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| A central part of the Al Yamamah deal was the sale of Tornado fighters to the Royal Saudi Air Force. |
Al Yamamah is the name of a series of a record arms sales by the United Kingdom to Saudi Arabia, which have been paid for by the delivery of up to 600,000 barrels (95,000 m3) of crude oil per day to the UK government. The prime contractor has been BAE Systems and its predecessor British Aerospace.
There have been numerous allegations that the Al Yamamah contracts were a result of bribes("douceurs") to members of the Saudi royal familyand government officials.
Some allegations suggested that the former prime minister's son Mark Thatcher may have been involved, however he has strongly denied receiving payments or exploiting his mother's connections in his business dealings.
In February 2001, the solicitor of a former BAE Systems employee, Edward Cunningham, notifiedSerious Fraud Office of the evidence that his client was holding which related to an alleged "slush fund". The SFO wrote a letter to Kevin Tebbit at the MoD who notified the Chairman of BAE Systemsbut not the Secretary of Defence. No further action was taken until the letter was leaked to and reported on by The Guardian in September 2003.
In May 2004, Sir Richard Evans appeared before parliament's defence select committee and said: "I can certainly assure you that we are not in the business of making payments to members of any government."
In October 2004, the BBC's Money Programme broadcast an in-depth story, including allegations in interviews with Edward Cunningham and another former insider, about the way BAE Systems alleged to have paid bribes to Prince Turki bin Nasser and ran a secret £60 million slush fund in relation to the Al Yamamah deal. Most of the money was alleged to have been spent through a front company called Robert Lee International Limited.
In June 2007 the BBC's investigative programmePanorama alleged that BAE Systems "..paid hundreds of millions of pounds to the ex-Saudi ambassador to the US, Prince Bandar bin Sultan."
1992 NAO report
The UK National Audit Office investigated the contracts and has so far not released its conclusions – the only NAO report ever to be withheld. Official statements about the contents of the report go no further than to state that the then chairman of the Public Accounts Committee, nowLord Sheldon, considered the report in private in February 1992, and said: "I did an investigation and I find no evidence that the MOD made improper payments. I have found no evidence of fraud or corruption. The deal... complied with Treasury approval and the rules of Government accounting."
In July 2006, Sir John Bourn, the head of the NAO, refused to release a copy to the investigators of an unpublished report into the contract that had been drawn up in 1992.
The MP Harry Cohen said, "This does look like a serious conflict of interest. Sir John did a lot of work at the MoD on Al Yamamah and here we now have the NAO covering up this report." In early 2002 he had proposed an Early Day Motion noting "that there have been... allegations made of large commission payments made to individuals in Saudi Arabia as part of... Al Yamamah... [and] that Osama bin Laden and the Al-Qaeda network have received substantial funds from individuals in Saudi Arabia."
Serious Fraud Office investigation
The Serious Fraud Office was reported to be considering opening an investigation into an alleged £20 million slush fund on 12 September 2003, the day after The Guardian had published its slush fund story. The SFO also investigated BAE's relationship with Travellers World Limited.
In November 2004 the SFO made two arrests as part of the investigation. BAE Systems stated that they welcomed the investigation and "believed that it would put these matters to rest once and for all."
In late 2005, BAE refused to comply with compulsory production notices for details of its secret offshore payments to the Middle East. The terms of the investigation was for a prosecution under Part 12 of the Anti-terrorism, Crime and Security Act 2001.
Threats by the Saudi government
At the end of November 2006, when the long-running investigation was threatening to go on for two more years, BAE Systems was negotiating a multi-billion pound sale of Eurofighter Typhoons to Saudi Arabia. According to the BBC the contract was worth £6billion with 5,000 people directly employed in the manufacture of the Eurofighter,while other reports put the value at £10billion with 50,000 jobes at stake.
On 1 December The Daily Telegraph ran a front page headline suggesting that Saudi Arabia had given the UK ten days to suspend the Serious Fraud Office investigation into BAE/Saudi Arabian transactions or they would take the deal to France, but this threat was played down in other quarters. A French official had said "the situation was complex and difficult... and there was no indication to suggest the Saudis planned to drop the Eurofighter." This analysis was confirmed by Andrew Brookes, an analyst at the International Institute for Strategic Studies, who said "there could be an element here of trying to scare the SFO off. Will it mean they do not buy the Eurofighter? I doubt it."
There were reports of a systematic PR campaign operated by Tim Bell through newspaper scare stories, letters from business owners and MPs in whose constituencies the factories were located to get the case closed.
Robert Wardle, head of the SFO, also stated (in a later High Court challenge, see below) that he had received a direct threat of a cessation of counterterrorist co-operation from the Saudi Arabian ambassador to the UK, in the first of three meetings held to assess the seriousness of the threat: “as he put it to me, British lives on British streets were at risk”.
Article 5 of the OECD Convention on Combating Bribery prohibits the decision to drop investigations into corruption from being influenced by considerations of the national economic interest or the potential effect upon relations with another state. This does not however explicitly exclude grounds of national security.
This prompted the investigation term to consider striking an early guilty plea deal with BAE that would minimise the intrusiveness to Saudi Arabia and mitigate damage. The Attorney General signed off on the strategy, but briefed Prime Minister Blair, who in a reply dated 5 December 2006, urged that the case to be dropped. Despite affirming his government's commitment to bribery prosecution, he stressed the financial and counter-terrorism implications. That same day, Prince Bandar met with Foreign Office officials, after spending a week with Jacques Chirac to negotiate a French alternative to the BAE deal.
A week later, after consultation with the SFO, the Attorney General met with Blair to argue against dropping the case. It was Blair's opinion that "Any proposal that the investigation be resolved by parties pleading guilty to certain charges would be unlikely to reduce the offence caused to the Saudi Royal Family, even if the deal were accepted, and the process would still drag out for a considerable period".
On 13 December, the Director of the SFO wrote to the Attorney General to inform him that the SFO was dropping the investigation and would not be looking into the Swiss bank accounts, citing "real and imminent damage to the UK's national and international security and would endanger the lives of UK citizens and service personnel."
Investigation discontinued
On 14 December 2006, the Attorney General Lord Goldsmith announced that the investigation was being discontinued on grounds of the public interest. The 15-strong team had been ordered to turn in their files two days before. The statement in the House of Lords read:
The Director of the Serious Fraud Office has decided to discontinue the investigation into the affairs of BAE Systems plc as far as they relate to the Al Yamamah defence contract. This decision has been taken following representations that have been made both to the Attorney General and the Director concerning the need to safeguard national and international security. It has been necessary to balance the need to maintain the rule of law against the wider public interest. No weight has been given to commercial interests or to the national economic interest.
The Prime Minister, Tony Blair, justified the decision by saying "Our relationship with Saudi Arabia is vitally important for our country in terms of counter-terrorism, in terms of the broader Middle East, in terms of helping in respect of Israel and Palestine. That strategic interest comes first."
Jonathan Aitken, a former Tory government minister and convicted perjurer, who was connected with the deals in the 1980s, said that even if the allegations against BAE were true, it was correct to end the investigation to maintain good relations with Saudi Arabia.
Mark Pieth, director of anti-fraud section at theOECD, on behalf of the United States, Japan, France,Sweden, Switzerland and Greece, addressed a formal complaint letter before Christmas 2006 to theForeign Office, seeking explanation as to why the investigation had been discontinued.Transparency International and Labour MP Roger Berry, chairman of the Commons Quadripartite Committee, urged the government to reopen the corruption investigation.
In a newspaper interview, Robert Wardle, head of the Serious Fraud Office, acknowledged that the decision to terminate the investigation may have damaged "the reputation of the UK as a place which is determined to stamp out corruption".
Delivery of the first two Eurofighter Typhoon aircraft (of 72 purchased by the Saudi Air Force) took place in June 2009.
Judicial review
A judicial review of the decision by the SFO to drop the investigation was granted on 9 November 2007. On 10 April 2008 the High Court of Justiceruled that the SFO "acted unlawfully" by dropping its investigation. The Times described the ruling as "one of the most strongly worded judicial attacks on government action" which condemned how "ministers 'buckled' to 'blatant threats' that Saudi cooperation in the fight against terror would end unless the ...investigation was dropped."
On 24 April the SFO was granted leave to appeal to the House of Lords against the ruling. There was a two-day hearing before the Lords on 7 and 8 July 2008. On 30 July the House of Lords unanimously overturned the High Court ruling, stating that the decision to discontinue the investigation was lawful.
OECD investigation
The OECD sent their inspectors to the UK to establish the reasons behind the dropping of the investigation in March 2007. The OECD also wished to establish why the UK had yet to bring a prosecution since the incorporation of the OECD's anti-bribery treaty into UK law.
US Department of Justice investigation
On 26 June 2007 BAE announced that the United States Department of Justice had launched its own investigation into Al Yamamah. It was looking into allegations that a US bank had been used to funnel payments to Prince Bandar. The Riggs Bank has been mentioned in some accounts. On 19 May 2008 BAE confirmed that its CEO Mike Turner and non-executive director Nigel Rudd had been detained "for about 20 minutes" at George Bush Intercontinental and Newark airports respectively the previous week and that the DOJ had issued "a number of additional subpoenas in the US to employees of BAE Systems plc and BAE Systems Inc as part of its ongoing investigation". The Times suggests that, according to Alexandra Wrageof Trace International, such "humiliating behaviour by the DOJ" is unusual toward a company that is co-operating fully.
Under a plea bargain with the US Department of Justice BAE was sentenced in March 2010 by US District Court Judge John D. Bates to pay a $400 million fine, one of the largest fines in the history of the DOJ. US District Judge John Bates said the company's conduct involved "deception, duplicity and knowing violations of law, I think it's fair to say, on an enormous scale". BAE was not convicted of bribery, and is thus not internationally blacklisted from future contracts.
SOURCE: Wikipedia
SOURCE: Wikipedia
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