Corruption is a Crime

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.

Over the last few weeks we’ve covered various stories suggesting that the United States’ Department of Justice would be launching an investigation into BAE Systems plc. The company itself has now confirmed this, the BBC reports. The inquiry will include its business dealings with Saudi Arabia.

BAE is facing allegations that it ran a multi-million pound slush fund to help it win a giant plane and military equipment order from Saudi Arabia.

BAE has always argued that it acted lawfully at all times.

The allegations of illegal payments by BAE date back to the 1980s and the £43bn ($85bn) al-Yamamah deal that supplied Saudi Arabia with Tornado jets and other military equipment.

Analysts said that the probe in the US could damage BAE’s business in North America.

The BBC business editor, Robert Peston, has blogged about the case this morning, noting that it will be “Gordon Brown’s first big diplomatic dilemma as prime minister.”

Why? Because the contract was between the British and Saudi governments, not between BAE and Saudi.

BAE was only the contractor.

So it will be a decision for the Ministry of Defence, not BAE, whether to disclose the details of the deal.

We will be watching with interest to see if Prime Minister Brown is any more open than Prime Minister Blair.

The Times has a detailed round up today of how Thales, one of the arms firms set to benefit from the dropping of the Al Yamamah corruption probe, rented flats owned by the Blairs via a family trust.

Whilst the SFO inquiry into Al Yamamah was axed in Britain, The Times goes on to point out that the SFO is helping further corruption investigations in South Africa:

Thales faces allegations that it paid Jacob Zuma, former vice-president of South Africa, to stop an investigation into another multi-billion-pound arms deal.

South African prosecutors suspect that a £69,000 bribe allegedly paid to Zuma was channelled through a bank account belonging to Berwin Leighton Paisner (BLP), a London legal firm. Coincidentally, Martin Paisner, a BLP partner, is one of two trustees who run the Blair trust.

There is no suggestion that Paisner or his law firm has done anything improper or was aware of any wrongdoing; but sources disclosed this weekend that the SFO has sought access to BLP’s bank accounts to trace any payments possibly made through them to Zuma.

Whitehall officials said the SFO was following international protocol in helping the investigation by the South African police.

Her Majesty’s Opposition must be feeling very proud after Jack Straw, the Leader of the House of Commons, Lord Privy Seal and former Foreign Secretary, praised their refusal to criticise the Government over the Al Yamamah arms deal controversy.

My Straw had been challenged in the House of Commons by David Heath, his Liberal Democrat shadow, for a statement on the issue:

Last week, I asked the Leader of the House about the Ministry of Defence’s involvement in the al-Yamamah affair. It is ironic that the United States Congress is taking more interest in the matter than the House of Commons. The Attorney-General has now written to my right hon. and learned Friend the Member for North-East Fife (Sir Menzies Campbell) saying that the decision to withhold vital information from the Organisation for Economic Co-operation and Development was taken by officials rather than by accountable Ministers—decisions that were politically inept and clearly unsustainable. I renew my request for a statement on the matter.

David Heath also asked the Government to get behind Lord Chidgey’s Corruption Bill, which the House of Lords approved last week.

Mr Straw rejected criticism of the Government over Al Yamamah and gave the Conservatives “great credit” for laying off the issue.

BAE Systems yesterday formally announced the appointment of former Chief Justice Lord Woolf as chair of the company’s new inquiry into its business ethics - but the Al Yamamah deal won’t be part of his remit, according to today’s Independent.

Yesterday, Lord Woolf said he would not have wanted to take on a role at BAE that included “an inquest” into the Al Yamamah affair. But he insisted his appointment had not been made simply to head off criticism of the company’s dealings with Saudi Arabia.

Lord Woolf will be paid £6,000 a day by the company over the next six to nine months, which could net him up to half a million pounds.

BAE Systems is facing a new investigation, this time by Hungary, which will look into “alleged improprieties” into the awarding of a tender for fighter jets that to Saab. The announcement was made on Monday by Hungarian Defense Minister Imre Szekeres.

The Hungarian media has widely reported on an investigative story by Sweden’s SVT television, which alleged that an Austrian businessman, Alfons Mensdorff-Pouilly, received $8 million (six million euros) to lobby the Hungarian government on behalf of the company.

Full story at DefenceNews.com.

Lord Goldsmith, the Attorney General, will be questioned about his role in the Al Yamamah/BAE affair by the House of Commons’ constitutional affairs committee, the Guardian reports.

The hearing is expected later this month while Tony Blair is still prime minister. The committee, chaired by the Lib Dem Alan Beith, will also question the head of the SFO, Robert Wardle. MPs decided to summon the two men at a private meeting in Westminster last week.

Splashed across the front page of yesterday’s Sunday Times was the news that BAE Systems forked out nearly a quarter of a million pounds for a luxury honeymoon for the daughter of Prince Bandar. Prince Bandar is the Saudi prince at the heart of allegations of backdoor payments from BAE in connection with the Al Yamamah arms deal.

The Sunday Times reports:

Peter Gardiner, managing director of the travel agency that organised the honeymoon, said: “BAE instructed me to give Bandar’s daughter and her husband the honeymoon of a lifetime at BAE’s expense. Who says that big business doesn’t have a heart?”

The disclosure is the first evidence that Bandar and his family may have benefited from secret payments made by BAE. The company and Bandar, who was Saudi Arabia’s ambassador to Washington at the time, have denied any impropriety.
[…]
The honeymoon for Bandar’s daughter, Princess Reema, was paid for through a £60m slush fund which the Serious Fraud Office (SFO) believes was set up by BAE to encourage Saudi royals to continue with a £43 billion arms contract to supply Hawk and Tornado jets.

There is lots more detail in the article.

The Leader of the Liberal Democrats has labelled Lord Goldsmith, the Attorney General, as “politically inept” over the information given to the OECD regarding BAE Systems.

Responding to a letter he received today from Lord Goldsmith, Ming Campbell said:

“These events get curiouser and curiouser.

“Major decisions involving relevant information to the OECD were taken by officials and not by those with direct ministerial responsibility.

“The plain unvarnished truth is that Britain did not reveal significant information to the OECD. Not only was this a lack of candour but it was politically inept since the information was bound to come out eventually.

“These events make yet another powerful case for transparency and more effective scrutiny by Parliament. It will be an irony if the United States Congress gets more information into the public domain than Parliament.”