In February 2010, the U.S. Department of Justice and the UK Serious Fraud Office announced a settlement with Britain’s BAE Systems PLC to resolve a decade-long investigation into allegations that BAE had made illegal payments to officials in various countries to secure lucrative contracts. U.S. court documents detailed allegations that BAE used secretive offshore entities and shell companies to conceal where illegal payments were going in 1999 transactions to lease fighter jets to Hungary and the Czech Republic. The U.S. filing also alleged that BAE paid tens of millions of dollars to a Saudi government official and other associates as part of an agreement between the UK and Saudi Arabia to supply military hardware to the Saudis. Under the US. plea deal, BAE will pay \($400\) million to settle one charge of conspiracy to make false statements to the government. The plea agreement demonstrates the Justice Department’s ability to impose tight ethical standards for its defense contractors, even those based overseas. It could send a message to other foreign military contractors that are trying to expand in the United States. The settlement allows BAE to continue bidding for U.S. government contracts. As for the UK investigation, BAE will pay a penalty of £30 million (30 million British pounds, or \($47\) million) and plead guilty to one charge stemming from payments to a former consultant in Tanzania.

a. Why is it important for the U.S. government to be able to bring charges of illegal payments to foreign government officials and intermediaries against non-U.S. companies that do business in the United States?

b. The UK Serious Fraud Office is an arm of the UK government, accountable to the UK attorney-general. Established by the Criminal Justice Act 1987, the Serious Fraud Office is responsible for the investigation and prosecution of suspected cases of serious or complex fraud where £1 million (\($1.57\) million) or more are involved or the fraud covers more than one national jurisdiction, According to its Web site, fraud “is a type of criminal activity, defined as: abuse of position, or false representation, or prejudicing someone’s rights for personal gain.” Compare this definition to the definition of fraud in the United States. Do you think there are any meaningful differences?