Britain Drops Bribery Probe Of Defense Firm

Britain Drops Bribery Probe Of Defense Firm
December 29th, 2006  
Team Infidel

Topic: Britain Drops Bribery Probe Of Defense Firm

Britain Drops Bribery Probe Of Defense Firm
Chicago Tribune
December 28, 2006
Blair cites national security in Saudi deal
By Tom Hundley, Tribune foreign correspondent
LONDON -- On the same day the British government trumpeted the results of a three-year investigation into the unmysterious death of Princess Diana, it pulled the plug on a far more substantive probe into allegations that BAE Systems, Britain's largest defense contractor, spent millions in bribes to secure a deal with Saudi Arabia.
The timing may have been coincidental but it gave rise to suspicions that Prime Minister Tony Blair's government was trying to divert media attention from an embarrassing cave-in to the Saudis.
The government cited "national security" concerns as the reason for calling off the investigation this month. Blair, who said he took "full responsibility" for the decision, explained that pursuing the criminal investigation would have resulted in years of "ill-feeling" between Britain and one of its key allies in the Middle East.
Decision saves jobs
He also acknowledged that dropping the investigation had probably saved thousands of British jobs, but insisted this was not a factor in his decision.
Britain's Serious Fraud Office had spent two years looking into allegations that BAE had paid millions of dollars in bribes over the past 20 years to clinch an $80 billion deal to supply and support the Saudi air force. The decision to end the investigation was made just as the fraud office was about to gain access to secret Swiss bank accounts of Saudi middlemen.
In recent weeks BAE and the Saudi government had lobbied intensively for the investigation to be called off. The Saudis openly threatened to cancel a contract for 72 Eurofighter Typhoons from BAE, a deal worth about $12 billion.
When that failed, the Saudis threatened to halt all cooperation on security matters, including intelligence sharing on Al Qaeda. They also threatened to downgrade diplomatic relations and to expel British military and intelligence personnel from the kingdom, according to media reports.
"British lives could be lost if this relationship broke down," said a senior government official quoted by The Times newspaper.
When it was announced Dec. 14 that the criminal inquiry was being abandoned, BAE stock prices jumped 6.8 percent to nearly a six-year high. The company has steadfastly denied any wrongdoing.
Despite the brief diversion provided by the Princess Diana investigation (the British royal family apparently did not conspire to kill her), negative reaction to Blair's decision has been growing steadily.
"Outrageous and disgraceful" was the pronouncement of Norman Lamb, a member of Parliament from the opposition Liberal Democrats who has followed the case closely.
"How on Earth can we lecture the developing world on good governance when we interfere with and block a criminal investigation in this way?" Lamb told the British Broadcasting Corp.
Mai Yamani, an expert on Saudi Arabia and former fellow at London's Royal Institute of International Affairs, said the decision would ultimately undermine pro-democracy forces in the region and strengthen the hand of radicals.
"Despite all the talk about democratic values and accountability and transparency that [Western governments] say they want to see in the Middle East, when it comes to a country like Saudi Arabia, it all becomes secondary to financial and economic interests," she said.
Anti-corruption advocacy groups have questioned the legality of the government's decision, and the influential Organization for Economic Cooperation and Development could ask the Blair government to explain its decision before a tribunal of member states.
"It's not going to go away," said Mark Pieth, head of the OECD's working group on bribery.
The working group wrote the OECD's convention on bribery, which is modeled on the United States' Foreign Corrupt Practices Act. Under the terms of the convention, to which Britain is a signatory, member states evaluate one another's compliance.
Pieth said the working group would take up the BAE case at its January meeting. Members could then decide to reopen the evaluation of Britain and summon officials of the Blair government to justify the decision.
"With 35 other countries asking one question after another, it can get pretty rough," he said.
The U.S., which is a member of the OECD and a leader in the fight against corporate corruption, has declined to comment on the case.
"We don't comment on British legal issues," said a spokeswoman for the U.S. in London.
Overseas bribery outlawed
Laurence Cockcroft, chairman of Transparency International, a respected watchdog group, said that even though Britain signed the OECD convention in 1998, it did not make overseas bribery illegal until 2002 and it has lagged its main business competitors, the U.S. and France, in mounting prosecutions against corporate bribe-givers. Cockcroft said the Blair government's gesture to the Saudis would weaken the convention and other international efforts to combat corruption.
"A major investigation was called off before it was complete. From our point of view, this is a disastrous setback," he said.

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