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BAE: Secret papers reveal threats from Saudi prince

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Spectre of ‘another 7/7′ led Tony Blair to block bribes inquiry, high court

David Leigh and Rob Evans, The Guardian
Friday February 15 2008

Saudi Arabia’s rulers threatened to make it easier for terrorists to attack
London unless corruption investigations into their arms deals were halted, according
to court documents revealed yesterday.

Previously secret files describe how investigators were told they faced "another
7/7" and the loss of "British lives on British streets" if they
pressed on with their inquiries and the Saudis carried out their threat to cut
off intelligence.

Prince Bandar, the head of the Saudi national security council, and son of
the crown prince, was alleged in court to be the man behind the threats to hold
back information about suicide bombers and terrorists. He faces accusations
that he himself took more than £1bn in secret payments from the arms company

He was accused in yesterday’s high court hearings of flying to London in December
2006 and uttering threats which made the prime minister, Tony Blair, force an
end to the Serious Fraud Office investigation into bribery allegations involving
Bandar and his family.

The threats halted the fraud inquiry, but triggered an international outcry,
with allegations that Britain had broken international anti-bribery treaties.

Lord Justice Moses, hearing the civil case with Mr Justice Sullivan, said the
government appeared to have "rolled over" after the threats. He said
one possible view was that it was "just as if a gun had been held to the
head" of the government.

The SFO investigation began in 2004, when Robert Wardle, its director, studied
evidence unearthed by the Guardian. This revealed that massive secret payments
were going from BAE to Saudi Arabian princes, to promote arms deals.

Yesterday, anti-corruption campaigners began a legal action to overturn the
decision to halt the case. They want the original investigation restarted, arguing
the government had caved into blackmail.

The judge said he was surprised the government had not tried to persuade the
Saudis to withdraw their threats. He said: "If that happened in our jurisdiction
[the UK], they would have been guilty of a criminal offence". Counsel for
the claimants said it would amount to perverting the course of justice.

Wardle told the court in a witness statement: "The idea of discontinuing
the investigation went against my every instinct as a prosecutor. I wanted to
see where the evidence led."

But a paper trail set out in court showed that days after Bandar flew to London
to lobby the government, Blair had written to the attorney general, Lord Goldsmith,
and the SFO was pressed to halt its investigation.

The case officer on the inquiry, Matthew Cowie, was described by the judge
as "a complete hero" for standing up to pressure from BAE’s lawyers,
who went behind his back and tried to secretly lobby the attorney general to
step in at an early stage and halt the investigations.

The campaigners argued yesterday that when BAE failed at its first attempt
to stop the case, it changed tactics. Having argued it should not be investigated
in order to promote arms sales, it then recruited ministers and their Saudi
associates to make the case that "national security" demanded the
case be covered up.

Moses said that after BAE’s commercial arguments failed, "Lo and behold,
the next thing there is a threat to national security!" Dinah Rose, counsel
for the Corner House and the Campaign against the Arms Trade, said: "Yes,
they start to think of a different way of putting it." Moses responded:
"That’s very unkind!"

Documents seen yesterday also show the SFO warned the attorney general that
if he dropped the case, it was likely it would be taken up by the Swiss and
the US. These predictions proved accurate.

Bandar’s payments were published in the Guardian and Switzerland subsequently
launched a money-laundering inquiry into the Saudi arms deal. The US department
of justice has launched its own investigation under the foreign corrupt practices
act into the British money received in the US by Bandar while he was ambassador
to Washington.

Prince Bandar yesterday did not contest a US court order preventing him from
taking the proceeds of property sales out of the country. The order will stay
in place until a lawsuit brought by a group of BAE shareholders is decided.
The group alleges that BAE made £1bn of "illegal bribe payments"
to Bandar while claiming to be a "highly ethical, law-abiding corporation".

Read more:
Leigh on the Saudi arms deal

cover-up laid bare: court hears how SFO inquiry was halted

Court documents:
Jonathan Jones

statement: Helen Garlick

Robert Wardle

Letters and memos

This article appeared in The Guardian on Friday February 15 2008
on p1 of the Top stories section. It was last updated at 12:08 on February 15