Updated The UK High Court has ruled that a controversial government decision to stop investigating allegations of arms industry bribery in Saudi Arabia violated both British and international law. Despite the judgement, it remains unclear whether the investigation will restart.

The judicial review took place as a result of legal action by campaign groups The Corner House and Campaign Against Arms Trade, following the decision in late 2006 by the Serious Fraud Office (SFO) to close its probe into long-running allegations that UK-headquartered arms multinational BAE Systems bribed Saudi officials. The SFO was brought under significant pressure to drop the investigation by the Blair government, who said that the embarrassment caused to Saudi royals would cause damage to British intelligence-gathering and so endanger national security.

The activists' lawyers argued successfully that the SFO decision was unlawful, in that it breached international anti-corruption rules to which the UK is signatory. The campaigners also contended that British politicians had improperly leant on the SFO during the decision-making process, that the Saudis themselves had violated international law by threatening the UK government, and that the SFO caving in had effectively undermined the rule of law in the UK.

During hearings in February, SFO representatives said they had been told that continuance of its Saudi probe would risk the loss of "British lives on British streets" in "another 7/7", and that this was why the investigation was deep-sixed.

Many analysts felt that the British government's desire to be chums with the Saudis might have stemmed as much from a desire to sell them more weapons as from a desperate need for Saudi intel on jihadi terrorism. The Saudis duly inked a deal for 72 partly-British Eurofighter jets last September.

The courts have now said in effect that the SFO investigation should never have been stopped; but it remains unclear whether it will be restarted. Since the legal action was launched, the UK government has drafted legislation which would allow an Attorney General to close down such investigations as he or she saw fit on "national security" grounds. If the draft becomes law, the British courts would be unable to make the ruling they have just made.

Contacted by the Reg this morning, an SFO spokesman said that the Office was "carefully considering the the implications of the the judgement, and the way forward from here". No comment could be offered on when a decision might be forthcoming, suggesting that the SFO may not be considering this issue without consulting its ultimate bosses.

All eyes will now be on the Brown government. On the one hand, the proposed new powers to leash plods on national-security grounds are a Brown law. On the other, it was Brown who decided last year to close down the controversial Defence Export Sales Organisation (DESO*).

Many of the allegedly corrupt payments in the Saudi case moved through accounts controlled by DESO officials, including vast sums which passed to Prince Bandar al-Saud while he was ambassador to America. The Prince does not deny that he received over $1bn, but says that the payments were legit. Nonetheless, SFO files leaked after the UK probe was dropped in 2006 have led US investigators to start their own investigation.

Now, however, DESO's functions are to move out of the MoD and into the new biz ministry - a move much lamented by BAE Systems and the rest of the UK arms sector. So Brown may not be quite as reliable a friend to BAE as Tony Blair was. ®

Update

The High Court judgement by Lord Justice Moses and Mr Justice Sullivan can be read online. In it, the two senior beaks say that Tony Blair and his government surrendered abjectly to threats from Prince Bandar, a man who was and remains under investigation.

A threat [was] made by an official of a foreign state, allegedly complicit in the criminal conduct under investigation, and, accordingly, with interests of his own in seeing that the investigation ceased ... The defendant [who is] in reality the Government ... contends that the [SFO] Director was entitled to surrender to the threat.

The court must, so it is argued, accept that whilst the threats and their consequences are "a matter of regret", they are a "part of life". So bleak a picture of the impotence of the law invites at least dismay, if not outrage ... However abject the surrender to that threat [says the government] the court must itself acquiesce in the capitulation.

[But] an independent prosecutor is not entitled to surrender to the threat of a third party, even when that third party is a foreign state ... Surrender merely encourages those with power, in a position of strategic and political importance, to repeat such threats ... those who wish to deliver a threat designed to interfere with our internal, domestic system of law, need to be told that they cannot achieve their objective.

No-one suggested to those uttering the threat that it was futile, that the United Kingdom's system of democracy forbad pressure being exerted on an independent prosecutor whether by the domestic executive or by anyone else.

If, as we are asked to accept, the Saudis would not be interested in our internal, domestic constitutional arrangements ... it is not difficult to imagine what they would think if we attempted to interfere with their criminal justice system.

The Director and Government failed to recognise that the rule of law required ... resistance to the pressure exerted by means of a specific threat. That threat was intended to prevent the Director from pursuing the course of investigation he had chosen to adopt. It achieved its purpose.

The Director was required to satisfy the court that all that could reasonably be done had been done to resist the threat. He has failed to do so. He submitted too readily because he, like the executive, concentrated on the effects which were feared ... It is the failure of Government ... that justifies the intervention of this court ... On 11 December 2006, the Prime Minister [Tony Blair] said that this was the clearest case for intervention in the public interest he had seen.

We agree.

Bootnote

*DESO was a large bureau, nominally part of the Ministry of Defence but directed and partly staffed by seconded arms biz people, which used extensive UK military and Treasury resources to sell British or partly-British weapons abroad.

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