Al-Yamamah: Bandar accused of taking BAE payments

Two of Britain's foremost investigative journalists, David Leigh and Rob Evans, have a major scoop in the Guardian today, about this country's biggest corruption story of the last thirty years, the Al Yamamah defence deal between Britain and Saudi Arabia:

 

According to legal sources familiar with the records, BAE Systems made cash transfers to Prince Bandar every three months for 10 years or more.

BAE drew the money from a confidential account held at the Bank of England that had been set up to facilitate the Al-Yamamah deal. Up to £2bn a year was deposited in the accounts as part of a complex arrangement allowing Saudi oil to be sold in return for shipments of Tornado aircraft and other arms.  

Both BAE and the government's arms sales department, the Defence Export Services Organisation (Deso), allegedly had drawing rights on the funds, which were held in a special Ministry of Defence account run by the government banker, the paymaster general.

Those close to Deso say regular payments were drawn down by BAE and despatched to Prince Bandar's account at Riggs bank in Washington DC. 

Under the terms of a previously unknown MoD instruction from the department's permanent secretary, Sir Frank Cooper, the payment deal would have required Deso authorisation. (Guardian)
 

The BBC carries a similar story about the deal, which is set to be the subject of a Panorama documentary next Monday.

This kind of corruption might seem acceptable to some, but it's insidious effects have been well described by Leigh:

The prime minister makes passionate speeches denouncing corruption in Africa. It does not look attractive if these appear merely cosmetic. Bribery saddles poor countries with burdens of debt to buy arms, and other goods they don't really need, at inflated prices. Their rulers spend the cash on Florida villas, private jets and diamond necklaces. Their people go hungry.

Nor is altruism the only point. It is not healthy for British industry to depend on bribery to sell goods that are overpriced and of the wrong quality. It distorts the market, and in the long run makes them inefficient. Furthermore - and perhaps crucially - a company that gets into the habit of bribery tends to become addicted. How does the ministry of defence know that the company from which it buys arms for British soldiers and pilots stops its habits of bribery at Dover? (Comment is Free)

The massive expansion of defence exports to the Middle East under the Thatcher Government made a vast swathe of British manufacturing industry dependent on corrupt arms deals, at an incalculable opportunity cost in terms of more productive investment, and in the process tied British foreign policy to some of the world's most reactionary regimes.

The fallout from this expansion, in the shape of the Arms-to-Iraq affair, helped to bring down the last Conservative government, so you might have expected a Labour government to try and wean Britain from this dependency.

Instead, it has blocked the SFO's investigation into the Al-Yamamah deal. In the wake of the latest reports, there will be renewed calls for that investigation to be re-opened.

The Campaign against the Arms Trade has a campaign to that effect, as do the Liberal Democrats. The Lib Dem site has an online petition, and there is another on the Number 10 petitions site.