Pressure mounts on the Serious Fraud Office to re-open Saudi bribes case
Last updated at 10:56am on 11th April 2008 The Serious Fraud Office was under growing pressure to reopen the Saudi bribes probe today.
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Gordon Brown's office said a decision would be left to the SFO - in contrast with the alleged interference by Tony Blair in the original investigation.
Lawyers and senior officials at the SFO were meeting to consider what to do in the wake of a searing High Court judgment that they acted unlawfully when their inquiry was halted in 2006 after "blatant threats" from the Saudi royal family.
In a hard-hitting ruling, the High Court said the decision amounted to a "successful attempt by a foreign government to pervert the course of justice in the United Kingdom".
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It criticised how ministers caved in to the Saudis' threat to hold back security information unless the probe was dropped, making it easier for terrorists to attack London.
Investigators were told there could be "another 7/7" with the loss of "British lives on British streets".
Lord Justice Moses said the dropping of the probe in the face of such threats should invite "dismay, if not outrage".
The ruling followed a legal challenge to the dropping of the inquiry by the anti-bribery group Corner House and the Campaign Against Arms Trade.
As well as being a serious headache for Gordon Brown, it is likely to infuriate the notoriously publicity-shy Saudis.
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Accused: Prince Bandar is said to have been paid £1billion by BAe as part of the arms deal. Tony Blair claimed the probe threatened Britain's national security
They could pull out of multi-billion pound arms deals or abandon counter-terror co-operation with Britain if the inquiry now has to be reopened.
The row centres on allegations of corruption at the heart of Britain's contract to supply Tornado and other military jets and equipment to Saudi Arabia.
The SFO inquiry focused on allegations of a "slush fund" used by BAE to pay Saudi dignitaries to win contracts.
The defence giant is alleged to have paid £1billion in bribes to Prince Bandar of Saudi Arabia.
BAE has repeatedly denied doing anything wrong and Prince Bandar has denied receiving any bribes.
Tony Blair, who was prime minister when the investigation was scrapped in 2006, said the Saudis had privately threatened to cut intelligence co-operation with Britain unless the inquiry was stopped.
In December 2006, the then attorney general, Lord Goldsmith, announced the investigation into the arms company was to be discontinued but it was SFO Director Robert Wardle who took the decision.
The judges said Mr Wardle had failed to satisfy the court that all that could reasonably be done had been to resist the threats.
Government lawyers had contended that the SFO Director "was entitled to surrender to the threat" to prevent the possibility of the loss of "British lives on British streets".
The judges said threat had been made "by an official of a foreign state allegedly complicit in the criminal conduct under investigation" who had interests of his own in seeing the investigation stopped.
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Judgment: Mr Justice Sullivan and Lord Justice Moses ruled the SFO acted illegally
Lord Justice Moses reacted with astonishment to the suggestion that Britain was powerless to resist threats from Saudi Arabia.
A possible view, the judge said, was that it was "just as if a gun had been held to the head".
He added: "The law is powerless to resist the specific and, as it turns out, successful attempt by a foreign government to pervert the course of justice in the United Kingdom, by causing the investigation to be halted.
"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."
The court is expected to order the SFO to reconsider its decision to drop the probe. A refusal to do so looks certain to result in fresh legal action.
Symon Hill, of the Campaign Against Arms Trade, said: "The Government tells poor countries that they can't get UK aid loans for hospitals, schools and other essentials unless they root out corruption.
"But in Britain, prosecutors are quietly taken to one side and pressured into abandoning a corruption investigation that might upset powerful interests at home and abroad."
Downing Street refused to comment on the court's ruling, referring questions to the SFO, which said in a statement: "The SFO are carefully considering the implications of the judgment and the way forward.
"No further comment at this stage."
Tony Blair's office did not respond to requests for a comment.
LibDem leader Nick Clegg called for a full inquiry into the dropping of the SFO inquiry.
He said: "The Government's actions over this probe have done untold damage to Britain's standing in the international community."
Q&A
What is the row about?
Britain's arms deals with Saudi Arabia. The UK has sold fighter jets to Saudi since the 1960s, but struck its biggest-ever deal with the country in 1985 - the so-called Al-Yamamah contract.
What is Al-Yamamah?
Al-Yamamah, which means "the Dove" in Arabic, involved supplying Tornado and other aircraft, missiles, mine-hunters and base facilities to the desert kingdom.
It is estimated to have been worth £40billion to BAE Systems, Britain's biggest arms contractor.
Why is Al-Yamamah controversial?
The Serious Fraud Office started an inquiry into allegations about a multi-million pound slush fund in November
The allegations are that Saudi defence officials were systematically bribed to ensure that they continued to buy from Britain.
What was the result of the probe?
It was never completed. In December 2006, the then Attorney General, Lord Goldsmith, abruptly announced that the SFO was suspending its inquiry.
The inquiry was said to have been risking "serious damage" to UK-Saudi relations and, in turn, threatened national security.
Was there political interference in the decision?
Yes, by the Government's own admission.
The then Prime Minister Tony Blair sent a personal minute warning of a "real and immediate risk of a collapse in UK/Saudi security, intelligence and diplomatic co-operation".
Previously, Lord Goldsmith is said not to have believed that the case withdraw should be dropped in response coto Saudi threats to intelligence and security operation.
Are hush-hush payments necessary to win arms deals with Middle Eastern countries?
There is a common perception that bribery is accepted practice in negotiating such arms deals.
But, crucially, Labour made any bribery in relation to an arms deal illegal under UK law in 2001.
What are the implications of yesterday's High Court ruling?
A judgment in such damning terms is unprecedented from the High Court. But it does not necessarily mean the SFO probe will be reopened.
The SFO could now reject a fresh investigation - but looks certain to be challenged once more in court if it does so.
And is it a headache for Gordon Brown?
Yes. The ruling will focus attention on Government plans to strengthen the role of the Attorney General to halt investigations said to threaten national security.
Widespread disquiet over the BAE affair could result in a Parliamentary rebellion.
There is also mounting pressure in Westminster for an independent inquiry into the process that led to the SFO inquiry being dropped.
What else is at stake?
The publicity-shy Saudis are likely to be furious at the High Court ruling.
They could yet withdraw from a £10billion order for 72 new Eurofighters. This latest deal, dubbed Al-Yamamah 3, took years to agree and secured thousands of British jobs.
Betcha this has Dick Cheney SQUIRMING.
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