Corruption is a Crime

The Telegraph reports:

City grandee Sir Nigel Rudd, chairman of airports operator BAA and deputy chairman of Barclays Bank, was one of the two BAE Systems executives detained briefly last week by US officials investigating allegations of corruption by the UK defence company.

Sir Nigel, a non-executive director at BAE, was issued with a subpoena by investigators from the Department of Justice (DoJ) when he arrived at New York’s Newark Airport en route to a holiday in Florida. Yesterday, The Sunday Telegraph disclosed that Mike Turner, BAE’s chief executive, had been detained at an airport in Texas, where his laptop and Blackberry were seized.

The DoJ is investigating claims that BAE paid bribes in the 1980s and 1990s to win the £20bn Al Yamamah arms deal with Saudi Arabia. News of the detentions will further strain relations between Washington and London over the DoJ’s probe, as Sir Nigel has been at BAE less than two years and had nothing to do with the Saudi deal.

In 2006 Britain’s Serious Fraud Office controversially dropped its own investigation into Al Yamamah, and there have been claims Whitehall is dragging its feet over requests from the DoJ for information. The detentions may be a sign of the DoJ’s determination to raise the stakes, although one source said last night: “It could equally be a sign of frustration.” …

Liberal Democrat Treasury spokesman Vince Cable said yesterday reports of the detentions “illustrate that the investigation into alleged corruption over this arms deal is very far from closed.”

The Government was accused in court yesterday of having rolled over in the face of threats from Saudi Arabia over the investigations into bribery and corruption allegations involving BAE Systems and arms deals with Saudi Arabia.

The comments came during a court hearing into the axing of the investigations:

Lord Justice Moses said the court had seen nothing to suggest that the government had done “anything other than roll over” in December 2006.

An attempt could have been made, he said, to get the threat to withdraw co-operation with the UK, including over security issues, lifted.

Liberal Democrat MP Vince Cable said:

These comments are seriously damaging to the Government’s credibility in its handling of this scandal. The Liberal Democrats alleged at the time that the Government had capitulated in the face of threats from Saudi Arabia which may or may not have had any substance. Today we have confirmation that this is exactly what happened.

The Government’s decision to drop the inquiry into corruption around the Al Yamamah arms deal is facing new scrutiny from the courts after campaigners won a request for a judicial review.

Corner House Research and Campaign Against the Arms Trade won their request for a judicial review after the judges ruled that “the challenge cries out for a hearing” and raises “matters of concern and public importance”.

Liberal Democrat leader Vince Cable comments:

“I am delighted that this is going to get a full hearing in the High Court.

“It is in the public interest to fully investigate the circumstances surrounding the dropping of this important investigation.

“It appears that the judiciary is more open than the British Government.”

Following up yesterday’s story about Vince Cable’s boycott of the Saudi state visit, here’s a link to his article in The Independent in which he expands on his decision:

The British government should not have offered the accolade of a state visit to the head of a regime which is authoritarian and deeply corrupt. Our own Foreign Office has described Saudi Arabia, without hyperbole, as follows: “Women are subject to discrimination. Prisoners suffer maltreatment and torture. Capital punishment is imposed without adequate safeguards and often executed in a cruel way and in public. Amputations are imposed as corporal punishment … We also have concerns about freedom of expression, assembly and religion.” British expatriates have been tortured to extract false confessions of involvement in terrorism.
[...]
Trade, too, is beneficial but not at any price and not if it is lubricated by bribery and government subsidy. The massive Al Yamamah arms contract, spanning two decades, has left a deep stain on British public life. Conservative and Labour governments have been complicit in large-scale corruption. Our legal system has been compromised by a refusal, under Saudi pressure, to pursue fraud investigations. Parliament has been compromised by the suppression of a Public Accounts Committee inquiry, which could embarrass the Saudis – the only such report thus suppressed in the history of parliament.

Read the full article here.

Vince Cable MP, the Acting Leader of the Liberal Democrats, is to boycott the state visit of King Abdullah of Saudi Arabia to the United Kingdom. According to the BBC:

Mr Cable says he will not attend any of the planned ceremonial events - as would be normal for the leader of one of the main opposition parties.

Mr Cable told the BBC’s Today programme that by any assessment of Saudi Arabia, “the human rights record is appalling”.

He also cited the regime’s arms deal with the British firm BAE and the row over alleged corruption surrounding it.

The International Herald Tribune quotes from Vince Cable’s letter to the Saudi ambassador:

“I have introduced three debates in Parliament this year expressing serious concerns over the al-Yamamah contract and the corruption allegedly involved. I have, in my arguments, also been very critical of members of the Saudi royal family and the Saudi record on human rights, including its maltreatment of British citizens,” the letter said.

“In my opinion, it is quite wrong for the British government to have proposed a state visit at this time. Therefore, it would, I believe, be inappropriate for me to participate in a ceremonial state visit against this background.”

Read more from:

• The Herald
• The Guardian
• ITN
• ePolitix.com

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.

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.

The Guardian’s BAE investigators David Leigh and Rob Evans have hit back at BAE, which had previously dismissed their reports of an impending anti-corruption investigation into the company by the United States.

BAE’s chief executive, Mike Turner, is eating his words today, only days after trying to dismiss the Guardian’s accurate prediction that the arms giant would face a criminal investigation in Washington.

Named as a potential corruption suspect himself in the Serious Fraud Office BAE dossiers, Mr Turner told a Sunday paper the only reason the SFO had begun its previous investigation was because of allegations in the British media.

The article goes on to note that Lord Goldsmith is likely to avoid serious questions about his role in the affair as Attorney General by standing down as part of the change of Prime Minister today. The whole article is worth a read - but we naturally liked this bit:

The Liberal Democrats, the only British political party with clean hands in the massive 20-year al-Yamamah Saudi arms programme, were quick to see the implications today.

They put down an urgent question: “What role does the government intend to play in assisting the US department of justice in the investigation which it has announced today into alleged corruption by BAE Systems?”

The Lib Dem frontbencher Vince Cable said: “It is extraordinary and embarrassing that we have to rely on the higher standards of probity in the United States to investigate alleged corruption by a British company in its overseas business operations.

“One of the most important challenges facing Gordon Brown is to alter the sleazy behaviour of the outgoing Blair administration and ensure that this government is committed to higher ethical standards and the rule of law.”

Vince Cable MP, the Deputy Leader of the Liberal Democrats, has labelled the United States’ investigation into BAE an embarrassment for the UK.

“It is extraordinary and embarrassing that we have to rely on the higher standards of probity in the United States to investigate alleged corruption by a British company in its overseas business operations.

“One of the most important challenges facing Gordon Brown is to alter the sleazy behaviour of the outgoing Blair administration and ensure that this Government is committed to higher ethical standards and the rule of law.”

The Liberal Democrats have put down an Urgent Question in Parliament, demanding to know how much cooperation the Government will provide to the US investigation.