UK defence firm Ultra Electronics to pay £15m after SFO bribery investigation

The British defence company Ultra Electronics has accepted responsibility for failure to prevent bribery and agreed to pay £15m after an investigation by the Serious Fraud Office.

The penalties are part of a deferred prosecution approved by the high court on Friday, after an investigation opened in 2018, when the company referred itself to the UK law enforcement agency a month after corruption allegations were published by Algerian media.

Ultra agreed to pay a £10m penalty and £4.8m to cover the SFO investigation costs, after it admitted failing to prevent bribery in connection with three public sector contracts in Algeria and Oman, sought 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.”

The contracts in question were a £200m deal awarded by Oman’s ministry of transport and communications, another for technology and e-commerce solutions at Houari Boumediene airport in Algiers, and a third for encryption technology for Algeria’s ministry of post and telecommunications. The Algerian contracts – which were ultimately not secured by the company – were expected to generate a profit of £1.4m.

Ultra agreed to take steps to reform its business practices, and must provide yearly reports for the next three years to the SFO to demonstrate the effectiveness of its anti-bribery and compliance programme.

Ultimately owned by the US-based private equity group Advent International, Ultra had been listed on the London Stock Exchange until it was acquired by rival UK defence company Cobham in 2021 in a £2.6bn deal. Cobham had previously been bought by Advent in 2020.

The agreement represents a much-needed win for the SFO, which was been hit by the collapse of high profile cases against companies including Serco, G4S and London Mining. The agency is now searching for a new leader, and the last time it imposed a penalty for corporate bribery was in 2022, when it fined the mining company Glencore £281m.

“This DPA is a welcome deal to end a drought of corporate bribery successes for the SFO,” said Helen Taylor, the deputy director of the nonprofit Spotlight on Corruption, which has been following the case. “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.”

However, she decried the level of penalty, saying there was a risk defence groups would simply “factor such penalties into the cost of doing business in a high-risk, high-reward sector”.

It comes three years after Ultra agreed a similar deal with public prosecutors in Canada. The 2023 remediation agreement found the company accountable for two counts of bribing officials in the Philippines, and one of defrauding the Filipino government.

The offences, which took place between 2006 and 2018, related to the procurement of ballistic missile systems for the Philippine national police, and the company was ordered to pay over C$10m (£5.4m) in penalties, surcharges and forfeiture charges.

While the original 2018 SFO investigation related to Algeria, it was expanded to cover Oman in 2023. The agency said it was widening the scope further in October 2024 to include the company’s worldwide operations.

The SFO said on Friday it had previously withdrawn from negotiations with Ultra after concluding “the conditions for a meaningful agreement were not in place”. Negotiations only resumed after what it described as “significant changes to the company’s ownership, structure and leadership”.

In a statement, Ultra said it had “fully cooperated” with the investigation, and that the SFO “acknowledged Ultra’s exemplary cooperation and the extensive enhancement to Ultra’s compliance programme” since its acquisition.

It said: “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.”