By John Donovan

In September 2009, we published an article headlined: BAE Systems whistleblower accuses Shell & BP of money laundering Al-Yamamah proceeds

Al-Yamamah was the Saudi/UK corruption scandal investigated by the UK Serious Fraud Office until the investigation was stopped in its tracks by the then PM, Tony Blair, a man not known for being incorruptible or honest. Blair gave in to threats from the repressive Saudi regime. In my lifetime, this was a low point in the UK’s international reputation, along with the Suez fiasco.

The scandal involved bartering oil for arms. The proceeds were laundered through Shell and BP.

Our story came from a Saudi BAE Systems insider. I met the individual a number of times. He said that he had already been interviewed in the USA by the US Justice Department, who were carrying out their own investigation after the UK investigation was terminated in the dubious and shameful circumstances I have mentioned.

I spoke to a source in Washington who confirmed the basics of the information the BAE whistleblower had supplied to me about his contact with the US authorities.

In our article, we named Prince Turki Bin Nasir as being a key player/beneficiary in the corruption scandal, along with Shell and BP.

The scandal is now beginning to unravel because of WikiLeaks. See:

Revelations in BAE Saudi case prompt inquiry call: The Telegraph 12 March 2011

Leaked US diplomatic cable disclosed the full case against BAE Systems, the defence contractor: The Telegraph 12 March 2011

U.K. Judge Throws Curveball in BAE Agreement

By Dionne Searcey: DECEMBER 20, 2010

Bringing closure to foreign-corruption cases has generally become a formulaic process.

The company pays a bribe overseas, law enforcement finds out, the two sides reach some kind of a settlement deal, a judge approves it, and everyone goes their separate ways. Any deviation from this pattern tends to generate headlines.

But a judge in the U.K. on Monday threw a wrench into the Serious Fraud Office’s plans for winding down the long and tangled corruption investigation into British defense contractor BAE Systems. Click here for the FT story.

BAE and the SFO had reached an agreement that the company would plead guilty not to a bribery charge, but to a less serious charge that it failed to account for $12.4 million in payments to Tanzania-based businessman Shailesh Vithlani.

But the judge said that — contrary to claims by both the Serious Fraud Office and BAE — it looked as if the company had funneled money to Vithlani who had then bribed Tanzanian officials to win a radar contract, the story said.

The SFO has not alleged corruption and BAE has always denied it.

According to the FT story, the judge said BAE “didn’t want to know how much money would be paid and to whom. They just wanted the job done. Hear no evil and speak no evil, and so on.” The judge said he wasn’t prepared to sentence BAE without clarification of what the money was used for.

The judge is slated to determine BAE’s fine tomorrow. BAE says it is awaiting the outcome and welcomes the opportunity to put the case behind it.

In the U.K., the BAE case has dragged on for about seven years and cost millions to investigate.

In March, BAE pleaded guilty to misleading the U.S. government about the steps it took to comply with an antibribery law.

As part of a plea agreement, BAE admitted that it made payments to intermediaries even though there was a “high probability” some of the money would be used to curry favor with foreign governments that granted defense contracts. DOJ had launched its probe in July 2007.

According to court filings, BAE had used secretive offshore entities and shell companies, and its efforts to conceal where payments were going, in 1999 transactions to lease fighter jets to Hungary and the Czech Republic. Justice’s probe also concerned payments in Saudi Arabia.

WSJ ARTICLE

SEE: SHELL INVOLVEMENT WITH SAUDI REGIME IN AL-YAMAMAH OIL FOR ARMS SCANDAL

An previous investigation by Britain’s Serious Fraud Office (SFO) into reports BAE paid about 1 billion pounds over a decade to Prince Bandar bin Sultan in connection with the al-Yamamah arms deal had been halted in December 2006 by former Prime Minister Tony Blair after the probe angered Saudi Arabia.

By John Donovan

The following is a self-explanatory email I sent earlier today to Robert (Bob) Pease, President & Chief Executive Officer of Motiva Enterprises LLC, which is jointly owned by a subsidiary of Saudi Aramco and Shell.

From the Motiva Website:

Formed in 1998, Motiva Enterprises LLC operates primarily in the eastern and southern United States. Its operations include nearly 7,700 Shell-branded gasoline stations, three refineries with a combined capacity of 740,000 barrels per day, and ownership interest in 41 refined product storage terminals with an aggregate storage capacity of approximately 19.8 million barrels.

MY EMAIL TO MR BOB PEASE

Dear Mr Pease

I am writing to you in your capacity as President and Chief Executive of Motiva Enterprises LLC.

You may be aware of the fact that the website royaldutchshellplc.com is serving as a public platform for stakeholders in Shell/Motiva refineries who have made allegations against Mr Tom Purves, your Vice President for Downstream Manufacturing on The Gulf Coast.

Allegations of rampant cronyism and much worse have been made against Mr Purves and his alleged “henchman”, including Mr Jeff Funkhouser and Mr Forrest Lauher.

I have sent emails to Mr Purves and Mr Funkhouser offering them the right of reply, promising to publish on an unedited basis, any comments they wish to make. Thus far, the invitations have not been taken up, thereby leaving serious allegations unanswered. The lack of any denial will likely give credibility to the allegations.

I would respectfully suggest that you read my emails to these gentleman and the “Shell Blog” comments accessible on this link. A quick glance through the postings over recent months might be enlightening.

There are many similarities with the Sakhalin 2 project before it came to grief with the forced takeover by Gazprom, the Russian energy giant controlled by the Putin regime.  The so called “Kremlin attack dog”, Oleg Mitvol, publicly acknowledged the pivotal role we played in those events. Mitvol turned out to be a genuine campaigner for his ideals.

Many stakeholders in the Sakhalin 2 project, including concerned contractors and employees, contacted us and posted allegations on our website about improper practices, SEIC management generally, and in particular, the Deputy Chairman of SEIC, a Shell MD, Mr David Greer. He subsequently resigned as a direct result of an internal email from him which was leaked to us.  The main difference is that Mr Greer had many supporters posting comments in his defense. I cannot recall any contributor trying to defend Mr Purves.

I note that in the USA market Shell is in bed with another unsavory regime, this time the Saudi Royal family, who have already drawn Royal Dutch Shell into what has been described as the *Scandal Of The Century”.  We have posted declassified UK government documents revealing Shell’s money laundering role in the Al Yamamah/ BAE Systems “oil for arms” deal. The power of the Saudi regime is such, that it ordered UK PM Tony Blair to stop an investigation by the UK Serious Fraud Office into the multibillion dollar corruption scandal on the grounds of national security. Blair did as he was told.

Returning to current events, it seems to me that if your company sticks by Mr Purves and his associates, then your company should provide legal support to protect their reputation and the reputation of Shell/Motiva.

In the interests of transparency, this email and any correspondence flowing from it, will be published in its entirety on our website.

Best Regards

John Donovan

shellmotiva.com

*Ironically a similar description was used in relation to the Royal Dutch Shell reserves securities fraud revealed in 2004.

cc.

Mr. Tom Purves, Shell/Motiva VP for Downstream Manufacturing on The Gulf Coast.

Mr. Michiel Brandjes, Company Secretary and General Counsel Corporate, Royal Dutch Shell Plc

Mr. Richard Wiseman, Chief Ethics & Compliance Officer, Royal Dutch Shell Plc

There is also an oil element. There was an oil barter arrangement whereby oil was marketed, initially by Shell and BP, and the proceeds were routed through the MOD to BAE Systems.”

At one point, BAE director Andy Ingils was greeted with laughter and jeers when he said that he wanted to make weapons environmentally friendly.

Excerpts: Freeh said that a 1985 treaty between Britain and Saudi Arabia allowed the trade of oil for weapons. BAE signed an $86-billion contract with the Saudis under the provisions of the treaty, and the funds that flowed between Britain and the Bandar-controlled bank accounts in the U.S. may have come from the sale of Saudi oil under the terms of the contract. “We did not invent corruption,” Prince Bandar bin Sultan tells Bergman. “This has happened since Adam and Eve. . . . This is human nature.”

The UK has been identified for several years by the OECD as one of the worst laggards… This is highlighted by the fact that the suspension of the Al-Yamamah investigation in 2006 – looking at alleged bribes paid by BAE Systems as part of a UK-Saudi Arabia arms deal