The U.S. Court of Appeals has rejected a plea by a Michigan pension fund to overturn a lower court’s dismissal of its lawsuit against BAE Systems PLC. The suit accused Prince Bandar, who owns property in Aspen, of receiving $2 billion in bribes from the British arms maker.
In an opinion for the appeals court in Washington, D.C., Judge Harry Edwards agreed with a lower court’s ruling that English law, not U.S. law, applies and therefore the pension fund for employees of the City of Harper Woods, a suburb of Detroit, has no standing to pursue its claims.
“BAE is incorporated in England and Wales, so English law applies to this shareholder derivative suit,” Edwards wrote in the decision, which was issued Tuesday.
The lawsuit claimed that since Bandar has access to money from BAE that had been deposited in a Riggs Bank in Washington, the case should be heard there.
The Reuters news service reported Sunday that attorney Patrick Coughlin of Coughlin, Stoia, Geller, Rudman, Robbins LLP, which represents the Harper Woods pension fund, “will consider” appealing the latest decision to the U.S. Supreme Court, but there were “no current plans to litigate in England.”
The suit claimed BAE’s directors wasted the company’s money on the payments to the Saudis and therefore caused harm to the Harper Woods’ pension fund, which owned shares in BAE Systems PLC.
It’s not clear if the Supreme Court would hear the case. Judge Edwards wrote in his decision that “our skepticism regarding the frailties of the complaint was fueled during oral argument…” and that “in the end analysis … Harper Woods’ arguments regarding the breadth of the complaint are much ado about nothing.”
The status of a restraining order that was issued by a U.S. District Court judge in February 2008 preventing Bandar from transferring proceeds from the sale of some of his Aspen property could not be determined over the weekend. The restraining order was issued to prevent the money from leaving the U.S. while the Harper Woods case was awaiting judgment from the appeals court.
William Jordan, a local attorney who represents Bandar’s interests in Aspen, was not available for comment.
In late 2006, Bandar sold three properties he owned in Starwood for $49 million. He still owns several other properties in the exclusive neighborhood, including a grand home that was once listed for sale at $135 million before being pulled off the market.
Bandar, a former ambassador to the U.S. who has visited Aspen since the early 1980s, was accused in the lawsuit of receiving payments from BAE as part of an $86 billion arms deal in 1985 known as Al-Yamamah, or “the Dove.” The deal was essentially an “oil for planes” deal that included BAE making cash payments back to the Saudis to offset the fluctuating value of the oil delivered to England.
Bandar, who had access to those payments, has consistently denied that they were illegal and says that they were fully approved by both the Saudi and British governments.
The lawsuit claims that the funds were used, at least in part, to pay for Bandar’s private jet — that was too big to land in Aspen — and his lavish homes in Aspen. Bandar is a senior member of the Saudi royal family. His father, Prince Sultan, is currently next in line to the Saudi throne.
The lawsuit named BAE’s individual corporate officers and directors, PNC Financial Group, the successor to Riggs bank of Washington, and Bandar.
bgs@aspendailynews.com
