UK “unlawfully” scrapped BAE probe

Financial Times: UK “unlawfully” scrapped BAE probe

By Michael Peel, Megan Murphy, George Parker and Sylvia Pfeifer
Published: April 10 2008 11:13 | Last updated: April 10 2008 21:24

Ministers on Thursday night vowed to drive through unprecedented statutory powers to shut down investigations on national security grounds, just hours after the High Court said the government had broken the law by scrapping a probe into arms deals between BAE Systems and Saudi Arabia.

Two top judges delivered a fierce rebuke to the government for “failing to recognise the rule of law” and allowing a foreign nation to “pervert the course of justice” in a case that triggered global condemnation.

“So bleak a picture of the impotence of the law invites at least dismay, if not outrage,” said Lord Justice Moses in the High Court in London, as he ruled that the Serious Fraud Office had illegally allowed threats by Saudi officials to derail the bribery probe, which was scrapped in December 2006.

The judge is expected to order the SFO to reconsider its decision to stop the case, which has since spawned probes by the US Department of Justice, Swiss authorities and others. The SFO, which is still investigating allegations of bribery against BAE in six other countries, said it was considering its response but Whitehall officials said they expected it would challenge such a decision.

The SFO suspended its bribery probe into BAE’s Al Yamamaha arms programme with the Saudi government apparently after threats from Prince Bandar bin Sultan, former Saudi ambassador to Washington, that Riyadh would withdraw co-operation on intelligence and cancel the £20bn deal with Saudi Arabia to supply 72 Eurofighter Typhoons.

The Saudi intervention came after it became clear the Serious Fraud Office was about to obtain access to Swiss bank accounts that investigators thought were linked to payments to agents.

Prince Bandar allegedly received more than £1bn of payments from BAE. The company and Prince Bandar have both denied wrongdoing.

In his judgment, Lord Justice Moses said that the threat was made directly to Jonathan Powell, chief of staff to the then prime minister Tony Blair. The government did not challenge reports that Prince Bandar made the threats, telling the court to base its judgment on “the facts alleged by the claimants”.

The judgment later stated “Had such a threat been made by one who was subject to the criminal law of this country, he would risk being charged with an attempt to pervert the course of justice.” Prince Bandar did not participate in the case.

Confidential documents released during the case showed that, following the Saudi warning, Mr Blair urged the scrapping of the probe in spite of a warning by Lord Goldsmith, then attorney-general, that it would send a “bad message”. The former prime minister also resisted suggestions that BAE might be allowed to plead guilty to lesser offences.

The ministry of justice said on Thursday it would press on with a bill to give the attorney-general statutory powers to block corruption investigations on national security grounds. In this case, the government could only pressure the SFO.

Corner House Research, one of the two pressure groups that brought the High Court case, said the proposals were a “cynical” response.

BAE Systems declined to comment on a case in which it said it had “played no part”.

Lord Justice Moses told the court, “No-one, whether within this country or outside, is entitled to interfere with the course of our justice. We intervene in fulfilment of our responsibility to protect the independence of the director and of our criminal justice system from threat.”

The government declined to comment on Thursday night.

BAE timeline
September 1985: First phase of “Al Yamamah” arms deal
November 2004: BAE Systems confirms it is being investigated by the SFO
December 2006: Attorney- general Lord Goldsmith announces that SFO is discontinuing its probe, on grounds of national security
June 2007: BAE Systems says that it is under investigation by the US justice department
April 2008: Campaign groups win their legal challenge over the SFO decision to drop case

Copyright The Financial Times Limited 2008

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Financial Times: Brown a “hypocrite” on corruption

By George Parker and Jimmy Burns in London and Andrew England in Riyadh
Published: April 10 2008 20:35 | Last updated: April 10 2008 20:35

Gordon Brown was on Thursday accused of looking like “an appalling hypocrite” on corruption, as international pressure mounted on him to tackle the problem and update Britain’s bribery and corruption laws.

Mr Brown has lectured developing countries on tackling graft, but Thursday’s High Court ruling on bribery allegations involving BAE Systems has focused attention on the UK’s record.

Last week the Organisation for Economic Co-operation and Development sent a team to London to find out why Britain was failing to comply with international bribery and anti-corruption protocols, 10 years after promising to do so.

Although the OECD team will not report until October, one official close to the investigation said: “There is no sign of any change in Britain’s anti-bribery legislation.”

The Paris-based organisation fears that proposed laws to give the attorney-general the statutory power to direct the ending of prosecutions on national interest grounds could even take Britain in the opposite direction.

Vince Cable, Liberal Democrat deputy leader, said the Serious Fraud Office inquiry into allegations of bribery by BAE Systems in the 1985 Al-Yamamah arms deal with Saudi Arabia should not have been stopped.

He said Mr Brown’s willingness to criticise corruption in other countries but failure to deal with at home left him “looking like an appalling hypocrite”. He added: “His position on this is unsustainable.”

The Department for Business insisted on Thursday that Britain’s anti-corruption laws dealing with bribes offered by British companies abroad met OECD standards, but admitted they were “complex and fragmented”.

The Law Commission would come up with proposals to improve the legal framework “later in the year”. The UK cites a Transparency International survey showing it is regarded as the 12th least corrupt country in the world.

The government’s role in halting the BAE Systems case dogged Tony Blair in his last months in Downing Street, along with Jonathan Powell, his chief of staff. Neither was available for comment on the case on Thursday.

The Conservatives, who were in power when the Al-Yamamah deal was signed, were also largely silent on the case.

However Dominic Grieve, shadow attorney-general, said the Conservatives would support the government’s plans to give the attorney statutory powers to intervene in cases affecting the national interest.

A Saudi government adviser said officials would be watching developments, adding that if the SFO were to reopen the case, it would set back “all the progress that has been made”.

A British source close to the negotiations between BAE and Saudi Arabia said: “Britain needs Saudi Arabia as a responsible partner against terrorism, as a major buyer of defence contracts, and a diplomatic partner. You change this at your peril.”

Copyright The Financial Times Limited 2008

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