Corruption is a Crime

An international crisis is brewing between the United Kingdom and the United States over the US Department of Justice’s continuing investigation into the BAE. Today’s Guardian reports that the US has formally requested documents relating to the BAE/Al Yamamah investigation.

If British ministers defy the justice department, this could go on to endanger reciprocal cooperation and intelligence-sharing with the US. Britain depends far more heavily on Washington than it does on Saudi Arabia. One senior source close to the US department of justice told the Guardian: “Britain’s definition of national security might have to change under these circumstances.”

Ministers are likely to be challenged today in the Commons on whether they will seek to obstruct US investigators. The Liberal Democrats have scheduled another opposition day debate in an effort to smoke out the prime minister’s position. The Liberal Democrat deputy leader, Vince Cable, said: “Gordon Brown has made much fanfare about promising a more open approach to government, but if he was serious, he would find a way of opening the lid on the secrecy surrounding this murky deal.

“Allegations that the British government has been complicit in large-scale corruption are incredibly serious. It is profoundly unsatisfactory to invoke national security as the reason for this government’s refusal to pursue either legal action or parliamentary oversight.”

The full story - here - is well worth a read. Meanwhile, the Liberal Democrat Voice blog has asked How far will Brown go to protect BAE from corruption charges?

BAE Systems is negotiating a new deal to sell military aircraft to Saudi Arabia. Today’s Independent on Sunday reports that questions have been asked into whether the new deal influenced the decision six months ago to scrap the Serious Fraud Office’s investigation into the Al Yamamah deal.

Norman Lamb, the Liberal Democrats’ health spokesman, said: “One questions whether this was envisaged at the same time that the Prime Minister advised against the investigation continuing.”
[...]
It is believed the Saudi royal family had threatened to cancel the final tranche of the Al-Yamamah contract, a multibillion-pound order for 72 Typhoon aircraft, unless the investigation was scrapped.

Liberal Democrat MPs said yesterday that it was possible the Saudis had dangled the current deal during representations to drop the corruption inquiry.

Mr Lamb added: “If this contract was envisaged and the Saudis were saying your prospects of winning this contract hang in the balance, that would be yet more evidence of a breach of OECD rules.

“It certainly needs to be pursued. Particularly if there is a link between this contract, supply of work, and the decision in December.”

Mr Lamb’s colleague Vince Cable, a Treasury spokesman, said: “Prince Bandar was coming to Britain and landing at Brize Norton about every fortnight. They can’t just have been discussing dropping the investigation.”

The full article is here.

Local authority pension schemes are to review their investments into arms companies, based partly on how those companies win contracts. According to today’s Observer:

The Local Authority Pension Fund Forum (LAPFF), which represents 40 funds with invested assets totalling £70bn, is drawing up a series of questions to put to defence companies as it seeks to encourage responsible investment by pension funds.

Among the areas to be probed will be the conduct of companies in winning contracts, including the use of bribery. Both BAE and the government are at the centre of a political storm over the issue, following the abandonment of an investigation by the Serious Fraud Office into bribery connected to the £40bn al-Yamamah arms deal with Saudi Arabia in the Eighties and Nineties.

The group Campaign Against Arms Trade (CAAT) has used the Freedom of Information Act to find out how much local authority pension funds invest in BAE. They found that there is £311m invested in BAE across 75 local authority funds. West Yorkshire has the biggest investment, with nearly £28m, followed by the West Midlands, Strathclyde, Kent and Aberdeen.

The full story is here and the CAAT campaign is here.

A senior civil servant who was allegedly involved in the decision by the Serious Fraud Office to drop its BAE/Saudi arms deal inquiry was close to the deal itself in the 1980s, today’s Daily Telegraph reports.

We now have a new Prime Minister, but the BAE arms affair - raised with Gordon Brown by Liberal Democrat Leader Ming Campbell at Prime Minister’s Questions yesterday - rumbles on.

According to the newspaper, the head of the SFO, Robert Wardle, told Parliament last week that the memos he was shown to encourage him to drop the BAE investigation included “papers from Sir Richard Mottram“, the permanent secretary for intelligence and security.

In the 1980s Sir Richard was permanent secretary to former defence secretary Michael Heseltine, who played a key role negotiating the contract with the Saudis.

Sir Richard wrote in September 1985 to Charles Powell, private secretary to Margaret Thatcher, giving detailed updates on the deal.

Vincent Cable, Liberal Democrat deputy leader, said of Sir Richard’s role in the 1980s and his recent advice on the SFO probe: “There are enormous overlaps involving senior officials which casts great doubt on the impartiality of the judgements which have been made.”

The paper also reports that the SFO is to launch a new round of interviews under caution with BAE executives.

Sources close to the investigation said the new push would see BAE staff questioned for the first time on evidence uncovered in the SFO’s investigation into allegations of corruption outside Saudi Arabia.