Europe

Keep off the graft

Odious Debts Online
February 12, 2007

In March 2005, British Prime Minister Tony Blair released a much anticipated Commission for Africa report which called on the developed world to help Africa curb corruption by cleaning up its own act (The Guardian). The report signalled a new and hopeful direction for the Blair administration’s advance on the scourge of global graft. Blair talked about changing U.K. banking laws to speed up the return of public funds pocketed by corrupt African leaders. His government also issued new anti-corruption rules aimed at cracking down on kickbacks paid by U.K. exporters to win contracts overseas (Financial Times).

Fast forward to 2007 and instead of an advance on corruption, the Blair government now stands accused of breaking its own anti-bribery rules in order to protect U.K. exporters who pay bribes on overseas deals. At least Blair’s fall from grace doesn’t involve Africa. What it does involve is a controversial U.K. arms deal with Saudi Arabia.

Last month, Odious Debts Online reported a backlash against Mr. Blair’s decision to scrap a high-ranking corruption probe into a 20-year-old Al-Yamamah arms deals brokered by then prime minister, Margaret Thatcher, between BAE Systems Plc, Britain’s biggest and most influential arms company, and the Saudi regime.

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.

As it turns out, BAE may have offered much, much more. According to a recent report by American journalist, Chris Floyd [PDF] , BAE is alleged to have supplied fundamentalist Saudi royals with “wine, women and song” as well as “lush apartments, ritzy holidays, cold hard cash, Jags, Ferraris and at least one gold-plated rolls-Royce.” Not only do these allegations embarrass BAE, they also call into question Saudi royal religious discipline.

The allegations of misconduct as a result of the Serious Fraud Office probe are said to have incensed the Saudis, who apparently threatened to take their arms business to France if the U.K. government didn’t shut down the investigation.

In addition to Saudi stress, Chris Floyd reports that the U.S. also pressured Prime Minister Blair to quash the probe. The U.S. apparently wanted Saudi help to influence Iraq’s volatile Sunni minority, as well as replace some of the billions of dollars of missing “reconstruction money” that White House cronies and local operators had somehow “misplaced” into their own pockets during the Iraq war.

“It is widely believed in top UK political circles that among the many considerations the Saudis asked for in return for the possibility of helping out in Iraq was the application of White House pressure on Tony Blair to quash the BAE investigation,” Floyd reports.

The U.K.’s The Observer reported that senior sources in the Blair administration had revealed that the Saudis had also threatened to stop sharing extensive intelligence on terrorism and force all British intelligence and military personnel out of Saudi Arabia if Blair didn’t kill the probe.

According to Floyd, if the U.S. and Saudi Arabia did strongarm the British prime minister, “they probably didn’t have to break a sweat to convince him.” The prime minister has championed BAE’s overseas contracts throughout his term in office, claims Floyd.

For example, in January 2002, as India and Pakistan teetered on the edge of a nuclear exchange over Kashmir, Blair made a lightning trip to both countries to preach peace – and to hawk a $1.4 billion deal for BAE jet fighters with India.

“This move, of course, only made the already outgunned Pakistanis even more likely to use their nukes to stave off any attack. It seems not even the greatest threat of nuclear war that the world had ever seen was enough to stop Blair from throwing gasoline on the fire in the service of BAE’s bottom line.”

In dropping the BAE probe, Prime Minister Blair is alleged to have breached 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. . . .” Britain is a signatory of the OECD convention.

The Blair administration defended its decision by saying that national security was the imperative:

“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,” he said. Chris Floyd interprets the results of Blair’s spin as a loss of face that confirms to the British public and the world that “Britain had indeed been blackmailed and bullied by Saudi Arabia into dropping the probe” and that Blair’s stance was “riddled with glaring contradictions.”

On the one hand, the prime minister portrays Saudi Arabia as a trusted ally, yet, on the other, alleged Saudi pressure to close the BAE file suggests that Saudi Arabia would “fan the flames of regional conflict” and expose Britain “to a much greater risk of terrorist attack” if Britain did not disregard its own laws and comply with Saudi wishes.
“Somehow, the sight of a British Prime Minister declaring ‘if we don’t do what they say, they’ll hurt us’ did not convey the degree of wisdom and reassurance the government sought to project about the decision,” adds Floyd.

Eric Illsley, a member of Blair’s own Labour party, said the decision appeared to give “businessmen carte blanche to do business with Saudi Arabia.” Carte blanche that could include illegal payments and illegal inducements – the very culprits the Blair administration seemed so intent on catching back in 2005. If the BAE scandal has revealed that Britain is no better than all the other developed countries that take Third World nations to task for graft, the latest development at least gives the developing world leverage to insist that Western nations must do as they say.

“Every time a government minister goes abroad and tries to lecture a corrupt dictator they are going to see this thrown back in their face,” says [PDF] Neil Cooper, a lecturer in International Relations and Security with the peace-studies department at England’s Bradford University.


Related articles:

US anger at Goldsmith over BAE inquiry

by Robert Winnett, The Sunday Times, February 11, 2007

BAE Systems Comes Under Fresh Scrutiny

by Chris Noon, Forbes.com, February 7, 2007

SFO investigation into BAE systems [PDF]

A response from the Attorney General’s Office, U.K., January 25, 2007

Pressure builds on Blair over weapons probe [PDF]

by Stefan Rousseau, The Christian Science Monitor, January 22, 2007

Two steps back in the fight against corporate backhanders [PDF]

The Economist, December 19, 2006

Categories: Europe, Odious Debts, United Kingdom

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