UK ‘unlawfully’ scrapped BAE probe

UK government ‘placed justice system at risk’

By Megan Murphy, Law Courts Correspondent

Published: April 10 2008 20:28 | Last updated: April 10 2008 20:28

What started as a David versus Goliath challenge, brought by a group of activists dismissed as “treehuggers”, on Thursday culminated in a damning condemnation of the government that is likely to reverberate for years to come.

Even the most optimistic of campaigners from Corner House Research and the Campaign Against Arms Trade could not have expected to hear one of Britain’s most senior judges castigate officials – including a former prime minister – for placing the entire criminal justice system under threat.

The judicial review into the Serious Fraud Office’s decision to scrap a corruption probe into arms deals between BAE Systems and Saudi Arabia was as close to a blow-by-blow account of the government’s backroom dealings as is likely to be put forward. When the investigation was abandoned in December 2006, the government repeatedly defended its decision as a matter of national security.

What the judicial review exposed was the seriousness of the threats voiced by the Saudi government – allegedly led by Prince Bandar bin Sultan – as they pressed Tony Blair’s administration to scrap the investigation.

The key players

Tony Blair,
former prime minister
December 15 2006
Says he takes full responsibility for decision to halt the investigation: ‘I have no doubt at all that had we allowed things to go forward, we would have done immense damage to the true interests of this country, leaving aside the fact that we would have lost thousands of highly skilled jobs and very, very important business for British industry.’

Robert Wardle,
outgoing SFO head
December 14 2006
Says the decision to drop the probe was 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.’

Prince Bandar,
former Saudi ambassador in US
July 2006
Meets Jonathan Powell, Tony Blair’s former chief of staff, at Downing Street and threatens to cancel £20bn contract for Typhoon aircraft unless the investigation is scrapped. Also threatens to pull co-operation on counter-terrorism and intelligence operations.

Lord Goldsmith,
former attorney-general
December 14 2006
Announces the SFO’s decision to scrap probe. OECD’s anti-bribery convention ‘precludes me and the Serious Fraud Office from taking into account considerations of the national economic interest or the potential effect upon relations with another state, and we have not done so’.

Mike Turner,
BAE chief executive
October 2005
BAE writes to then attorney-general Lord Goldsmith urging him to scrap the investigation. It refers to a £20bn contract to supply Typhoon aircraft to the Saudis, and says that the probe ‘would almost inevitably prevent the UK securing its largest export contract in the last decade’.

Prince Bandar, the former Saudi ambassador to Washington and the son of Saudi Arabia’s crown prince, has denied receiving more than £1bn of bribes from BAE in connection with the arms deals.

Previously confidential memos released during the case show that SFO investigators were told they faced “another 7/7” and the loss of “British lives on British streets” if Saudi co-operation on intelligence – such as the monitoring of suspected terrorists – was withdrawn.

But what also emerged were consistent references by senior figures to the potentially devastating commercial consequences of pressing forward with an investigation that was equally unpopular with BAE Systems, Britain’s largest defence contractor.

The £43bn Al-Yamamah arms deal between London and Riyadh is Britain’s largest export agreement, securing thousands of jobs in a key industry.

At the time the investigation was dropped, the Saudi government was in the middle of negotiating a £20bn contract for the purchase of 72 Eurofighter Typhoon jets.

Confidential documents released during the judicial review hearing detail BAE’s efforts to derail the inquiry as early as November 2005 in a confidential letter to Lord Goldsmith, then attorney-general. The defence contractor claimed the investigation was straining UK-Saudi relations and placing the arms programme at risk.

“It would almost inevitably prevent the UK securing its largest export contract in the last decade...with the consequent adverse consequences for the UK economy in general and employment,” the company wrote. BAE has consistently denied any wrongdoing with respect to the Al-Yamamah programme.

Eight months later, when Saudi officials learnt the SFO probe might have ex-tended to Swiss bank accounts, Prince Bandar allegedly threatened to withdraw the Typhoon contract, in a private meeting with Jonathan Powell, Mr Blair’s former chief of staff.

Less than a week before the investigation was scrapped, he again met Foreign Office officials after beginning negotiations for the purchase of alternative aircraft with Jacques Chirac, the former French president.

Mr Blair noted the “critical difficulty presented to the negotiations over the Typhoon probe” in a note to Lord Goldsmith on December 8 2006, urging him to re-consider halting the inquiry.

“It is my judgment on the basis of recent evidence and the advice of my colleagues that these developments have given rise to the real and immediate risk of a collapse in UK/Saudi security, intelligence and diplomatic co-operation,” wrote Mr Blair. “This is likely to have seriously negative consequences for the UK public interest in terms of both our national security and our highest priority foreign policy objectives in the Middle East.”

The SFO announced its decision six days later. The SFO and Lord Goldsmith insisted the decision was made exclusively on national security grounds.

Robert Wardle, outgoing head of the SFO, told parliament “no weight” had been given to either commercial interests or the national economic interest.

Lord Justice Moses and Mr Justice Sullivan on Thursday excoriated not the substance of the Saudi Arabian threat, but officials’ abject failure to counter it. By failing to exhaust all efforts to rebuff the threats, the government had placed the criminal justice system itself at risk, requiring judicial intervention at the highest level, said the judges.

“No one suggested to those uttering the threat that it was futile, that the United Kingdom’s system of democracy forbade pressure being exerted on the independent prosecutor whether by the domestic executive or by anyone else; no one even hinted that the courts would strive to protect the rule of law,’’ the judges said.

Ministers now face intense pressure to reopen the probe, or to convene a public inquiry into how the SFO reached its decision. The High Court is expected to order the SFO to reconsider its actions.

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UK ‘unlawfully’ scrapped BAE probe

By Michael Peel, Megan Murphy, George Parker and Sylvia Pfeifer

Published: April 10 2008 11:13 | Last updated: April 10 2008 21:24

Ministers on Thursday night vowed to drive through unprecedented statutory powers to shut down investigations on national security grounds, just hours after the High Court said the government had broken the law by scrapping a probe into arms deals between BAE Systems and Saudi Arabia.

Two top judges delivered a fierce rebuke to the government for “failing to recognise the rule of law” and allowing a foreign nation to “pervert the course of justice” in a case that triggered global condemnation.

“So bleak a picture of the impotence of the law invites at least dismay, if not outrage,” said Lord Justice Moses in the High Court in London, as he ruled that the Serious Fraud Office had illegally allowed threats by Saudi officials to derail the bribery probe, which was scrapped in December 2006.

The judge is expected to order the SFO to reconsider its decision to stop the case, which has since spawned probes by the US Department of Justice, Swiss authorities and others. The SFO, which is still investigating allegations of bribery against BAE in six other countries, said it was considering its response but Whitehall officials said they expected it would challenge such a decision.

BAE timeline

September 1985: First phase of ‘Al Yamamah’ arms deal
November 2004: BAE Systems confirms it is being investigated by the SFO
December 2006: Attorney- general Lord Goldsmith announces that SFO is discontinuing its probe, on grounds of national security
June 2007: BAE Systems says that it is under investigation by the US justice department
April 2008: Campaign groups win their legal challenge over the SFO decision to drop case

The SFO suspended its bribery probe into BAE’s “Al Yamamah” arms programme with the Saudi government – apparently after threats from Prince Bandar bin Sultan, former Saudi ambassador to Washington, that Riyadh would withdraw co-operation on intelligence and cancel the £20bn deal with Saudi Arabia to supply 72 Eurofighter Typhoons.

The Saudi intervention came after it became clear the Serious Fraud Office was about to obtain access to Swiss bank accounts that investigators thought were linked to payments to agents.

Prince Bandar allegedly received more than £1bn of payments from BAE. The company and Prince Bandar have both denied wrongdoing.

In his judgment, Lord Justice Moses said that the threat was made directly to Jonathan Powell, chief of staff to the then prime minister Tony Blair. The government did not challenge reports that Prince Bandar made the threats, telling the court to base its judgment on “the facts alleged by the claimants”.

The judgment later stated “Had such a threat been made by one who was subject to the criminal law of this country, he would risk being charged with an attempt to pervert the course of justice.” Prince Bandar did not participate in the case.

Confidential documents released during the case showed that, following the Saudi warning, Mr Blair urged the scrapping of the probe in spite of a warning by Lord Goldsmith, then attorney-general, that it would send a “bad message”. The former prime minister also resisted suggestions that BAE might be allowed to plead guilty to lesser offences.

The ministry of justice said on Thursday it would press on with a bill to give the attorney-general statutory powers to block corruption investigations on national security grounds. In this case, the government could only pressure the SFO.

Corner House Research, one of the two pressure groups that brought the High Court case, said the proposals were a “cynical” response.

BAE Systems declined to comment on a case in which it said it had “played no part”.

Lord Justice Moses told the court. “No-one, whether within this country or outside, is entitled to interfere with the course of our justice. We intervene in fulfilment of our responsibility to protect the independence of the director and of our criminal justice system from threat.”

The government declined to comment on Thursday night.