The High Court in London has ordered BAE Systems, Britain’s largest arms company, to produce a sworn affidavit divulging how it obtained a confidential and legally privileged document belonging to pressure group Campaign Against the Arms Trade (CAAT). CAAT successfully argued judicial review proceedings could be severely prejudiced if BAE had access to their confidential legal advice. CAAT are seeking to uncover the truth of the bribes BAE paid to Saudi Arabia to underwrite its arms dealing. The British Government shut down a fraud squad investigation into the dealings last year. The landmark ruling is a major victory for freedom of information and a body-blow to the highly secretive arms industry as well as an embarrassment to the British Government over its clandestine dealings with the Saudi Royal Family.
BAE Systems was formed in 1999 as the merger of British Aerospace and Marconi Electronic Systems. The merged company is very big business. They manufacture warplanes, avionics, submarines, surface ships, radar, electronics, and guided weapons systems. According to their own website, BAE is the fourth largest defence company in the world. It has 88,000 employees, annual sales exceeding $22 billion and is ranked as the number 1 European defence company and number 7 in the US.
George Monbiot described BAE last month as a “small but untouchable domain that appears to be subject to a different set of laws.” BAE have been the intermediary in Britain’s lucrative arms dealing with Saudi Arabia that dates back to Margaret Thatcher’s leadership. In 2003 the Sunday Times revealed how BAE paid a company to carry out an elaborate spying operation on its critics and infiltrate CAAT.
CAAT were investigating BAE since the British Government closed down a police investigation into BAE activities in Saudi Arabia. These activities go back to the 1980s. Oil rich Saudi Arabia was looking to expand its military and Prime Minister Margaret Thatcher successfully lobbied the Saudi Royal Family to buy British weapons. The British manufacture was contracted out to BAE, then known as British Aerospace.
The oil-for-arms deal known as Al Yamamah was born. Al Yamamah means ‘doves of peace’ in Arabic but this sale was all about war. In 1986 British Aerospace delivered the first weapons of Al Yamamah to the Saudis: 72 Tornado and 30 Hawk advanced fighter-bombers along with other tranches of military hardware. According to the terms of the sale, the Saudis were to purchase the armaments in payments of oil, over an unspecified period of time. The Saudis transferred the oil to BP and Shell, who paid the value of the oil into an escrow account where BAE received the money. 20 years later, the deals are still ongoing. And since the initial 1986 order, Saudi Arabia has purchased a staggering $33 billion worth of British arms. These massive deals (equivalent to the GDP of Cuba) have been fraught with bribery.
Much of the BAE profits from Al-Yamamah was recycled as kickbacks to members of the Saudi royal family and other intermediaries such as Wafic Said, the billionaire financier and benefactor of Oxford University’s business school. According to former CIA operative Robert Baer the deal was “a huge commission-generating machine”. He said British Aerospace overcharged for its hardware and spare parts and the difference went into the pockets of the Saudis.
But not all of the kickbacks stayed in Saudi Arabia. In 1994 MP Tam Dalyell produced a US intelligence report and an internal British Aircraft Corporation memo which revealed Margaret Thatcher’s son, Mark, had received a £12 million commission from Al-Yamamah. The then Tory government declined to investigate the charges. Less well protected was British Defence Procurement Minister Jonathan Aiken who played a key role in setting up Al-Yamamah II. He was jailed for 18 months in 1993 for letting the Saudis pay his bill at the Paris Ritz.
Aiken’s imprisonment didn’t stop the illegal flow of money and the Sunday Times began to report the allegations in 2003. The Serious Fraud Office (SFO) was finally forced to investigate a year later. The SFO were making slow but steady progress until late last year when they tried to gain access to Swiss bank accounts with Saudi links. The Saudis were aghast and threatened to withdraw co-operation on security and cancel a supply contract for new aircraft. Under instruction from Tony Blair, Attorney-General Lord Goldsmith immediately told the SFO to drop the investigation on the grounds that it “lacked evidence and threatened national security”.
The Government decision was attacked by City fund managers who said it could compromise London’s standing as a financial centre due to lack of corporate governance. Top fund manager Hermes wrote an open letter to the Prime Minister saying “lack of credibility in the regulation of one company can spread to the rest of the stock market, creating higher-risk premiums and cost of capital.”
CAAT were also unhappy with the decision. They instructed their lawyers, Leigh Day & Co, to seek a judicial review of the government’s decision to drop the corruption case against BAE. Leigh Day sent CAAT an email containing advice on costs and tactics. However that email ended up in the hands of BAE. The arms company argued it was an unwitting recipient but refused to reveal how they got it. Now the court has decided they must tell CAAT how they obtained the information.
CAAT are understandably delighted about the High Court’s ruling. Spokesman Symon Hill said “This is a victory not only for Campaign Against Arms Trade but for all who care about democracy. When Tony Blair ended the Saudi corruption inquiry, he implied that BAE Systems were above the law. But today BAE have been prevented from behaving as they like. We are a step closer to the day when BAE can no longer get away with calling the shots."