Team Infidel
Forum Spin Doctor
Financial Times
April 18, 2008 By Demetri Sevastopulo, Alex Barker and Sylvia Pfeiffer
A £20bn ($40bn) British government contract to supply Saudi Arabia with Typhoon fighter jets could be in jeopardy because of a debate in the US administration over whether to approve the deal.
The state department must approve the transfer of US technology on the fighter before the UK can export 72 Eurofighter Typhoons to the Gulf kingdom as part of the al-Salam deal.
BAE, the British defence company, is the prime contractor to the UK government on the deal.
The state department wants to approve the deal but has encountered resistance from the department of justice, according to a senior administration official.
Another US official said the DoJ had concerns that approval could hamper an investigation into whether BAE violated US laws by allegedly bribing Saudi officials over a previous arms deal, known as al-Yamamah.
BAE has denied any wrongdoing.
The issue comes during a three-day visit by Gordon Brown to the US. The UK prime minister has not commented since the High Court, in a scathing ruling last week, chastised the government for terminating a Serious Fraud Office investigation into al-Yamamah.
Congress has also entered the debate. Senators Joe Biden and Richard Lugar, the senior Democrat and Republican on the foreign relations committee, which plays a key role in approving licences, asked Michael Mukasey, attorney-general, in a February letter whether granting the licences could affect any investigations.
A spokeswoman for Mr Biden said the letter was sent "to make sure that the executive branch did its job, pursuant to section 38(g) of the Arms Export Control Act - no more, no less". The provision says the US can deny an application where there is "reasonable cause" to believe an applicant has violated US law.
The senior administration official said that because the DoJ's investigation was continuing, the DoJ did not want the state department to say it was "unaware" that BAE had broken any laws. Another official said the case was complicated because the British government, not BAE, was the applicant for the licence. The administration official and a third -official said the DoJ was annoyed at the lack of co-operation from Britain.
David Manning, former UK ambassador to Washington, told the Financial Times in a September interview that Britain would "fulfil our obligations" to co-operate over the inquiry. The senior administration official said Washington was hoping the UK would step up its co-operation following the High Court decision.
Another US official said the internal debate was stalling efforts to approve the licences. Mr Biden's spokeswoman added that the letter did "not reflect any substantive opposition to the Typhoon sale".
She said: "The ball is in the administration's court."
The third official said DoJ investigators were very concerned that one part of the US government approving a deal involving BAE could have an impact on the -al-Yamamah investigation. A former federal prosecutor said the issue would be less a legal one than one of "optics".
The UK denies any problem over the licences. The ministry of defence said it "fully expected" approval "in due course". The ministry recently wrote to the DoJ with assurances that al-Yamamah and al-Salam were not linked. The DoJ has not responded to Mr Biden and Mr Lugar.
The DoJ and state department declined to comment.
One former official said it was not surprising that the DoJ was "tugging on the sleeve of the state department to slow down" because of the pressure it would create on BAE.
The UK defence ministry also denied that approval had been delayed because of the debate. In a January letter read to the FT, however, Baroness Ann Taylor, UK defence procurement minister, said the process needed to be complete by March 7 to honour the UK commitment to the Saudis.
BAE said Typhoon was "on schedule and contract obligations are being met".
April 18, 2008 By Demetri Sevastopulo, Alex Barker and Sylvia Pfeiffer
A £20bn ($40bn) British government contract to supply Saudi Arabia with Typhoon fighter jets could be in jeopardy because of a debate in the US administration over whether to approve the deal.
The state department must approve the transfer of US technology on the fighter before the UK can export 72 Eurofighter Typhoons to the Gulf kingdom as part of the al-Salam deal.
BAE, the British defence company, is the prime contractor to the UK government on the deal.
The state department wants to approve the deal but has encountered resistance from the department of justice, according to a senior administration official.
Another US official said the DoJ had concerns that approval could hamper an investigation into whether BAE violated US laws by allegedly bribing Saudi officials over a previous arms deal, known as al-Yamamah.
BAE has denied any wrongdoing.
The issue comes during a three-day visit by Gordon Brown to the US. The UK prime minister has not commented since the High Court, in a scathing ruling last week, chastised the government for terminating a Serious Fraud Office investigation into al-Yamamah.
Congress has also entered the debate. Senators Joe Biden and Richard Lugar, the senior Democrat and Republican on the foreign relations committee, which plays a key role in approving licences, asked Michael Mukasey, attorney-general, in a February letter whether granting the licences could affect any investigations.
A spokeswoman for Mr Biden said the letter was sent "to make sure that the executive branch did its job, pursuant to section 38(g) of the Arms Export Control Act - no more, no less". The provision says the US can deny an application where there is "reasonable cause" to believe an applicant has violated US law.
The senior administration official said that because the DoJ's investigation was continuing, the DoJ did not want the state department to say it was "unaware" that BAE had broken any laws. Another official said the case was complicated because the British government, not BAE, was the applicant for the licence. The administration official and a third -official said the DoJ was annoyed at the lack of co-operation from Britain.
David Manning, former UK ambassador to Washington, told the Financial Times in a September interview that Britain would "fulfil our obligations" to co-operate over the inquiry. The senior administration official said Washington was hoping the UK would step up its co-operation following the High Court decision.
Another US official said the internal debate was stalling efforts to approve the licences. Mr Biden's spokeswoman added that the letter did "not reflect any substantive opposition to the Typhoon sale".
She said: "The ball is in the administration's court."
The third official said DoJ investigators were very concerned that one part of the US government approving a deal involving BAE could have an impact on the -al-Yamamah investigation. A former federal prosecutor said the issue would be less a legal one than one of "optics".
The UK denies any problem over the licences. The ministry of defence said it "fully expected" approval "in due course". The ministry recently wrote to the DoJ with assurances that al-Yamamah and al-Salam were not linked. The DoJ has not responded to Mr Biden and Mr Lugar.
The DoJ and state department declined to comment.
One former official said it was not surprising that the DoJ was "tugging on the sleeve of the state department to slow down" because of the pressure it would create on BAE.
The UK defence ministry also denied that approval had been delayed because of the debate. In a January letter read to the FT, however, Baroness Ann Taylor, UK defence procurement minister, said the process needed to be complete by March 7 to honour the UK commitment to the Saudis.
BAE said Typhoon was "on schedule and contract obligations are being met".