The Times - UK (2020-07-31)

the times | Friday July 31 2020 1GM 39

Business

Fraud prosecutors have charged a

former executive at an Airbus subsidi-

ary with corruption over a £2 billion

military contract with Saudi Arabia in a

move that could embarrass Whitehall.

Jeffrey Cook, former managing

director of GPT Special Project Man-

agement, was charged by the Serious

Fraud Office yesterday after an eight-

year investigation into alleged offences

over sensitive contracts for the Gulf

country’s national guard.

The office also charged John Mason,

the part-owner of Simec and Duranton,

two of GPT’s subcontractors which

were based in the Cayman Islands and

Switzerland, with the same offences,

which allegedly took place between

2007 and 2012.

Mr Cook was also charged with mis-

conduct in public office over allega-

tions relating to a commission he was

paid for contracts he placed with ME

Consultants while working for the

Ministry of Defence between 2004 and

2008. A third man, Terence Dorothy,
      has been charged with aiding and
      abetting Mr Cook.
      Airbus shut down GPT last summer,
      but a fraud office spokeswoman told
      The Times that the company “still exists
      for the purposes of a prosecution”.
      Investigators began looking into

making 500 people redundant. Pen-

dragon had a shareholder revolt over

executive pay in May. The company

said at the time that it had “to ensure

that the chief executive [Bill Berman] is

appropriately incentivised at this

crucial time for the company”.

Mr Berman, 54, a veteran of the US

motor trade, said the redundancies

were “extremely regrettable”, adding:

“We expect the economic environment

to remain challenging.”

Pendragon’s stock gave up 1 per cent

yesterday to close at 8p, valuing the

group at £112 million.

6 Inchcape has plunged into the red

after a third of its revenues vanished in

the pandemic. Jobs are under threat at

100 UK showrooms. The company sells

and delivers vehicles in 33 countries. It

reported losses of £169 million on reve-

nues of £3 billion in the first half.

Pendragon to axe 1,800 as

car industry pain goes on

Pendragon, one of Britain’s largest car

dealers, has added another 1,800 job

losses to the 20,000 gone in recent

months across the automotive industry.

The group behind the Stratstone and

Evans Halshaw chains plans to close 15

showrooms with the loss of 400 jobs. It

will also be “leaner and more sustain-

able” across its remaining 161 outlets,

which will see 1,400 jobs go.

Pendragon has been making heavy

losses and suffered from a confused

strategy over whether to concentrate

on the second-hand or new car market.

Even before the impact of the coronavi-

rus closed showrooms this spring, the

group had booked losses of £190 million

in the previous two years.

Lookers had already signalled 1,500

job cuts and Jardines, another dealer, is

Robert Lea Industrial Editor

GPT and the three men in 2012 after

whistleblower allegations that the

company had made illicit payments

and bribes worth £14 million in an at-

tempt to win the military contract.

A spokeswoman for the MoD said it

would not be appropriate to comment.

Airbus said: “The UK SFO has requi-

sitioned GPT to appear in court on 14

September 2020 for prosecution on a

single corruption-related charge. GPT

is a UK company that operated in Saudi

Arabia which was acquired by Airbus in

2007 and ceased operations in April

2020. The SFO’s investigation related
      to contractual arrangements originat-
      ing prior to GPT’s acquisition by Airbus
      and continuing thereafter.”
      It added: “Given the commencement
      of the prosecution, neither Airbus nor
      GPT can comment further at this time.”
      A deferred prosecution agreement
      reached separately earlier this year
      between the SFO and Airbus would not
      be affected, the company said.

Jonathan Ames Legal Editor 6 Airbus will further cut production

of its A350 long-haul aeroplane in

more bad news for its UK supply

chain (Robert Lea writes). It will

make only five of the 350-seater

aircraft per month, halving the

production planned at the start of

the year. The move will particularly

hit Rolls-Royce, which exclusively

makes Trent XWB engines for the

aerospace group. Airbus reported a

€1.9 billion first-half loss against

profits of €1.2 billion a year ago.

Saudi fraud charges at Airbus subsidiary

B

AE Systems said

that it expected

to beat the worst

ravages of the

coronavirus with

only a small drop in

profits and the prospect of

a double dividend this

year (Robert Lea writes).

The British-American

defence group is

reinstating its £460

million, 13.8p-a-share

final dividend for last

year, which it pulled

during the depths of the

crisis.

With an interim

dividend for the first six

months of this year held

at 9.4p a share and a

better-than-expected

financial performance

and forward earnings

guidance, the stock rose

yesterday.

Weighed down by the

pulling of that final

dividend and uncertainty

about a UK defence

review and the US

presidential elections in

the autumn, shares in

BAE have shifted sideways

during the pandemic.

During February and

March, the shares swung

from 669p to 438p.

Yesterday they climbed

5.9 per cent to 505p.

BAE Systems is the

product of multiple

mergers over the decades

in the UK defence

industry, featuring names

such as Hawker Siddeley,

before the 1999 merger of

British Aerospace with

the defence parts of

Marconi.

Today it has 87,000 staff

in 40 countries. About

40 per cent of them, more

than 33,000 people, are at

50 sites around the UK.

Much of its business is

in the United States but

20 per cent is done in the

Middle East, including

Saudi Arabia.

For the first half of the

year sales at BAE Systems

were up nearly 5 per cent

at £9.8 billion but

underlying earnings fell

more than 10 per cent to

£895 million. That decline

is coronavirus-related,

with aviation demand

falling and social

distancing harming

productivity.

For the whole year it

expects sales to be about

5 per cent better than last

year’s £20.1 billion.

after global oil price collapse

Hinkley Point risks

further delays due

to impact of virus

The Covid-19 pandemic is threatening

delays and further cost increases in the

construction of the Hinkley Point C

nuclear plant, the developer EDF has

warned.

A slowdown in work at the Somerset

site has increased the risk that Britain’s

first new nuclear plant in a generation

will not be ready to generate power by

December 2025 as planned, the French

energy giant said.

The plant is being built jointly by

EDF, which owns 66.5 per cent of the

project, and the Chinese state

nuclear group CGN. When

complete it should

generate enough

electricity to power

six million homes.

Costs have risen

from £18 billion

when it was ap-

proved in 2016 to

between £21.5 bil-

lion and £22.5 bil-

lion. EDF had

already warned of a

risk that the first reac-

tor could be delayed by 15

months and the second by

nine months, which would lead

to a further £700 million cost increase.

EDF said yesterday that the impacts

of Covid 19 “increase the risk of

postponement of planned commission-

ing dates” and a “comprehensive study

to assess the need for an updated

schedule and costs” was under way.

Under the terms of the 2016 govern-

ment agreement over Hinkley’s

financing, EDF and CGN are on the

hook for the cost increases.

EDF reduced the number of people

working on site from 5,000 pre-pan-

demic to 2,000 during lockdown but is

now back up to 4,500, with staff

working in two shifts.

Stuart Crooks, EDF’s managing

director of the project, said that work

was still about 20 per cent below usual

productivity levels and crucial factories

in the supply chain were operating at

only about half normal levels. Three

out of 20 construction milestones for

this year were at risk of being delayed,

he said. Some elements of construction

have already been delayed after a

factory in Spain was unable to operate

due to lockdown.

Mr Crooks said that EDF was aiming

to catch up on lost time by the end of

2021 and was confident it could so do.

However, this was based on an

assumption that operations were back

to normal by the end of this year.

He added: “I don’t know if

there’s going to be a

second wave or not, so

what we’ve said to the

shareholders is: we

understand the

cost to date, but I

can’t put a figure

on it because

[Covid] is not fin-

ished yet.”

Nigel Cann,

another executive,

said that further

shutdowns at fact-

ories represented the

“biggest risk”.

Mr Crooks also defended the

involvement of CGN in the construc-

tion after deteriorating UK-China rela-

tions prompted criticism from some

Conservatives. “CGN want the same as

I do: they want this project to be a

success and they want the return on the

project,” he said.

There are about 30 CGN staff

working on Hinkley directly. A further

70 staff of CGN and its subsidiaries are

involved in associated design and

engineering work elsewhere in the UK,

France and China.

Mr Crooks said that CGN staff were

restricted from accessing certain

computer files and sending emails

using CGN addresses, to comply with

regulations on nuclear export licence

controls.

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