Arms giant BAE lobbied Fraud Office to stop investigation

Arms giant BAE lobbied Fraud Office to stop investigation

By agency reporter
15 Feb 2008

Documents released in the High Court yesterday show that Britain’s biggest arms company, BAE Systems, wrote to the Attorney General on a "strictly private and confidential" basis urging him to halt the Serious Fraud Office investigation into allegations that BAE had bribed Saudi officials to secure the Al Yamamah arms deal.

The company argued that the investigation should be dropped on commercial and diplomatic grounds in letter from Michael Lester, Group Legal Director, BAE Systems, to Lord Goldsmith, Attorney General, on 7 November 2005, ("BAE Systems plc ('the Company'), SFO Investigation, Memorandum for Attorney General", RW4, pages 3-7.)

The documents were released as part of a judicial review being brought by Campaign Against Arms Trade (CAAT) and The Corner House, who argue that the decision to drop the investigation was illegal. The case is being heard in the High Court today and tomorrow (14-15 February) before Lord Justice Moses and Mr Justice Sullivan.

BAE's "Memorandum for Attorney General" set out "the reasons why the Company considers it not to be in the public interest for the SFO investigation . . . to continue." It argues that the continued investigation would "adversely and seriously affect relations between the UK and Saudi Arabia" and would jeopardise the multibillion-pound sale of Typhoon aircraft.

This Memorandum triggered a consultation within government departments on the "public interest" aspects of the investigation, even though it had been sent by BAE itself - the very subject of that criminal investigation.

The Serious Fraud Office began its investigation into the Saudi arms deals in November 2004, but the BAE letters released today were only written one year later in response to an SFO order that BAE disclose its payments to agents and consultants involved in the Saudi arms deals.

BAE expressed concern in the released Memorandum that the Saudis would view disclosure of documents to the SFO as a breach of confidentiality and trust (although it admitted that similar information about “the names of consultants engaged by the Company and the amounts paid to them” had previously been provided to the Inland Revenue, apparently without any adverse commercial or diplomatic consequences").

Nowhere did BAE mention the issue of 'national security'.

Another document released today indicates that even the representations subsequently made by government departments to the SFO on the public interest aspects of the investigation were made at BAE's instigation.

Robert Wardle notes of a telephone conversation with BAE's Legal Director, Michael Lester, that BAE "would make further representations to the Ministry [of Defence] for them to make representations to us [the Serious Fraud Office]".

Nicholas Hildyard of The Corner House commented: "Even though it was the subject of the criminal investigation, BAE brazenly tried to stop the Serious Fraud Office from doing its job. Nor was it alone. The letters released today reveal the hand-in-glove relationship between BAE and its friends in government. What's more, it's clear from these documents that ‘national security’ -- the reason ultimately given for pulling the plug on this investigation -- was trotted out as a concern only when all these other special pleadings of commercial and diplomatic consequences had failed.”

Symon Hill of Campaign Against Arms Trade added: “This is absurd. A criminal investigation was dropped at the request of the people accused of the crime. The whole BAE saga is becoming more and more like an episode of Yes, Minister. Britain's democracy, economy and security will all be better off when BAE is no longer calling the shots.”

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