BAE Systems: The Marconi Merger, Al-Yamamah Probes and the Yemen Contracts

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BAE Systems descends from A.V. Roe, de Havilland, Supermarine, maker of the Spitfire, and Vickers, which built the Royal Navy's first submarines. After the Cold War, US mergers such as Boeing and McDonnell Douglas in 1997 left European firms outmatched, and British Aerospace held talks with Germany's DASA. In November 1999 it walked away and instead bought Marconi Electronic Systems, GEC's defense electronics arm, for 7.7 billion pounds, combining aircraft with the radars and avionics inside them and creating BAE Systems. DASA went on to merge with Aerospatiale to form EADS, later Airbus. BAE then bought United Defense, maker of the M2 Bradley, in 2005, Armor Holdings in 2007 and Ball Aerospace for $5.6 billion in 2024.

BAE Systems Inc. now sells more to the US Department of Defense than the parent sells to the UK Ministry of Defence, operating under Special Security Arrangements with a board of cleared US citizens. The UK Serious Fraud Office investigated alleged bribery in several countries, but in December 2006 dropped the Al-Yamamah inquiry, citing national security after reported Saudi pressure. The US Justice Department pursued the case, and in 2010 BAE pleaded guilty to felony conspiracy to defraud the US government, paying a $400 million fine plus 30 million pounds in the UK. During the Yemen war it sold Saudi Arabia weapons worth 17.6 billion pounds, with about 6,300 British contractors at Saudi bases.

• As of 2017, 98 percent of BAE's sales were military, including the Eurofighter Typhoon and about 15 percent of each F-35's value.
• It builds Astute and Dreadnought class submarines and Type 45 destroyers, and partners with Italy and Japan on the GCAP Tempest fighter.
• A 2020 munitions deal worth 2.4 billion pounds over 20 years and a 2023 order of 280 million pounds followed ammunition demand tied to Ukraine.
• Lord Woolf's independent review found BAE had not paid sufficient attention to ethical standards and made 23 recommendations.
• BAE stopped making cluster bombs after the 2008 Oslo Convention, and in 2019 NGOs asked the International Criminal Court to examine arms executives over Yemen.