Partners in Corruption


There are some countries you bully and some countries you don’t.

Abuses of human rights always seem to be less serious, for example, in a big country with clout (like China), than in a country where the moral high ground can be taken without fear of economic consequences (like Zimbabwe). And there is a world of difference in getting tough with, say, Ethiopia over its standards of government procurement, and doing the same with the world’s biggest oil producer, Saudi Arabia.

These double standards, however, are not always so clearly highlighted as they are in the BAEE/Al-Yamamah saga.

As already reported in New Matilda, in December last year, Britain’s Serious Fraud Office (SFO) was in its third year investigating an arms deal with Saudi Arabia involving 72 Eurofighter Jets (worth £10 billion) from British defence manufacturer BAE Systems. Signed in 1985, Al-Yamamah (meaning ‘the Dove’ in Arabic) was Britain’s biggest ever arms deal.

The agreement was renewed in 1993, when the Saudis agreed to buy another batch of 48 Tornado warplanes. In a third stage of the Al-Yamamah agreement, signed in 2005, Britain is selling up to 72 more planes called Typhoons to the Saudis. The agreement has kept BAE afloat for the past 20 years.

Within weeks of the deal being signed over two decades ago, allegations of corruption surfaced. Those allegations have never gone away. Late last year however, the SFO’s investigation was stopped in its tracks when Tony Blair claimed it would endanger Britain’s security if the inquiry was allowed to continue. This intervention was announced by UK Attorney General Lord Goldsmith, who made the decision to end the SFO inquiry into alleged bribes paid by the company to Saudi officials after consulting Cabinet colleagues.

However, in January of this year, Britain’s Secret Intelligence Service, M16, challenged this claim, saying that there was no evidence that the Saudis had warned that they would cut off intelligence if the SFO inquiry continued.

Lord Goldsmith and Blair’s interventions came at a time when the SFO appeared to have made a significant breakthrough with investigators on the brink of accessing key Swiss bank accounts. These alleged bribes, or ‘slush funds,’ were paid to Saudi royals in the form of prostitutes, cars and kickbacks.

Last week, British MPs condemned the Government’s decision to quash the SFO probe, saying:

We conclude that the Government’s decision to halt the inquiry into the Al-Yamamah arms deal may have severely damaged the reputation of the United Kingdom in the fight against corruption.

Under US pressure, the UK made overseas bribery illegal in 2002, and in an interesting twist, the US Department of Justice is investigating whether it can launch its own formal inquiry into alleged bribery and corruption at BAE.

Although the Attorney General’s action last year means that UK courts are now unlikely to hear details of alleged slush funds and call girls, the public could be forgiven for suspecting that this defence contract stank to high heaven. Different circumstances, different industries, duly noted, but the utter embarrassment Blair is facing over these corrupt dealings brings back vivid memories of AWB, the Cole Commission and a Government intent on covering its tracks.

The Saudis, of course, would prefer not to have baskets of their dirty laundry washed in public but it’s a little too late for that. Widely known for its human rights abuses, the Kingdom of Saudi Arabia continues to assume the position of peace broker in the Middle East, and as ‘big brother’ of the wider Muslim world. The next time two warring factions travel to Riyadh or Mecca for ‘talks’ then, it may be wise to remember that the House of Saud isn’t exactly in order itself. Better yet, just whisper ‘BAE’ and see what happens.

The British Government’s argument that its appeasement of the Saudis was due to concerns about ‘national security’ rather than the grubbier fear that BAE might lose a lucrative contract suggests delusions of grandeur. What really matters in the geopolitics of the Middle East is the relationship between Saudi Arabia and the United States. Anything that Britain does is a sideshow. The idea that Saudis would abandon their pro-West stand because a few executives came up before the UK courts is comical.

No, this was really about money, and plenty of it.

The Attorney General’s support for BAE amounts to protectionism, which most Western governments these days consider to be a Very Bad Thing. If Blair’s Labour Government truly believes in the sanctity of market forces, it is hard to justify protecting a company even one as important as BAE in this way. According to its own stated ideology, there should be no assured contracts, no bowing to lobbying, no favours. Defence procurement should be done on the basis of free market principles, with taxpayers theoretically getting the best value money and revenue used to boost less marketable parts of the economy. Isn’t that supposed to be how the logic of globalisation works?

Perhaps another logical stance is that the perfect world of global market forces simply does not exist, that States will continue to use their financial muscle to support industries they consider strategically or economically vital, and that they’ll always pick and choose the moments when they stand up for the unbending principles of statecraft and those moments when they’ll just cover up a bit of bribery, corruption and illegality and hope the world doesn’t notice.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.