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How Saudi slush kept UK aero biz afloat

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Analysis The long-smouldering debate around allegations of corrupt British arms deals with Saudi Arabia reignited yesterday, as both the Guardian and the Beeb published the results of new investigations.

To recap: back in 1986, the Saudis agreed with the British government to buy a large amount of military hardware from UK firms under a long-term deal called al-Yamamah ("the dove").

The majority of the kit consisted of Tornado combat jets from the company then known as British Aerospace plc: both low-level strike versions intended to deliver the JP233 runway-denial landmine system, and the F3 fighter variant.

The JP233 and low-level runway attack doctrine are now widely viewed as suicidal, after RAF Tornados were decimated while using such tactics against Saddam Hussein's airbases in 1991. The RAF has since binned JP233 and re-equipped its Tornado bombers for higher-altitude work.

The Tornado F3 fighter was a laughing-stock from the moment it entered RAF service. Nonetheless, the RAF was forced to buy far more F3s than it wanted. As of 2004 the RAF had fewer than 90 F3s flying: 170 were bought during the 1980s and 1990s. The defective jets only reached a reasonable level of serviceability in the early to mid-90s according to some analyses (pdf), when their ever-troublesome Foxhunter targeting radars finally acquired Non-cooperative Target Recognition (NCTR) capability - lack of which, among other things, had kept British F3s out of the air fighting in 1991. The Tornado F3 started retiring from RAF service in 2005, scarcely 10 years after it had been brought to a somewhat combat-worthy state.

(The original F2 airframes first delivered to the RAF were even worse, in that they had no radar at all; just cement ballast in their empty nose cones. This was wryly dubbed "Blue Circle radar," in an allusion to the Sea Harrier's Blue Fox and Blue Vixen sets - and the well-known cement company.)

Despite the poor performance and reputation of the Tornados, the Saudis have continued to pay huge sums under al-Yamamah right up until the present day - more than £40bn to British Aerospace. The firm is nowadays known as BAE Systems, as it is no longer very British (only a third of its employees are today in the UK) nor does it only deal in sky weaponry, having moved into warships, submarines, armour, artillery etc etc.

Allegations of corruption surrounding the al-Yamamah deal surfaced almost immediately, and in 1989 the UK National Audit Office investigated. Uniquely, the report of the investigation remains secret to this day; a fact which may not be unconnected to the second stage of al-Yamamah having been signed the year before. By this point the British civil aircraft industry (which still existed at that date, and was owned by BAE) was only being kept in existence by al-Yamamah.*

Despite the suppression of the NAO report, the stink around the British arms industry and the Saudis never really went away. The Minister for Defence Procurement and later chief secretary to the Treasury, Jonathan Aitken, unwisely resigned from government in 1995 to bring a libel action against the Guardian and Granada TV for exposing his involvement in the UK-Saudi arms trade. He was cuffed and jailed in 1999 for repeatedly lying on oath during the failed libel case.

In 2001, the Guardian began taking the fight to BAE and the UK government, wheeling out whistleblowers and detailed investigations. Roman-Empire levels of excess were revealed, with BAE having picked up the tab for cargo planes full of Bond Street shopping, companionship from lingerie models and actresses, and lord knows what else. In 2002, the UK passed laws against corrupt payments to overseas officials.

Finally, in 2004, the UK Serious Fraud Office launched a new investigation. The Ministry of Defence (MoD), however, had full access to the investigation via the participation of the MoD police force.

By the summer of 2006, it was thought that the SFO/MoD-plod/Guardian probe might be getting somewhere, with Swiss authorities reportedly on the verge of yielding access to key bank information.

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