As long as the government hides behind 'national security' to justify BAE's secret arms sale payments, it will be mired in suspicion of sleaze says Vincent Cable in the Guardian


BAE Systems are expected soon to conclude negotiations for a major Eurofighter export contract with Saudi Arabia. Lots of jobs. A triumph for Blair's commercial diplomacy on behalf of UK plc. Proof that at least one Arab government likes the British. A poke in the eye for the spoilsports at the Guardian, at the BBC and in Parliament who ask irritating questions about legality and ethics.

After the champagne has been drunk (or the Saudis' non-alcoholic equivalent), the irritating questions will remain. And they are important questions. The first, and most basic, is whether the government has been complicit in serious breaches of the criminal law: legislation in 2001 outlawing the payment by companies of bribes to overseas officials.

The company, BAE Systems, claims that hitherto secret £1bn payments to Prince Bandar (and perhaps others) were not illegal. The attorney general has said that the Serious Fraud Office enquiry was going nowhere, on legal grounds. The argument is being advanced that since the Saudi royal family is the Saudi state and approved such commission payments (even if it led to inflated contract prices), there was no legal wrongdoing by BAE Systems or the prince. There are, however, two snags in this argument.

One is that the non-political head of the Serious Fraud Office has never conceded the legal argument of the political attorney general and had to be stopped from proceeding with the enquiry. The other is that the OECD, whose anti-bribery convention led to the UK prohibition, believes the UK is dragging its feet on enforcing the law. Even the cynical French are now prosecuting (among others, Mitterrand's son). A specific issue is who took the decision to conceal the Bandar payments from an OECD peer group review team. Robert Wardle, head of the SFO, has claimed responsibility, but are we to believe this decision was made entirely on his authority alone?

A second set of questions relates to the government's role. It appears that not only did the MoD (and perhaps the Treasury) know about the secret payments but actively facilitated them. I am seeking to establish which ministers and officials were involved and until when the payments were paid (perhaps they still are?).

I still find it difficult to get my head round the idea that, until December, one agency of government (the Serious Fraud Office) was investigating what it believed could be crimes, leading to prosecutions, while another arm of government was cheerfully helping the suspected felons. Since there are six other bribery cases still being investigated by the SFO in relation to the BAE contracts with South Africa, Tanzania, the Czech Republic, Qatar, Chile and Romania, the obvious question is whether the government has been, or is, actively involved in facilitating payments there as well.

A third set of issues relates to the alleged threat of the Saudis to cut off crucial intelligence on terrorists. The prime minister has repeatedly used this argument, and did so with me in Parliament on Monday, and it is the justification advanced to parliament and to the OECD by the attorney general.

Arguments about national security must be treated with respect. But this one seems rather questionable. Saudi Arabia has much to fear from al-Qaida and everything to gain from cooperating with us. Saudi watchers also point out that Prince Bandar, a former ambassador to the US and close to the Bush administration, is locked in a power struggle with the more impressive, and frugal, former ambassador to Britain, Prince Turki bin Faisal, who is also closer to Saudi intelligence. The government is using "national security" to intimidate us into silence.

While the government shows little sign of contrition, BAE Systems are, rightly, becoming seriously worried about their business reputation particularly in the US, where tougher laws on foreign bribery apply. It is reported today that the US authorities may be, indeed, be initiating action against the company. BAE hopes to hire Lord Woolf to oversee the work of an ethics committee. Lord Woolf has unimpeachable credentials. What is not clear is how far he may be restricted in looking at future contracts and processes, and which stones he would be allowed to turn over. My advice to the company, if it seriously wants to clean up its act and its reputation, would be to ask Transparency International to carry out an audit.

The company, and the government, no doubt hope that good news about new business and jobs will crowd out awkward questions about how they were won. I have no quarrel with the principle of exporting arms provided: they genuinely satisfy requirements of export control (that they do not fuel regional conflict or aid abuse of human rights); are not subsidised by the taxpayer; and are obtained legally. Certainly one, and probably all three, are in doubt in this case. And if I were running a British company battling to win an export order and tempted to secure it with a generous "commission payment" to someone in the ruler's family, I would be asking myself right now: will the British government also turn a blind eye to any illegal act and breaches in international obligations to help my business and my employees?

These issues are, on one level, legal and technical, but at another, moral and political. So far, the government has shown itself utterly impervious to political embarrassment. The prime minister happily signed up to a G8 communique condemning corruption, and British minsters and ambassadors go round the world lecturing (Africans, in particular) on the virtues of honest and transparent government procurement.

For those of us in Parliament who are determined to get to the bottom of this scandal, the aim is an inquiry similar in scope to that which unearthed the truth about the Iraq "supergun". It was that inquiry which launched Robin Cook's crusade for an ethical foreign policy. We need a similar cleansing, now.


This article is based on an article written by Vincent Cable in the Guardian on 14th June 2007.

Vincent Cable is Deputy Leader of the Liberal Democrats