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How Saudi slush kept UK aero biz afloat

Surplus Eurofighters could be dropped on high-living Saudis

The SFO also pointed out that the Guardian in particular had been intimately involved in the investigation from the beginning. Indeed, the paper had supplied the information which led the SFO to move in the first place.

It's understood that the head of the SFO, in an interview to be broadcast on Panorama next Monday, has expressed the view that the details of the payments are not sufficient to win convictions even though some transactions date since the anti-corruption legislation of 2002.

This is thought to be because the payments were fully authorised by the British government and laid down in the al-Yamamah agreements; also because of the difficulty of distinguishing between corrupt payments to overseas individuals and legitimate ones into foreign government accounts.

The BBC quotes David Caruso, an investigator who worked for the American bank where the accounts were held:

"There wasn't a distinction between the accounts of the embassy, or official government accounts as we would call them, and the accounts of the royal family." Unsurprisingly, as the al-Saud family really are the government: it's Saudi Arabia, after all. The situation is as if Britain were called "Windsor Europe," and the Queen's family - rather than being junior army officers, theatrical types, polo players etc - held all important government jobs.

Prince Bandar's lawyers told the Guardian that the payments via the Washington embassy accounts in no way "represented improper secret commissions or 'backhanders'".

The Prince's position is that the cash went to Saudi government accounts of which he was a signatory. "Any monies paid out of those accounts were exclusively for purposes approved by [the Saudi defence ministry]."

Prince Bandar's reps insisted that all the payments were "pursuant to the al-Yamamah contracts."

When contacted by the Reg defence desk, BAE Systems' rep rather worryingly said: "We know who you are." But this turned out to be because of this book rather than any corporate spies at the Reg.

The company then offered the following comment: "All the information regarding the Al Yamamah contract in our possession has been made available to the Serious Fraud Office over the last two and a half years and, after an exhaustive investigation, it was concluded, over and above the interests of national security, that there was and is no case to answer.

"A spokesman for the Attorney General has confirmed that nothing in this week’s media reports alters this position.

"The Al Yamamah programme is a government-to-government agreement and all such payments made under those agreements were made with the express approval of both the Saudi and the UK governments.

"We deny all allegations of wrongdoing in relation to this important and strategic programme."

In other words, sure, Saudi princes were paid off; the UK government promised they would be in the original al-Yamamah treaty. Don't blame us: nothing to see here.

BAE reps also expressed the view that the ongoing media revelations would have no effect on US legislators' decision as to whether the company would be allowed to acquire Armor Group. That at least remains to be seen.

So does the effect on the reputation of the UK government, not least with respect to the ongoing OECD probe. The more so as it now appears that UK officials have been economical with the truth in discussions with OECD investigators. ®

Bootnote

*From 1988-90 your correspondent was an undergraduate management trainee at BAE's Hatfield civil-aircraft factory, now the site of the Ocado web-groceries warehouse; and from 1988-91 an RAF university-reservist cadet pilot.

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