Corruption is a Crime

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.”

A couple of weeks ago, we reported that Lib Dem MP Norman Baker had called for the resignation of Sir John Bourn, the head of the National Audit Office, after Sir John ran up significant expenses bills on public money and accepted hospitality from companies including BAE Systems.

It’s now been announced that Sir John will stand down, retiring in January. His decision has been welcomed by Norman Baker:

“Sir John Bourn has made the correct decision and he should be thanked for the work he has done. But the next incumbent cannot end up in a position where he embarrasses the National Audit Office through expenses claims and perceived conflicts of interest.”

BAE Systems has being accused of paying hush money to two Australian airlines, the Daily Mail reports:

In a House of Lords debate, Lord Tyler pointed the finger at the defence company over a 14-year secret deal between British Aerospace Regional Aircraft, East West Airlines and Ansett Transport Industries.

The Liberal Democrat peer claimed a leaked document signed in 1993 shows BAE paid the airlines £329,000 to silence them about ‘the leak of toxic fumes into aircraft cabins’.

Lord Tyler’s questions and the Government’s responses are available on the TheyWorkForYou website here.

An intriguing tangent to the BAE/Al Yamamah arms deal affair has come to light.

The National Audit Office has revealed that its head, Comptroller and Auditor General Sir John Bourn, has run up significant expenses bills - paid for by the taxpayer - and has also received corporate hospitality from various sources.

One of these is BAE Systems, who paid for Sir John to attend the British Grand Prix during the summer. Sir John has previously refused to release the NAO’s own report into BAE’s Al Yamamah deal.

As a result of these revelations, Norman Baker MP, the Liberal Democrats’ Shadow Cabinet Office Minister, has called on Sir John to resign, saying:

“It is incredible that Sir John Bourn has seen fit to run up gigantic bills for largesse at the taxpayers’ expense.

“Even more serious is appearing to accept hospitality from companies such as BAE which compromises the independent and professional standing essential to someone in this post.

“The time has come for him to call it a day in the interests of good administration.”

Labour ministers are refusing to assist the Americans’ investigation into alleged corruption by BAE, the Guardian reports.

The newspaper claims that Home Secretary Jacqui Smith hasn’t approved a request for assistance made by the US authorities two months ago.

The formal request for assistance came from the US department of justice earlier in the summer, but Ms Smith has refused to pass it on to the Serious Fraud Office for processing in the normal way.

This is unusual behaviour towards a major ally, with whom legal cooperation is normally automatic. Last night, the Home Office said its failure to pass on the request was “not unprecedented”, but could not give any example of similar behaviour.

The SFO possesses important files on BAE gained from its own major inquiry into £1bn of payments to Prince Bandar of Saudi Arabia and other Swiss bank accounts linked to the Saudi royal family. But SFO investigators are not allowed to speak to US authorities until Home Office officials forward the paperwork.

The Government’s failure to assist the US inquiry has been condemned by Liberal Democrat MP Norman Lamb, who is quoted in the same story:

“There is no justification for delay. This information should be handed over immediately. Again, one is left with the suspicion that by refusing to cooperate, the government is more interested in securing arms deals than in the pursuit of justice.

“It makes a mockery of the government’s assertion that they are robustly tackling corruption.”

Read the full story here.

The Ministry of Defence has handed security passes to 38 BAE employees, giving them acccess to the MoD headquarters at will. The discovery was made by Liberal Democrat MP Norman Lamb, who criticised the arrangement.

“This demonstrates that there is far too close a relationship between the Ministry of Defence and BAE. This incestuous and potentially corrupting relationship must be brought to an end. BAE’s lobbying muscle helped to bring an end to a major corruption inquiry, which is totally unacceptable.”

The Guardian says that the ministry won’t reveal why the BAE staff were given the passes, or to whom they were given:

However, it is known that one has been held by BAE’s chief lobbyist, Julian Scopes. The pass gave him access to the top levels of the ministry, enabling him to lobby ministers and senior officials and promote BAE’s commercial interests.
[…]
It has also emerged that BAE staff have been given passes by two other Whitehall ministries in recent years - two from the trade department and one from the Foreign Office. Critics have claimed that BAE wields huge influence over the government through privileged access and lobbying. BAE has hired politicians, such as the former defence secretary Michael Portillo, and former officials including Charles Powell, Margaret Thatcher’s chief foreign affairs adviser. The company regularly gives jobs to former MoD officials - 33 in the last 18 months.

Read the full story of the Guardian site.

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.