Police searched locations in Austria last week looking for evidence of alleged bribes that they claim were paid by British defense contractor BAE Systems PLC to win contracts to sell military aircraft in Austria and the Czech Republic, according to a prosecution spokesman.Austrian prosecutor Gerhard Jarosch said police searched the home and office of Alfons Mensdorff-Pouilly, a 55-year-old Austrian count, on Sept. 24 at the request of British and Austrian investigators.
The request came in connection with a continuing investigation into whether BAE unlawfully tried to influence defense procurements in a number of countries.
Mr. Mensdorff-Pouilly's wife, reached on Mr. Mensdorff-Pouilly's cellphone, referred all questions to their lawyer. Harald Schuster, lawyer for Mr. Mensdorff-Pouilly, said: "The allegations are without grounds. The English have been investigating the allegations for years without success; it will continue as such."
Britain's Serious Fraud Office has been digging into BAE's business practices since 2004, although an investigation into questions regarding funds linked to the purchase of Eurofighter Typhoon fighter jets by Saudi Arabia was halted in late 2006 by the British government.
The Austrian search warrant specifically excludes a search for evidence connected to the sale of BAE products to Saudi Arabia, according to the document, reviewed by The Wall Street Journal.
The Eurofighter is produced by a consortium including BAE, Franco-German European Aeronautic Defense & Space Co. and Italy's Finmeccanica SpA.
A BAE spokeswoman declined to discuss events in Austria. The company said that it "continues to fully co-operate with the ongoing SFO investigation."
The Austrian search warrant cites a request for legal assistance by the Serious Fraud Office, dated July 25. The Austrian investigation has since been expanded to include suspected money laundering and bribery, said Mr. Jarosch, the prosecutor.
According to the search warrant, dated Sept. 12, Mr. Mensdorff-Pouilly's Vienna-based company, MPA Handelsgesellschaft m.b.H., used its influence to prevent the Austrian air force from selecting American F-16 aircraft, built by Lockheed Martin Corp., by insisting that new bids needed to be filed. Austria in 2003 agreed to pay €1.79 billion ($2.58 billion) for the 18 Eurofighters.
The Austrian warrant cites a purported letter sent by Mr. Mensdorff-Pouilly to BAE in March 2003, saying the Eurofighter was selected in a second competition thanks to his efforts.
Mr. Mensdorff-Pouilly said he was successful because of "aggressive payment of commissions to decision makers based on success and strong lobbying by the British, German and Italian ambassadors in support of the Eurofighter," the document says, citing a purported March 25, 2003, letter from Mr. Mensdorff-Pouilly to a BAE official.
According to the search warrant, Mr. Mensdorff-Pouilly is suspected of receiving "commission payments" from BAE as a consultant and passing some of this money as bribes to unidentified "third parties."
By: David Crawfor and Daniel Michaels
Wall Street Journal; October 1, 2008
