Ultra Electronics Accepts Liability and Agrees to £15m Payment Following SFO Investigation
The British defence company Ultra Electronics has accepted responsibility for failing to prevent bribery and agreed to pay £15 million after an investigation by the Serious Fraud Office (SFO).
The penalties form part of a deferred prosecution agreement (DPA) approved by the high court on Friday. The investigation began in 2018, following Ultra Electronics' self-referral to the UK law enforcement agency a month after corruption allegations were reported by Algerian media.
Ultra agreed to pay a £10 million penalty alongside £4.8 million to cover the SFO's investigation costs. The company admitted to failing to prevent bribery related to three public sector contracts in Algeria and Oman, which were pursued through the use of agents.
Graham McNulty, the interim director of the SFO, said: “Bribery undermines that trust and corrodes the systems on which society relies. Today’s outcome underlines the Serious Fraud Office’s determination to investigate and hold companies to account where those standards are breached.”
Details of the Contracts Involved
The contracts in question included a £200 million deal awarded by Oman’s Ministry of Transport and Communications, a contract for technology and e-commerce solutions at Houari Boumediene Airport in Algiers, and a third contract for encryption technology for Algeria’s Ministry of Post and Telecommunications. The Algerian contracts, which Ultra ultimately did not secure, were expected to generate a profit of £1.4 million.
As part of the agreement, Ultra committed to reforming its business practices and must submit annual reports to the SFO over the next three years to demonstrate the effectiveness of its anti-bribery and compliance programme.
Corporate Ownership and Industry Context
Ultra Electronics is ultimately owned by the US-based private equity group Advent International. The company was listed on the London Stock Exchange until it was acquired by rival UK defence firm Cobham in 2021 in a £2.6 billion deal. Cobham itself had been acquired by Advent in 2020.
This agreement marks a significant success for the SFO, which has faced setbacks with the collapse of high-profile cases involving companies such as Serco, G4S, and London Mining. The agency is currently seeking a new leader, and its last corporate bribery penalty was imposed in 2022.
Helen Taylor, deputy director of the nonprofit Spotlight on Corruption, commented: “This DPA is a welcome deal to end a drought of corporate bribery successes for the SFO. Coming at a time of growing geopolitical instability and rising defence spending, this enforcement action sends an important signal to those in the defence industry tempted to cut corners to secure lucrative public contracts.”
She also noted concerns about the penalty level, stating there was a risk defence groups might simply “factor such penalties into the cost of doing business in a high-risk, high-reward sector.”
Previous Related Enforcement Actions
This case follows a similar remediation agreement Ultra entered into three years ago. The 2023 agreement held the company accountable for two counts of bribing officials in the Philippines and one count of defrauding the Filipino government.
The offences, which occurred between 2006 and 2018, involved the procurement of ballistic missile systems for the Philippine National Police. Ultra was ordered to pay over C$10 million (£5.4 million) in penalties, surcharges, and forfeiture charges.
Expansion of the Investigation
While the original 2018 SFO investigation focused on Algeria, it was expanded in 2023 to include Oman. The agency announced in October 2024 that it would further widen the scope to cover Ultra’s worldwide operations.
The SFO stated on Friday that it had previously withdrawn from negotiations with Ultra after determining that “the conditions for a meaningful agreement were not in place.” Negotiations resumed only after “significant changes to the company’s ownership, structure and leadership.”
Ultra Electronics’ Response
In a statement, Ultra said it had “fully cooperated” with the investigation and noted that the SFO “acknowledged Ultra’s exemplary cooperation and the extensive enhancement to Ultra’s compliance programme” since its acquisition.
The company added: “The agreement reached between Ultra and the SFO, approved today by the court, recognises Cobham Ultra’s status as a model of good practice within the defence industry.”
