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Sun 20 September 2020
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Ten years after the allegations were first aired, Steve Shaw reports on corruption charges alleging misconduct in an arms deal between the UK and Saudi Arabia

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The Background: the al-Yamamah Deal

After months of negotiations in the 1980s, which included the Saudis being personally lobbied by then-prime minister Margaret Thatcher, the UK secured the biggest arms deal in the country’s history.

Known as the al-Yamamah deal, the Saudis agreed to a multi-billion-pound order of Tornado and Hawk jets earning British defence giant BAE Systems at least £43 billion in revenue between 1985 and 2007.

It was a big success for the politicians and BAE but it was also, according to anti-arms trade campaigner Andrew Feinstein, “the most corrupt commercial transaction in commercial history”. Allegations of corruption spilled out soon after the deal was struck but it was a cache of documents leaked in the early 2000s that gave enough proof for Serious Fraud Office (SFO) to launch a major investigation.

The UK Government claims to have some of the most robust arms export controls in the world yet its arms sales to repressive regimes increased by £1 billion last year compared with 2018 – the equivalent of a 300% increase

The SFO soon uncovered details of how BAE used shell companies to bribe members of the Saudi royal family and others to the tune of £6 billion in order to secure the deal. It was alleged that even the prime minister’s son Mark Thatcher was paid £12 million as a bribe, along with Prince Bandar bin Sultan, son of the Saudi Crown Prince, who received more than £1 billion. 

But in a startling act of state intervention, the SFO’s investigation was halted in its tracks in 2006 by Tony Blair’s Government over “national security” concerns. It was a move the High Court ruled as unlawful and Nick Clegg, former Liberal Democrat leader, said appeared “like it was done to protect BAE sales by appeasing the Saudi government”.


The Airbus Story

In the years since, the shadow of that investigation and the Government’s remarkable intervention has loomed over another investigation into a UK arms deal with Saudi Arabia, only this time it involved a subsidiary of Airbus.

Allegations began to unfold at the end of 2010 when whistle-blower Ian Foxley – a programme director for Airbus subsidiary GPT Special Project Management in Saudi Arabia – claimed to have uncovered unexplained payments to the Cayman Island bank accounts of Simec International and Duranton International.

The payments were processed by the UK’s Ministry of Defence (MOD) as GPT was working as the prime contractor for the UK Government to supply telecoms and electronic warfare equipment to the Saudi Arabian National Guard. Foxley believed they could be linked to bribes and fled Saudi Arabia to take his findings to senior compliance staff at Airbus and then to the MOD in January 2011.

As with the al-Yamamah deal, the case eventually landed on the desk of the Serious Fraud Office (SFO) resulting in a six years’ investigation into corruption that concluded in March 2018 when the SFO requested permission to prosecute. But then nothing.

The request sat with the UK’s Attorney General Geoffrey Cox for two years with little explanation, raising fears that history would repeat itself. In October last year, rights group Transparency International wrote to Cox urging him to act. The group warned that “any potential interference on national security grounds” would “irreparably damage not just the UK’s international reputation but also the global fight against corruption”.

Cox was eventually replaced in February by Suella Braverman and following further pressure from campaigners, Braverman gave the SFO the greenlight to move forward. On 30 July the charges were announced. They include the charge of corruption between January 2007 and December 2012 in relation to contracts for Saudi Arabia’s national guard against former GPT managing director, Jeffrey Cook, and John Mason, partial owner of two GPT subcontractors registered in the Cayman Islands.

Cook has also been charged with misconduct in public office between September 2004 and November 2008 when he was employed by the Ministry of Defence. Another man involved was Terence Dorothy, who has been charged with aiding and abetting that offence. GPT and the three men are due to appear at Westminster magistrates’ court in London on 14 September.


Corruption ‘Endemic’ in the Arms Trade

Duncan Hames, director of policy at Transparency International UK, said: “After more than two years of unexplained delays, it is most encouraging to see the Attorney General finally permit the Serious Fraud Office to pursue this case. These are serious allegations which involve corruption relating to a large defence contract. Failing to proceed with this would have given the impression that the UK Government condones this sort of practice.”

Andrew Smith of Campaign Against the Arms Trade also welcomed news of the prosecutions. He told Byline Times it is crucial “all allegations are full investigated and the people and companies are held accountable”.

“This investigation has been going on for years,” he continued. “Previous Attorney Generals had failed to address the issue, so we are glad that Suella Braverman has given permission for the case to proceed. It is an important case and is potentially embarrassing for the arms company, the UK government and the Saudi regime.

“Corruption costs a lot of money and, particularly when it comes to the arms industry, the pro-military policies that it drives can be deadly. Accountability is important, and it is vital that we challenge those responsible and the system that allows it to happen.”

Mr Smith added that corruption has become “endemic” in the arms trade with it being estimated to cost at least £20 billion every year. A 2018 report from Transparency International explained there has been “significant efforts” to reduce the risk yet it remains a “regular feature” of international arms deals. It added “a culture of secrecy, close relations with politics, and the sector’s size and complexity all help to create an environment where corruption can thrive”.


Arms Sales Booming

The UK Government claims to have some of the most robust arms export controls in the world yet its arms sales to repressive regimes increased by £1 billion last year compared with 2018 – the equivalent of a 300% increase. Its arms sales to Saudi Arabia, in particular, have come under significant scrutiny in recent years since due to the conflict in Yemen.

Saudi Arabia has been leading a major bombing campaign that has devastated one of the poorest nations on earth and created the world’s worst humanitarian crisis. In the five years since the war began, rights groups have documents a raft of war crimes, including the bombing of schools, homes, hospitals, weddings and even funerals. At the same time, the UK has ramped up its arms sales, with £5.3 billion worth of arms going to the Saudi regime since March 2015, including £2.7 billion worth of licences for aircraft, helicopters and drones. A further £2.5 billion of licences have been issued for the sale of grenades, bombs, missiles and countermeasures.

The arms sales were temporarily stopped in June 2019 by the Court of Appeal when it ruled the Government had acted unlawfully by issuing licenses without making an assessment as to whether past incidents amounted to breaches of International Humanitarian Law.

But in July, Liz Truss, Secretary of State for International Trade, said the allegations were only “isolated incidents” and there is “not a clear risk that the export of arms and military equipment to Saudi Arabia might be used in the commission of a serious violation of International Humanitarian Law”. Her conclusion gave the greenlight for British-made arms to continue flowing to the Saudis just as the UN’s children’s agency warned millions of children in Yemen are “on the brink of starvation” and the country’s health system could collapse as it struggles to deal with COVID-19 and the war.


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