Corruption is a Crime

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.

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.