Odious Debts

Groups protest Blair’s decision to drop top fraud probe

Odious Debts Online
January 17, 2007

Earlier this week, 140 international charities, churches and NGOs sent a written petition to British Prime Minister Tony Blair demanding that he reopen a corruption probe into a controversial arms deal with Saudi Arabia.

Last month, the U.K.’s attorney general, Lord Goldsmith, announced that a probe into the 20-year-old Al-Yamamah arms deal brokered by then prime minister, Margaret Thatcher, had been dropped despite long-standing allegations of slush funds and bribery concerning the deal between BAE Systems Plc, Britain’s biggest and most influential arms company, and the Saudi regime.

According to the groups, who sent a protest letter [PDF] to Prime Minister Blair on Monday, the decision is a breach of Article 5 of the OECD Anti-bribery Convention, which requires that the investigation and prosecution of foreign bribery “. . . shall not be influenced by considerations of national economic interest” or “the potential effect upon relations with another State . . . .”

In defence of his decision, Mr Blair cited safeguarding Britain’s national security as the reason for scrapping the probe, saying: “Our relationship with Saudi Arabia is vitally important for our country in terms of counter-terrorism, in terms of the broader Middle East, in terms of helping in respect of Israel and Palestine.

That strategic interest comes first.” But Blair’s petitioners say that early termination of the investigation “for reasons that do not relate to the legal merits of the case” sends the message that “companies trading with countries that a government claims to be of strategic importance are above the law and can bribe with impunity.”

The groups claim the decision is likely to cause irreparable damage to the U.K.’s reputation as an anti-corruption champion on the world stage:

“At the OECD, for example, it is hard to see how the UK can credibly continue to play its role in the process of peer review, through which parties hold each other to account for their implementation of the Convention. Similarly, future efforts by the UK to prescribe governance standards for developing countries in receipt of aid and debt relief are likely to be viewed as nothing less than double standards.”

Britain’s Serious Fraud Office, charged with investigating the probe, had been looking into allegations that BAE ran a $US110-million “slush fund” offering sweeteners to
officials from Saudi Arabia in return for lucrative contracts as part of the Al-Yamamah arms deal in the 1980s.

Al-Yamamah, meaning “the dove,” was the name given to an agreement under which BAE supplied Tornado fighter jets and other military equipment to Saudi Arabia, which paid the British government with oil.

The full extent of the deal was never revealed but it was widely believed to be Britain’s largest export agreement. The British government sold its majority BAE stake in 1981 when BAE became a public limited company.

News reports claimed that the Saudi government had told Britain to drop the probe or lose a $19.6-billion contract to buy Typhoon Eurofighter jets, a deal that will supersede the Al-Yamamah agreement.

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