BAE confirms ‘support services’ deals

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BAE Systems has confirmed that “support services” were paid for and provided to senior Saudi Arabian officials as part of the al-Yamamah arms deal, Britain’s biggest export contract, according to an official account released on Wednesday night.

In a letter from BAE’s solicitors to the Serious Fraud Office in November 2005, details of which have emerged under freedom of information laws, the weapons company cast light on the nature of payments at the heart of bribery allegations. But it told the SFO the allegations were unfounded. The disclosure is likely to stoke controversy over the multibillion-pound agreement under which Riyadh paid for British jet fighters.

The account shows BAE’s lawyers confirmed to investigators that payments had been made for the provision of “support services” to Saudi officials, although it does not say what these services were. The lawyers, it adds, said the payments had been made as part of contractual arrangements.

Lord Goldsmith, the attorney-general, quoted BAE’s lawyers as saying that the “allegations [were] unfounded for the principal reason that the support services provided to Saudi officials were provided for and paid for under the contractual arrangements that underlie the al-Yamamah programme”.

The inquiry into allegations that BAE ran a “slush fund” to bribe Saudi officials was dropped by the SFO in December after the inter­vention of Tony Blair, prime minister, drawing protests from anti-bribery campaigners and a rebuke from the Organisation for Economic Co-operation and Development.

An account of the events leading to that decision, published by Lord Goldsmith, reveals that BAE approached his office directly in November 2005, demanding the inquiry be abandoned on “public interest” and diplomatic grounds.

The company, in representations to Lord Goldsmith, set out an argument for ending the inquiry that bore a resemblance to views the government was to adopt in December 2006, “specifically that it [the investigation] would adversely and seriously affect relations between the UK and Saudi Arabian governments”.

BAE also warned the attorney-general the inquiry “would inevitably prevent the UK securing the next tranche of work under the al-Yamamah programme”, among a number of Saudi threats later made to the UK ambassador in Riyadh. Lord Goldsmith rebuffed its approach, saying the manner in which it was made was “inappropriate”.

Mr Blair stressed the “commercial importance” of the deal in representations made in December 2005, it emerged. He cited national security and the damage to intelligence and diplomatic co-operation a year later.

The narrative confirms the role of Sir Sherard Cowper-Coles, the ambassador, who met Robert Wardle, the SFO director, three times in the run-up to the dropping of the investigation.

The SFO is still investigating BAE activities in six countries. BAE Systems declined to comment on the material released by the attorney-general’s office and denies all wrongdoing.

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