HC 847 International Development CommitteeFurther written evidence from The Corner House

It has come to our attention that BAE Systems is arguing that it cannot make a direct payment to Tanzania arising from its settlement agreement with the Serious Fraud Office as this would run foul of EU and UK legislation on political donations unless the payment was approved by BAE’s shareholders, an outcome which BAE claims is “uncertain”.

Our reading of the relevant UK legislation (Part 14 of the Companies Act 2006) is that BAE has fundamentally misdirected itself as to the law covering political donations and that, contrary to BAE’s claims, a payment to the Republic of Tanzania would be entirely lawful within the terms of the Act.

Part 14 of the Act is intended to control political donations and expenditure made by companies to political parties, to other political organizations, independent election candidates, and political expenditure incurred by companies.

The donations to which Part 14 applies are donations, inter alia, to:

1.“political parties”, defined as parties that are either registered under Part 2 of the Political Parties, Elections and Referendums Act 2000 or that are carrying on activities relating to participation “in any election or elections to public office held in a member State other than the United Kingdom” and

2.“political organizations”, defined as an organization whose activities are intended to affect public support for a political party or to “influence voters in relation to any national or regional referendum held under the law of the United Kingdom or another EU member State”.

Part 14 also covers political expenditures made by a company. Such expenditures are defined as expenditures intended to affect public support for a political party or other political organisation (as defined under the Act) or to influence voters in relation to any national or regional referendum held under the law of a EU member State.

We fail to see how any of the above criteria apply to the Republic of Tanzania, which is a sovereign State and not a political party or political organization as defined under the Act.

We are drawing this to your attention as BAE may seek to advance its misconstrued line of argument in oral evidence to the Committee on 19 July 2011.

14 July 2011

Prepared 29th November 2011