SFO urged to step in over Leonardo claims

The Sunday Telegraph - Money & Business - - Front Page - By Alan Tovey

ARMY he­li­copter maker Leonardo faces mount­ing pres­sure over bribery al­le­ga­tions amid fresh calls for Bri­tish au­thor­i­ties to open a crim­i­nal in­quiry.

The watch­dog group Cor­rup­tion Watch ex­am­ined Leonardo’s al­legedly cor­rupt in­ter­na­tional sales of he­li­copters and has called on the Se­ri­ous Fraud Of­fice to launch a for­mal in­quiry.

Formerly known as Fin­mec­ca­nica, Leonardo has ma­jor UK op­er­a­tions, which in­clude the con­struc­tion of Agustawest­land he­li­copters in Yeovil.

Cor­rup­tion Watch ex­am­ined court ev­i­dence re­lat­ing to the sale of he­li­copters to South Korea and In­dia.

The sale of Wild­cats to South Korea in 2013 trig­gered le­gal cases, which heard ev­i­dence that Leonardo used mid­dle­men to in­flu­ence the sale.

This al­legedly in­cluded a prom­ise to ex-de­fence min­is­ter Yang Kim of £15,000 a month to “me­di­ate” with of­fi­cials and a 0.5pc “suc­cess fee” on the £230m con­tract. It is il­le­gal in South Korea to ac­cept pay­ment to try to in­flu­ence gov­ern­ment of­fi­cials. Kim was con­victed of ac­cept­ing a bribe.

Cor­rup­tion Watch claims the pres­sure on Kim came de­spite the com­pany hav­ing set up a com­mit­tee to in­ves­ti­gate its com­pli­ance on bribery rules.

The 2010 deal to sup­ply 12 Mer­lin he­li­copters to In­dia is also un­der the mi­cro­scope. In­ves­ti­ga­tions in In­dia and Italy found the he­li­copters were picked de­spite not be­ing able to fly high enough to work in In­dia’s moun­tains. The sale was can­celled in 2014 when In­dia gave Leonardo a chance to say why it should not be axed. Cor­rup­tion Watch claims this meant mid­dle­men had been used.

Two Leonardo ex­ec­u­tives faced charges of bribery in Italy with claims they paid €51m (£45m) to mid­dle­men to win the deal. Ini­tially they were found guilty, but were cleared on ap­peal. Leonardo it­self was treated sep­a­rately. It paid almost €8m to set­tle the case with­out ad­mis­sion of wrong­do­ing, the bulk com­ing from its UK arm.

The claims will ramp up pres­sure on UK reg­u­la­tors to sub­ject Leonardo to greater scru­tiny. Paul Holden, Cor­rup­tion Watch in­ves­ti­ga­tions di­rec­tor, said: “There’s been a per­plex­ing lack of any for­mal in­ves­ti­ga­tions in the UK.”

Leonardo said due dili­gence on Kim did not re­veal any risks and he was sus­pended when charged. The com­pany added it had not been charged with any of­fence in South Korea.

On the In­dian deal, Leonardo said it did not com­ment on on­go­ing cases, but pro­ceed­ings re­lated to the deal have “not re­sulted in Leonardo, nor any of its em­ploy­ees past or present, be­ing con­victed on grounds of cor­rup­tion”.

The SFO said it “could nei­ther con­firm nor deny whether we are in­ves­ti­gat­ing”.

The MOD said: “This is a mat­ter for the ap­pro­pri­ate au­thor­i­ties.”

Turn­ing a cor­ner Hornby is con­sid­er­ing of­fload­ing its Scalex­tric op­er­a­tions in a bid to ar­rest on­go­ing losses. The toy­maker will un­veil an op­er­a­tional over­haul later this month. A key plank of Hornby’s re­vamp is a move to­wards the hobby and col­lecta­bles mar­ket. In­vented in 1956, Scalex­tric is Hornby’s sec­ond-largest di­vi­sion. How­ever, it suf­fers from low profit mar­gins.

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