Saudi Arabia, Corruption and the British Arms Company, BAE

Posted on January 26, 2007


Britain censured over decision to drop BAE Saudi corruption inquiry

by Rob Evans in Paris
Friday January 19, 2007
The Guardian

The (British) government was severely criticised yesterday by the international community’s leading anti-bribery watchdog for halting a corruption investigation into the arms company BAE.

The public expression of “serious concern” came after Tony Blair claimed this week that Britain had done more than any other country in recent years to root out international corruption. He has taken responsibility for the controversial decision to terminate the Serious Fraud Office’s (SFO) inquiry into allegations that BAE paid bribes to Saudi royals.

Yesterday’s criticism was made by the Organisation for Economic Cooperation and Development (OECD) which enforces an international treaty to stamp out the payment of bribes to win contracts.

Officials from 35 countries agreed they had “serious concerns” that the government could have broken the treaty. Britain has been given two months to provide further explanations before the group decides what to do. [More]

Please click here to watch the BBC videos on this incident:
Part 1 of 2 of the Saudi/UK Corruption:

Part 2 of 2 of the Saudi/UK Corruption:

Here are more details from a previous Guardian article dated December 17, 2006:

The SFO was investigating claims that Saudi officials enjoyed prostitutes and luxury holidays paid for by a £60m ‘slush fund’ administered by BAE Systems, which supplied Tornado fighters under the Al-Yamamah arms deals of the 1980s and 1990s. BAE and the Saudis have denied any wrongdoing.

Laurence Cockcroft, director of the anti-corruption watchdog Transparency International, described the government’s decision to call off the SFO as ‘a tremendous step backwards. […] To suspend an investigation which isn’t even completed is really quite remarkable,’ he said. [more]

Why was there a direct intervention by Tony Blair to stop this investigation and cover this scandal?

An editorial from the Guardian clarifies it for us:

Although the intervention of the attorney general, Lord Goldsmith, means that the courts are now unlikely to hear details of alleged slush funds and call girls, the public would be forgiven for suspecting that the defence contract stank to high heaven. The Saudis would prefer not to have baskets full of allegedly dirty linen washed in public and Labour has duly halted the inquiry.

What does this say about the interface between politics and economics? Firstly, that there are some countries you bully and some countries you don’t. There is a world of difference in getting tough with, say, Ethiopia, over its standards of government procurement and doing the same with the world’s biggest oil producer. Abuses of human rights are always less serious in a big country with clout (eg China) than in a country where the high moral ground can be occupied without fear of economic consequences (eg Zimbabwe). But it is good to have double standards so clearly highlighted.

The government’s argument that its appeasement was due to concerns about national security, rather than fear that BAE would lose a £6bn contract for the next phase of the Al-Yamamah deal, suggests delusions of grandeur. What matters in the geopolitics of the Middle East is the relationship between Saudi Arabia and the United States; anything Britain does is a sideshow. The idea that the Saudis would abandon their pro-west stance because a few executives came up before the UK courts is risible.

No, this was really about money. With Britain’s own oil and gas reserves falling, Whitehall has justifiable concerns about energy security. Saudi is the world’s No 1 supplier of oil and is too powerful to upset. Given that Russia has the world’s biggest reserves of gas, those expecting the incorruptible British justice system to deliver up the killers of Alexander Litvinenko may be in for a long wait. [more]

Please click here to read the whole article from the Guardian: Britain censured over decision to drop BAE Saudi corruption inquiry

Here are more links to articles related to this issue:

1. Fury grows over move to end arms inquiry.
2. Ethics are dead, Long live BAE!

Finally, it is interesting that even the U.S. State Department concurs about the climate of corruption and unethical behavior prevailing among the royal family and its ancillaries in Saudi Arabia. In its 2005 report, the US State Department has the following statement on government corruption and lack of transparency in Saudi Arabia:

“There was a widespread public perception of corruption on the part of some members of the royal family and the executive branch of the government. The absence of transparency in government accounts and in decision making encouraged this perception. There are no laws providing for public access to government information. Information concerning specific instances, allegations regarding corruption, or government actions against corruption was not available to the public. ”

Unfortunately, Saudi Arabia is not the only Muslim country to lag in ethics. To read more about ethics and corruption in Muslim countries, please click here.

You may wish to compare BAE’s behavior to its ethical pronouncements on its own website. Click here to read BAE’s stance on ethics.

More about corruption: Drug trafficking by a member of the Saudi Royal family

Oct 15, 2004: A Saudi prince moved roughly two tons of cocaine from Colombia to an airport outside Paris, using his diplomatic status and a royal family 727 jet, U.S. and French law enforcement authorities told ABC News. “It doesn’t happen without him,” said Tom Raffanello of the Drug Enforcement Agency in Miami. “He is the key co-conspirator. He’s the straw that stirs the drink, he made it happen. No plane, no dope. Dope stays in Colombia.”

Prince Nayef bin Fawwaz Al Shalaan is under indictment by U.S. and French authorities, but living outside the reach of American law in Saudi Arabia, according to Raffanello. The United States and Saudi Arabia have no extradition treaty. A trial for the prince’s alleged co-conspirators is scheduled to begin next month in a federal court in Miami. […]

Again, in a case similar to the British BAE case above, Fabrice Monti, a former French police investigator, said the powerful Saudi interior minister, Prince Nayef bin Abdel Aziz, actually threatened to cancel certain business deals with the French government if the narcotics investigation of a fellow prince continued. “The Saudi government acted as one to set up a protective barrier between the prince and French justice and threatened to not sign a very important and lucrative contract in the works for a very long time,” said Fabrice Monti, who has written a book on the subject.

Please click here to read the whole article from ABC News.