed in BAE's published accounts.

Those involved have told us of a secret operation around the time the Labour government came to power in 1997 *, to shift BAE's most embarrassing files to this safe location.

The Blair government came under immediate pressure on its election to ratify an international anti-corruption convention and make it illegal to bribe foreign public officials. Labour brought such a law into force in February 2002.

One source said that in 1997 "the filing cabinets and safes containing the information were loaded on to a van and driven from Farnborough (BAE's headquarters) to Geneva. The trip was made using staff from BAE's site maintenance company, Caxtons, under the personal supervision of BAE's site general manager, Ron Hedges."

Caxtons told us they were unable to check their records. Mr Hedges, contacted at BAE, declined to speak to us.

According to the allegations, the operation was administered by Julia Aldridge, deputy head of BAE's confidential HQ Marketing Services' organisation at Farnborough. Ms Aldridge too, refused to comment.

Her boss at the time, Hugh Dickinson, confirmed, however, that Ms Aldridge was his deputy. Mr Dickinson, who has now retired to Hythe, near Southampton, said "She went to Geneva once or twice, yes".

The Novelmight office was designed to be unmanned and highly secure, sources told us. A Geneva security firm, Securitas, was contracted to provide video surveillance. But an encrypted fax and phone system was installed in Geneva by a technician from BAE's own Group Security division.

A sweep for bugs was carried out by an outside specialist from England, George McIntosh of Blair Associates, it is alleged. Mr McIntosh told us he would "neither confirm or deny the allegations" and that his clients' affairs were confidential. He added, however, that some facts put to him were incorrect. When asked to clarify, he put the phone down.

When we visited the office block in Geneva, it turned out to contain a discreet locked set of double doors, tucked away behind the lift on the 6th floor.

On the door, it says Novelmight Ltd. Novelmight maintains a phone line listed in the Geneva directory. The phone was never answered when we called.

The office management company declined to tell us who paid the rent.

However, we found confirmation of its link to BAE. Novelmight has been registered with secret ownership in the offshore tax haven of British Virgin Islands (BVI) since October 1999 **. The company agents there refuse to disclose the identity of its owners.

But Novelmight was first registered in the UK itself. Files at Companies House show that Novelmight is owned by BAE, operated "a branch in Switzerland" commencing in 1996, and received up to 44,000 in annual lease payments from another BAE group company.

According to BAE official filings at Companies House, Novelmight Ltd has ceased operations. But it seems that it continued its activities secretly by re-registering in the British Virgin Islands.

The discovery of the Novelmight vault raises major issues about BAE's willingness to comply with Labour's anti-corruption legislation.

We can disclose that the Serious Fraud Office has already attempted to conduct one frustrated inquiry into BAE's payment of 7m to a Middle East politician, which may have been hampered by the earlier spiriting away of documents.

In 2000, the SFO came so close to mounting a criminal investigation against BAE for paying bribes to a politician in Qatar to win a big arms contract that it consulted a QC and went to see the then attorney general, Lord Williams.

The attempt was abandoned because of "practical difficulties facing any domestic investigation principally in relation to obtaining the necessary evidence of offences from overseas".

The SFO served notices on BAE forcing it to hand over minutes of board meetings and internal memoranda. It also ordered individuals to attend for interview, according to a letter sent by the solicitor-general, Harriet Harman, to Plaid Cymru MP Simon Thomas.

But the SFO appears to have had no knowledge at the time that BAE was alleged to be running a string of BVI-registered offshore companies, and may have transferred incriminating documents wholesale out of the SFO's jurisdiction. The SFO refused to comment.

BAE refused to say whether it disclosed the existence of the Novelmight vault or the papers in it to the SFO. It only said "BAE complied fully with SFO requirements."

The allegations about BAE's behaviour also raise questions about the knowledge of BAE's auditors KPMG.

KPMG told us yesterday "We do not consider the matters raised by the Guardian as representing a failure on the part of KPMG". It added "UK company law requires that only principal subsidiaries are listed in a company's group accounts."

But the auditors did not say whether they were aware of any of BAE's alleged undisclosed subsidiaries, registered in the BVI under secret ownership, and declined to say whether the records in Switzerland had been available for audit.

Sir Dick Evans, chairman of BAE Systems, refused to comment on the Novelmight allegations when they were put to him.

The company issued a general statement denying "any allegations of wrongdoing", saying "BAE Systems rigorously *** complies with the laws of the UK and the laws of the countries in which it operates."

With acknowledgements to David Leigh, Rob Evans and The Guardian.

* 1997 - the year the SA DoD's Arms Deal was initiated.

** The SA DoD's Arms Deal contracts were signed on 3rd December 1999.

*** Quite!

Are the herrings not rather fragrant?