LONDON, England

A British judge on Tuesday sentenced defense contractor BAE Systems PLC to pay a fine of 500,000 pounds (US$775,000) for failing to keep proper accounts of payments made to an adviser in Tanzania.

The payments were made in connection with the sale of a military radar system in 1999. BAE agreed in February to plead guilty to a single offense in a deal with the Serious Fraud Office, which in turn waived its right to investigate any other conduct by BAE before this year.

Justice David Bean, in a ruling which sharply criticized both BAE Systems and the Serious Fraud Office, said “there was a high probability” that some of the payments were used to favor BAE in negotiations, and it was impossible to determine whether they were lawful.

BAE, the judge said, “did not want to know the details” of how their adviser, Shailesh Vithlani used the money.

“The victims of this way of obtaining business, if I have correctly analyzed it, are not the people of the UK, but the people of Tanzania,” Bean said.

“The airport at Dar-es-Salaam could no doubt have had a new radar system for a good deal less than US$40 million if US$12 million had not been paid to Mr Vithlani.”

Bean suggested that individual officers of BAE Systems, including its then chairman who personally approved Vithlani’s contract, might have been charged with offenses, and he chided the prosecuting agency for agreeing not to investigate any other activities of BAE before this year.

Sentencing followed BAE’s agreement with the Serious Fraud Office in February to plead guilty and pay penalties of 30 million pounds, most of it as a charitable payment to Tanzania. The British fine will be deducted from that amount. BAE was also ordered to pay 225,000 pounds toward the cost of prosecution.

“In the decade since the conduct referred to in this settlement occurred, the company has systematically enhanced its compliance policies and processes with a view to ensuring that it is as widely recognized for responsible conduct as it is for high quality services and advanced technologies,” BAE said in a statement.

At the same time in February, BAE announced a settlement with the US Department of Justice in which the company agreed to plead guilty to one criminal charge of conspiring to make false statements in regulatory filings from 2000 to 2002.

The US agency said BAE “knowingly and willfully failed to create mechanisms to ensure compliance with … legal prohibitions on foreign bribery,” and that it had made a series of payments to shell companies and third party intermediaries.

On March 1, it was sentenced to pay a fine of US$400 million.

The Tanzania radar contract negotiations were started by Siemens Plessey Electronic Group, which was acquired by BAE Systems in 1998. Siemens Plessey had retained Vithlani, a Tanzanian marketing adviser, to assist in negotiations.

BAE subsequently entered into agreements which guaranteed 31 percent of the contract proceeds, or US$12.4 million, to two companies — EnversTrading Corp and Merlin International Ltd. — controlled by Vithlani.

“Although it is not alleged that BAE PLC was party to an agreement to corrupt, there was a high probability that part of the US$12.4 million would be used in the negotiation process to favor British Aerospace Defense Systems Ltd.,” a BAE subsidiary, Bean said in his written decision, quoting the settlement with the Serious Fraud Office.

“The payments were not subjected to proper or adequate scrutiny or review. Further, British Aerospace Defense Systems Ltd. maintained inadequate information to determine the value for money offered by Vithlani and entities controlled by him.”