The Serious Fraud Office was told it would not be able to persuade Saudi Arabia to withdraw a threat to cease co-operation with the UK on counter-terrorism just weeks before it abandoned a high-profile corruption probe into arms deals between the two countries.

Evidence submitted to the House of Lords on Monday reveals Britain’s ambassador to Saudi Arabia warned senior SFO officials – including Robert Wardle, the agency’s former head – that the Saudis did not understand the fraud office was independent of government.