Posts Tagged ‘Saudi Arabia’

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.

The Sunday Telegraph

November 15, 2009

Ministry cannot account for where £1bn went in Saudi oil-for-jets affair

DAVID HENCKE

DETAILS OF a damning secret report into Britain’s biggest ever arms deal, which raises questions over how the Ministry of Defence spent more than £lbillion, can be disclosed for the first time by The Sunday Telegraph.

A National Audit Office (NAO) investigation into the controversial £20 billion al-Yamamah arms deal between Britain and Saudi Arabia found that:

• The MoD could not properly account for nearly £1billion of cash it paid to British Aerospace (now Bae Systems) at the time of the deal;
• Bae also “failed to account” for the £1billion;
• A£30.3 million management fee was paid to Bae even though there was no “legal or contractual obligation” to do so – a payment described by auditors as “irregular”.

Documents also outline how auditors demanded that the Govemment investigate Bae accounts to find out what had happened to the money, and reveal the fears that led to the report being kept secret for 17 years.

The deal, agreed in 1985, saw British Aerospace-built warplanes exported to Saudi Arabia in exchange for oil, which was sold on the open market by the British Government. The deal has long been at the centre of corruption allegations.

The disclosures are certain to raise new questions as to whether millions of pounds were paid in secret commissions to middlemen.

The revelations could not come at a worse time for Bae Systems, which is facing a Serious Fraud Office investigation over other arms deals.

The al-Yamamah deal involved a series of complex transactions. Saudi oil was given to the Government, which then sold it on the open market. The money raised was then used to buy Tornado fighter and ground attack air-craft and Hawk trainer jets
from Bae, which were then exported to Saudi Arabia.

While the NAO report is still secret, correspondence between the MoD and the NAO has been seen by The Sunday Telegraph.

An internal NAO memo, written by auditor J Parsons on July 12, 1991,reveals that “payments of £30.3 million (redacted) have been netted off in a suspense account.  This is contrary to the fundamental principle of gross accounting and as such is irregular.”

It added that “the department have not accounted in their suspense payments for nearly $ 1.5billion [£1billion] of receipts and payments.

“By any definition, failure to account for $1.5billion indicates a certain weakness in control.” In a draft letter, Sir John Bourn, the former auditor general, urges Michael Quinlan, the then permanent secretary at the MOD, to push Bae to account for the money it had been paid.

He demands that the ministry’s auditors go to the company and insist on seeing its accounts.

The letter to Mr Quinlan goes on: “A thorough investigation into the profitability of the sale would reveal whether substantial commissions have been paid. There are, of course, guidelines to cover such circumstances. We would need to see evidence that these have been followed.”

At the time, the NAO had no power to examine the accounts of a private company.

The documents reveal why the report was kept secret.

Under normal circumstances, the ministry’s accounts would have had to be published and qualified by Sir John, leading to a hearing by MPs on the Commons public accounts committee, then chaired by Sir Robert (now Lord) Sheldon.

Such a scenario provoked panic in Whitehall, since the Government had agreed with the Saudis to keep all the details of the deal secret and it could have led to the cancellation of the order for the jets.

By any definition, failure to account for $1.5billion indicates a  certain weakness

One letter from an auditor warns that it could “blow up”. Another says that the whole business was “a murky area”.

Whitehall invoked national security reasons to prevent public reporting of the accounts. Instead, a secret hearing attended by Lord Sheldon, his deputy Michael Shaw, Mr Quinlan and Sir John was held. In that way, the obligation to inform Parliament had been fulfilled, even though the report itself had not been made public.

The hearing must have raised concerns because it led to Sir John’s demand for an audit of Bae’s al-Yamamah accounts, though it is not clear whether this ever happened.

Information on the deal is to be published under Freedom of Information rules this week.

However, many documents are still being kept secret and the NAO has told the Information Commissioner that an entire file on the contract, dating between 1995 and 2002, has been destroyed.

ARTICLE ENDS (Link will be added when available)

RELATED ARTICLE

BAE Systems whistleblower accuses Shell & BP of money laundering Al-Yamamah proceeds

SHELL INVOLVEMENT IN SAUDI ARABIA / AL YAMAMAH BAE ARMS SCANDAL

UPDATED MARCH 2010

A BAE Systems insider from the AL-Yamamah and AL-Salam Projects in Saudi Arabia, is supplying internal BAE, Saudi, and UK MOD documents to the US Department of Justice (DoJ) which is carrying out an investigation into alleged corruption.

The samples we have seen include correspondence between high ranking officers in the British and Saudi military responsible for administering the Al-Yamamah oil-for-arms barter deal.

One example is a letter marked”SECRET” from Brigadier General Prince Turki Bin Nasser Bin Addul Aziz, Royal Saudi Air Force Al-Yamamah Project Officer, to an MOD Air Marshal within Project Al-Yamamah.

Extract from a Guardian newspaper article “Prince Turki: The man with everything“:

“The man who allegedly received most from BAE’s £60m slush fund, Turki bin Nasser, is a rich man. He has nearly 200 classic cars, a £20m private Boeing business jet, a large yacht called the Sarah, a sumptuous mansion in Beverly Hills and houses in Barcelona, Riyadh, Dharan and London. His London home is in Sussex Square, near Hyde Park.”

The UK Serious Fraud Office has investigated allegations of bribery relating to BAE and the Saudi royal family. The UK government stopped the investigation in the face of threats from the Saudis.

We have already published information revealing the involvement of the MOD, Shell, BP and BAE Systems in the controversial arms-for-oil project. There are articles published somewhere in the world almost every day about alleged BAE corruption. The following is an extract from an article published in The Times on 22 September 2009.

At about the same time Tony Blair was overriding the law of the land in unprecedented fashion to protect the Saudi Royal Family from a corruption investigation in connection with a BAE deal. Legally it was a scandal, but to do otherwise would have put a huge defence contract at risk (you could hear the French salivating), not to speak of the incidental disadvantage of severing anti-terrorist co-operation with Riyadh, which the Saudis had blatantly threatened.

The controversial decision to stop the SFO investigation – an unprecedented act which generated an international outcry that the UK was not meeting its obligations to combat corruption – undoubtedly damaged the reputation and standing of the UK.

In reaction to the astonishing surrender, the US issued a formal diplomatic protest and the US Department of Justice (DoJ) subsequently launched its own investigation, which is still in progress. Two BAE bosses were detained when they landed in the USA on business. Like the recent release of the Lockerbie bomber Megrahi to appease the Libyan Dictator Gaddafi (which also gravely damaged Britain’s relationship with the USA), oil was the main factor in the humiliating capitulation.

We have confirmed with an authoritative Washington DC source that the BAE whistleblower has, as he claims, already been in contact with the US DoJ.  His discussions with the DoJ took place in the USA. He has insider knowledge of the AL-Yamamah arms agreement between the UK and Saudi Arabia and alleges that BAE, Shell and BP are all complicit in orchestrating an international oil-money laundering scheme using the armament umbrella that for decades has remained shrouded in secrecy.

The whistleblower approached us because of the key role played by Shell in the oil-for-arms deal.  Shell has a close business relationship, on an international basis, with the Saudi regime via the state owned oil company, Saudi Aramco.

BAE Whistleblower Allegations

• Claims documents in his possession reveal how the laundered proceeds of oil sales under the Al-Yamamah agreement have been funneled by BAE, Shell and BP into various international financial systems.
• Proceeds of these oil sales were deposited in a secret bank account in London controlled by Prince Bandar and his father Crown Prince Sultan. The funds were in turn invested in various US securities and into the US stock market.
• AL-Yamamah has been, since 1985, “the smuggling proxy for Shell and BP tankers to loot millions of oil barrels from Ras Tanura to Rotterdam, where it is sold until this very day”.
• Bribes were paid to Prince Bandar from the revenues generated from money laundering the oil sales proceeds and deposited  into a US account at Riggs Bank in Washington and secret bank accounts in Switzerland.

The BAE whistleblower has supplied us with a statement which makes these and other serious allegations.

We have not read all of the documents, so we cannot say if the content substantiates the allegations made by the whistleblower. What we can say is that his claims as to being employed by BAE in Saudi Arabia, his possession of secret Al-Yamamah project documents, and his discussions in the USA with the US DoJ concerning supply of the documents as evidence in their BAE corruption investigation, are all genuine.

It is our understanding that the documents are being supplied to the US DoJ to coincide with the publication of this article and the imminent publication of a statement by the whistleblower. Consequently, the DoJ will have the opportunity to assess and determine the relevance and weight of the documentary evidence.

A decision by the UK Serious Fraud Office is expected later today regarding bringing a prosecution against BAE Systems in relation to alleged bribery in Tanzania, the Czech Republic, Romania and South Africa.

Update MARCH 2010: Link to legal document arising from BAE settlement of US Department of Justice charges.

RELATED ARTICLES

BAE Systems pleads guilty to conspiracy and is sentenced to pay a $400M fine: 1 March 2010

High Court halts BAE plea deal with SFO: 2 March 2010

Anti-arms campaigners halt SFO deal with BAE: 2 March 2010

BAE protesters win SFO injunction: 3 March 2010

Defense Contractor Agrees to Pay $400 Million Criminal Fine: 8 March 2010

ROYAL DUTCH SHELL INVOLVEMENT IN SAUDI ARABIA / AL YAMAMAH BAE ARMS SCANDAL

June 24 (Bloomberg) — Showa Shell Sekiyu KK, a Japanese refiner and solar-equipment maker, rose to the highest in nine months after saying it will build solar plants in Saudi Arabia to expand its alternative energy business.

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.”

But the biggest case was always the Al Yamamah probe, which became even more explosive after it emerged that the SFO was investigating allegations that the company had paid more than £1bn to Prince Bandar bin Sultan, the former Saudi ambassador to Washington. Prince Bandar has also always denied wrongdoing. The scrapping of the Saudi case on national security grounds proved a pyrrhic victory for BAE, however, as it triggered a wave of criticism of the company and was followed by the launching of other investigations around the world.

There may be no silver lining in a story that involves Iran being able to spend untold millions on its weapons procurement, but at least this UK institution’s actions debunk the popular myth that it is only the U.S. that will conveniently ignore international norms of behavior for the sake of a reliable oil supply.

Royal Dutch Shell PLC, for example, has postponed a near-doubling of production in Canada’s oil sands — an operation that some analysts say requires oil to be above $70 a barrel to be economically feasible.

Royal Dutch Shell has announced that it will delay some of its planned expansion of expensive oil sands projects in Canada. Rob J. Routs, executive director of oil products and chemicals and a member of the board at Royal Dutch Shell, said that reaching the target of 700,000 barrels a day would be “pushed out at least two to four years.”