On March 2, 2010, in the United States District Court for the District of Columbia, judgment was filed against BAE Systems plc ("BAES") for conspiracy to violate certain U.S. laws, including the Arms Export Control Act ("AECA"). On May 16, 2011, the Department issued an Order after entering into a Consent Agreement with BAES regarding alleged civil violations of the AECA and International Traffic in Arms Regulations (ITAR) committed by BAES. See Proposed Charging Letter here.
Under the Consent Agreement, BAES agrees to pay a total civil penalty of $79 million. Sixty-nine million dollars will be paid through several installments: (1) $18M to be paid within 10 days of the Order; (2) $17M to be paid within 1 year of the Order and then on each of the 2nd and 3rd anniversaries of the order; (3) $3M will be suspended on the condition that BAES has applied this amount to self-initiated, pre-Consent Agreement remedial compliance measures; and (4) $7M will be suspended on the condition that BAES applies this amount to the Consent Agreement authorized remedial compliance measures and for the purpose of defraying a portion of the costs associated with the specified remedial compliance measures.
The Consent Agreement also outlines that as a result of the conviction, BAES was statutorily debarred but there was an immediate lifting of the debarment. The Consent Agreement also outlines a policy of denial concerning certain non-U.S. subsidiaries of BAES involved in activities related to the conviction (BAE Systems CS&S International, Red Diamond Trading Ltd., and Poseidon Trading Investments Ltd., and their subsidiaries, divisions and business units, and successor entities), which means that there will be a presumption of denial of license and other applications involving these entities. DDTC posted guidance on its website to exporters regarding a policy of denial for BAE Systems plc.