BVI Companies involved in BAE’s deals in South Africa

The corruption investigation started on the purpose of defence conglomerate British Aerospace (BAE) Systems two years ago by the United Kingdom’s Serious Fraud Office (SFO) now includes new allegations of dirty money and influence-buying.

The SFO formal application asking for legal assistance of South African authorities contains information on more than £1bn commissions paid by BAE systems in the context of R-multibillion arms deal. Two anonymous offshore companies registered by BAE in the British Virgin Islands were used for commission transactions. The main front company was Red Diamond Trading, the other one was Poseidon Trading Investments. The SFO application states that in the period between 2000 and 2005, more than £70-million were received by South African Agents through BVI-registered Red Diamond. The same Red Diamond, according to the SFO request, was used to pay to the intermediaries in South Africa. No comments were given by BAE on the purpose of these two companies.

BAE itself has maintained that these are just normal commissions, not bribes. However, the facts say that BAE has developed an extensive web of influence in South Africa, and the system of commissions paying was held in such conditions of secrecy, which arose suspicions concerning the real purpose of the payments.

Another side of SFO investigation concerns the agents who received these commissions. The same SFO document informs that probably no funds at all were paid to South African bank accounts, and the majority of payments was made to offshore companies; some of them are registered in the jurisdiction of BVI.

The amount of R1-billion went to the eight entities in terms of “consultancy agreements”. In one case, the deal took place as far back as 1992. Among other beneficiaries of the suspected bribes, which entered into consultancy agreements with BAE and/or the aforementioned BVI companies, there is the company Huderfield Enterprises, incorporated in the British Virgin Islands in 1997.  The SFO investigation suggested that the company’s beneficiary was Richard Charter – major and most publicly known agent of BAE in South Africa, who actively assisted in the run up of R30-billion order for Hawk jet trainers and Gripen fighters. It is stated in the SFO document that BVI-based Huderfield got  R350-million ( £25-million) between 1999 and 2005. This amount included also a “final settlement” of £5,5-million.

Another company, Osprey Aerospace, was founded and run by Richard Charter as the “overt” agent for BAE in South Africa. The SFO considers that, while South African company was the “overt” agent, there was also a “covert” agent, and possibly it is BVI-registered Huderfield. To compare transferred amounts: by the SFO document, Osprey received from BAE just less than £2-million (about R27-million) between 2002 and 2005.

Richard Charter , beneficiary of both companies, was the chairperson of BAE Systems South Africa, established in 1997. He had a long relationship with the old South African Defence Force; also he had a stake in SA Airlink, which was sold after his death, as a result of an accident in January 2004. One of his estate executors denies the mentioned facts, including Huderfield’s affiliation to Charter.

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