BAE linked to Zimbabwean arms dealer

By Christopher Thompson and Michael Peel in London

July 31 2008 23:31

BAE Systems, the British arms manufacturer under investigation in several countries for alleged bribery, paid at least £20m to a company linked to a Zimbabwean arms trader allied to President Robert Mugabe, documents seen by the Financial Times show.

John Bredenkamp, who has indefinite leave to remain in Britain, has had a controversial career ranging from supplying military equipment to the Zimbabwean military to mining in the Democratic Republic of Congo.

British properties owned by Mr Bredenkamp were raided by the Serious Fraud Office more than 18 months ago as part of a long-running investigation into BAE aircraft sales to South Africa. The payment of at least £20m is the first detailed evidence of a financial relationship between Mr Bredenkamp and the group.

The payments raise fresh questions about BAE’s dealings with outside agents, intermediaries who sometimes act as brokers in arms deals. Agents have featured in investigations into whether BAE channelled bribes to foreign officials to win contracts.

BAE refuses to provide details of its relationships with agents, although it has pledged to introduce reforms as part of an effort to improve its image after the corruption investigation into its multibillion-pound al-Yamamah arms deal with Saudi Arabia.

The payments linked to Mr Bredenkamp were made between 2003 and 2005 by Red Diamond Trading, a BAE subsidiary registered in the British Virgin Islands, from a London-based Lloyds TSB account, according to documents seen by the FT. The money was transferred to Kayswell Services, also registered in the British Virgin Islands, a company in which the documents list Mr Bredenkamp as a beneficiary.

British Virgin Island company records show Red Diamond was liquidated on May 30 last year, just two weeks before BAE announced that Lord Woolf, the former lord chief justice, would investigate its ethical conduct and compliance with anti-corruption rules. BAE, Mr Bredenkamp and Kayswell all declined to confirm the payments or comment on what the money was for.

Less than two weeks ago, BAE unveiled a plan to achieve “benchmark standards of governance” as part of its response to Lord Woolf’s recommendations.

Mr Bredenkamp has been involved in tobacco trading, oil procurement and – according to the United Nations – the supply of equipment to the Zimbabwe air force. Mr Bredenkamp says he has always complied with European Union arms sanctions, in force against Zimbabwe since 2002, which ban “the provision of financing related to military activities”.

Mr Bredenkamp, who prospered under Ian Smith’s white Rhodesian regime, is now a close associate of Zimbabwe’s rural housing minister, Emmerson Mnangagwa, head of the Mugabe government’s Joint Operational Command, a body widely identified as leading the campaign of violence against the government’s political opponents.

The Serious Fraud Office raids on Mr Bredenkamp’s UK properties were part of an ongoing investigation into BAE’s 1999 £1.6bn jet fighter sale to South Africa, when several ruling African National Congress officials allegedly received bribes.

A spokesman for Mr Bredenkamp denied he had any involvement in the South African sale and said it was “wholly inappropriate” for him to make any comment while the SFO inquiry continued.

BAE said: “It is our policy not to comment on payments to individual parties or organisations, or on the individuals, parties or organisations themselves.”

Copyright The Financial Times Limited 2008