BAE accused of secretly paying £1bn to Saudi prince

When an inquiry by the Serious Fraud Office (SFO) was launched into the transactions behind the £43bn Al-Yamamah arms deal, the SFO is understood to have uncovered that BAE secretly paid Prince Bandar of Saudi Arabia more than £1bn in connection with Britain's biggest ever weapons contract.

It is alleged by insider legal sources that the money was paid to Prince Bandar with the knowledge and authorisation of Ministry of Defence officials under the Blair government and its predecessors. For more than 20 years, ministers have claimed they knew nothing of secret commissions, which were outlawed by Britain in 2002.

This investigation was halted last December after the intervention of Lord Goldsmith who said it was "in Britain's national interest" to halt the investigation as there was little chance of achieving a conviction. Blair announced that he took "full responsibility" for the decision.

However, according to those familiar with the discussions at the time, Lord Goldsmith had warned colleagues that British "government complicity" was in danger of being revealed unless the SFO's corruption inquiries were stopped.

The abandonment of the investigation provoked an outcry from anti-corruption campaigners, and led to the world's official bribery watchdog, the OECD, launching its own investigation.

The fresh allegations may also cause BAE problems in America, where corrupt payments to foreign politicians have been outlawed since 1977.

So both Goldsmith and Blair were being - and I'm being polite here - less than truthful when they stated that they were acting in Britain's best interests and merely concerned that a prosecution would fail, they were actually acting to hide several British government's complicity in an act of possible illegality.

According to legal sources familiar with the records, BAE Systems made cash transfers to Prince Bandar every three months for 10 years or more.

BAE drew the money from a confidential account held at the Bank of England that had been set up to facilitate the Al-Yamamah deal. Up to £2bn a year was deposited in the accounts as part of a complex arrangement allowing Saudi oil to be sold in return for shipments of Tornado aircraft and other arms.

Prince Bandar has always been a colourful figure and is so close to the Bush family that he is nicknamed Bandar Bush. Indeed, such is his closeness to the Bush's that shortly after 9-11, at a time when all air travel was banned in the United States, he was able to persuade George Bush to allow several prominent Saudi Arabians to fly out of the country, including members of bin Laden's family. So this man is seriously well connected.

Neither Bandar nor BAE were keen yesterday to shed any light on these massive payments:

Prince Bandar, currently head of the country's national security council, was asked about the alleged payments by the Guardian this week.

He did not respond.

BAE Systems also would not explain the alleged payments. The company said: "Your approach is in common with that of the least responsible elements of the media - that is to assume BAE Systems' guilt in complete ignorance of the facts."

Its spokesman, John Neilson, added: "We have little doubt that among the reasons the attorney general considered the case was doomed was the fact that we acted in accordance with ... the relevant contracts, with the approval of the government of Saudi Arabia, together with, where relevant, that of the UK MoD."

The attorney general's office would not discuss claims about Lord Goldsmith's concerns of "government complicity" in the payments.

A spokesman said the SFO inquiry had been halted because of the "real and serious threat to national security".

What possible threat is there "to national security" by investigating whether bribes have been paid to secure arms deals? As so very often happens the Blair government appear to consider their personal embarrassment as "a matter of national security" to be avoided at all costs.

And BAE are no doubt telling the truth when they say that they had the approval of the MoD, but that doesn't automatically make what they were doing legal, it merely makes the MoD complicit in their possible illegality.

The Deputy leader of the Liberal Democrats last night called for an enquiry:

This is potentially more significant and damaging than anything previously revealed. It is unforgivable if the British government has been actively conniving in under-the-counter payments to a major figure in the Saudi government.

"There must be a full parliamentary inquiry into whether the government has deceived the public and undermined the anti-corruption legislation which it itself passed through parliament."

He added: "It increasingly looks as if the motives behind the decision to pull the SFO inquiry were less to do with UK national interests but more to do with the personal interests of one of two powerful Saudi ministers ... Tony Blair's claims that the government has been motivated by national security considerations look increasingly hollow."

Nor is the criticism only coming from the other side of the chamber:

Labour MP Roger Berry, head of the House of Commons committee which investigates strategic export controls, told the BBC that the allegations must be properly investigated.

If there was evidence of bribery or corruption in arms deals since 2001 then that would be a criminal offence, he said.

He added: "It's bad for British business, apart from anything else, if allegations of bribery popping around aren't investigated."

So, as Blair heads for the door, yet another sleazy truth leaks. And Blair once again claims that he is concerned with "national security" when the truth is much more mundane. He is using "national security" as a way of covering the fact that his government have been involved, by the very least by turning their back to, a series of payments that they knew were probably bribes.

One also wonders how this will effect British credibility as we demand that African nations cut out corruption whilst turning a blind eye to it at the highest levels of government when it occurs on our shores.

However, there will be no enquiry, just as Blair will allow no enquiry into the political decisions that led to the Iraq war. He will hide behind the excuse of national security and forbid any investigation into this. The man who said his government would be "whiter than white" is leaving office covered in stains.

Timeline:

Story of a £43bn deal

1985 Al-Yamamah agreement signed by Saudi defence minister Prince Sultan and the then defence secretary Michael Heseltine. Saudis agree to buy 72 Tornado and 30 Hawk warplanes. The deal - "the dove" in Arabic - will in time be worth £43bn to BAE

1989 National Audit Office (NAO) starts inquiry into allegations that members of Saudi royal family and middlemen were secretly paid huge bribes to land Al-Yamamah contract

1992 MPs and auditor general Sir John Bourn suppress NAO report after government claims it would upset Saudis. Report never published

2001 Whistleblower alleges BAE operates "slush fund" to keep sweet the Saudi prince in charge of country's air force, but MoD covers up allegations

2004 Second whistleblower discloses to Guardian further details of slush fund. Serious Fraud Office starts investigation into alleged BAE corruption

2006 Government halts SFO inquiry; investigators were about to gain access to Swiss accounts thought to have been linked to Saudi royal family

2007 OECD, the world's anti-bribery watchdog, rebukes Blair government for terminating SFO investigation, and launches own inquiry

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