Overview: BAE staff US detention

Nigel Rudd, non-exec at BAE

Detained: Sir Nigel Rudd

In a globalised world, overseas business trips are a necessity ­ but there
could be some who are more reluctant to make them to the US, after the recent
detention of top BAE executives at Texas airport.

Chartered accountant Sir Nigel Rudd, a non-exec at BAE, was one of those
detained, raising questions about what might happen to key personnel involved
with the company.

What’s happened?

The US Department of Justice is looking into allegations that the company
paid bribes to win the £20bn al-Yamamah arms deal.

Chief executive Mike Turner, while en route to check out the company’s
armoured vehicle factory in Sealy, was questioned for 40 minutes at Texas
airport last week over the issues, as was Sir Nigel.

Turner has been with BAE Systems ‘man and boy’, rising up through the ranks
as an apprentice to overseeing all of the company’s defence export business from
the mid-90s.

But Sir Nigel’s detention at New York’s Newark Airport en route to a holiday
in Florida, undoubtedly raises even wider issues.

Sir Nigel, a chartered accountant and deputy chairman of Barclays, has been a
non-executive director for less than two years, so was not involved with BAE in
the 1980s and 1990s when it is alleged the company paid bribes to win the Saudi

What’s going to happen?

When a non-exec who wasn’t linked with the company at the time under
investigation is detained, what might happen to all the other executives
involved with the company now?

What about those working for auditors KPMG? After all, BDO Stoy Hayward
advised online gaming auditors not to travel to the US with papers when the rows
over the gambling emerged.

KPMG declined to divulge what, if any, travelling restrictions they might
impose on staff handling the defence firm’s work.

Obviously, they need to visit the global operations of the company they are
auditing but the prospect of being subpoenaed with laptops, mobiles and
BlackBerries examined is not attractive.

Brad Ockene, a partner in the Chicago office of law firm Lovells, believes
it’s unlikely that outside auditors, who he describes as ‘one step’ removed,
would receive such treatment.

But BAE Systems chief financial officer, George Rose, is likely to face
tougher scrutiny.

‘The CFO would be of great interest and someone they would consider stopping
via a subpoena, or other means, if the government feels they aren’t getting
sufficient co-operation the usual way,’ he said.

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