International watchdog raps UK on arms corruption case

By agency reporter
21 Oct 2008

The OECD's Anti-Bribery Working Group, an international watchdog which monitors corruption, has held that the UK authorities breached their obligations under international law when they cancelled a Serious Fraud Office (SFO) investigation into arms deals between BAE Systems and Saudi Arabia.

The Corner House and the Campaign Against Arms Trade (CAAT) have welcomed the news as a vindication of their judicial review of the decision.

The OECD report released on 17 October 2008 recommends that the UK authorities consider reopening the investigation. The report states that the OECD's "serious concerns" that the decision to drop the investigation in December 2006 was not consistent with Article 5 of the International Anti-Bribery Convention have only been “reinforced and intensified”. The Working Group stated that does not believe that the decision of the House of Lords in July this year at the end of the judicial review process allays these concerns.

The report notes the "effect on the whole process" leading up to the SFO decision of the commercial considerations repeatedly mentioned by the then Prime Minister, Tony Blair. It also finds that the SFO's Director, Robert Wardle, had been given insufficient access to security advice before he declared the investigation dropped on grounds of "national security". Instead, he was left to consult the UK's Ambassador to Saudi Arabia, who had himself been involved in arms deal negotiations, which "could give rise to concerns about unconscious bias or perceptions of partiality".

Symon Hill of Campaign Against Arms Trade said: "We're delighted. This is brilliant news for everyone who cares about justice and democracy. CAAT, The Corner House and the many, many people who supported us have been vindicated. Might is not right. Arms dealers are not above the law. The government must put public interest and international law ahead of subservience to the arms industry."

Nicholas Hildyard of The Corner House commented: “The OECD's damming rebuke bears out what anti-corruption activists have been saying all along: the UK government has a big mouth when it comes to the rhetoric, and in telling the rest of the world what to do, but it doesn’t practise what it preaches. In fact, it takes action to do precisely the opposite. Parliament should urgently review the political, legal and constitutional issues raised without delay. There is an urgent need to strengthen parliamentary scrutiny of the advice upon which any decision to halt a criminal prosecution or investigation on national security grounds is taken."

Commenting more broadly, the OECD's scathing report describes the UK's laws on tackling corruption as "defective". It says that the draft Constitutional Renewal Bill, which would allow the attorney-general to cancel a foreign bribery investigation or prosecution on asserted national security grounds, “could seriously weaken public accountability” and” would represent a serious backward step in this area.” Today, the Prime Minister will receive a petition of over 2,000 signatures calling for the proposal to be scrapped.

The report also questions whether the government's Export Credits Guarantee Department (ECGD) should be underwriting arms deals with Saudi Arabia in the light of the allegations about corruption. CAAT and The Corner House have long called for the ECGD not to use taxpayers' money to underwrite arms deals and to ensure that it does not underwrite bribery.

On 14 December 2006, the government and the Serious Fraud Office declared that they were dropping an investigation into BAE's Saudi arms deals. CAAT and The Corner House brought a judicial review hearing against the SFO decision. On 10 April 2008, the High Court ruled that the decision was unlawful, although on 30th July 2008, the House of Lords overturned this ruling on the grounds that the SFO Director was exercising his legal discretion.

The OECD Anti-Bribery Convention (the “OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions”) is a multilateral treaty aiming to ensure that all 30 OECD (Organisation for Economic Cooperation and Development) countries, as well as 7 other non-member signatory countries, present a combined and united front against bribery and corruption of foreign public officials. The UK signed the Anti Bribery Convention in 1997.

Article 1 of the Convention requires parties to make it a criminal offence to bribe a foreign public official. The UK did so in the 2001 Anti-Terrorism, Crime and Security Act.

Article 5 makes provisions to enforce Article 1. It rules out the termination of corruption investigations on grounds other than the merits of the case. Signatory governments specifically undertake not to be influenced "by considerations of national economic interest, the potential effect [of an investigation or prosecution] upon relations with another State or the identity of the natural or legal person involved" in deciding whether to terminate an investigation.

The OECD’s Working Group on Bribery comprises public servants from the 37 signatories to the Convention. It monitors parties’ performance in implementing the Convention through a peer review process to which parties agree when they sign and ratify the Convention. The monitoring process usually comprises just two stages: Phase 1 assesses legislation and Phase 2 examines overall implementation. In rare cases, however, where countries fail to meet their commitments, a follow-up evaluation of key weaknesses, Phase 2 bis, is carried out, which is what the OECD published last week.

The Campaign Against Arms Trade (CAAT) works for the reduction and ultimate abolition of the international arms trade. The Corner House is an environmental and social justice NGO.

The full text of the report by the OECD Anti-Bribery Working Group can be read at http://www.oecd.org/dataoecd/23/20/41515077.pdf

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