May 29, 2020

The US rescinds a policy of denial against a British defense subsidiary

The US Department of State recently rescinded its policy of denial against BAES SAL, a subsidiary of BAE Systems plc, a British multinational defense and security company – ending a policy that had been in place since 2011 according to a recent notice in the US Federal Register.  Until now, the policy prohibited US entities from engaging with BAES SAL in any transaction subject to the US Department of Commerce’s Export Administration Regulations. According to the notice, the rescission was made in response to a request from BAE, after the Department conducted a thorough review of the denial and surrounding circumstances, and determined that it served US national security interests and foreign policy interests to rescind the denial at this time. 

The notice affirmed that a judgment was filed against BAE on March 2, 2010 for allegedly committing violations against the US, including conspiracy to violate the Arms Export Control Act and the International Traffic in Arms Regulations.  After the convictions, BAE allegedly entered into a Consent Agreement with the government that settled all charges and penalties against BAE but implemented a policy of denial against the individual business units that were responsible for a majority of violations.  BAES SAL, a successor entity to one of the banned BAE units, has been subject to the policy of denial until the recent rescission that, according to the Federal Register notice, went into effect on May 20, 2020.

Federal Register Notice