For the record

This site was set up to detail the judicial review of the decision to end the SFO investigation into BAE-Saudi arms deals.

Now the judicial review has finished, the site will be left online for the record. It is frozen as of February 2009.

For further information about corruption, visit The Corner House, or about BAE and the UK Government's arms dealing, visit CAAT.

Timeline of the legal challenge

1. Bringing the Judicial Review

14 December 2006: Corruption investigation dropped
18 December 2006: Beginnings of a legal challenge
23 February 2007: Spying delays court case
19 April 2007: Full application lodged . . .
29 May 2007: . . . and refused . . .
. . . but the proceedings continued
June 2007: New allegations
9 July 2007: UK prepared to break international law . . .
25 June 2007: . . . while US picks up where UK left off
23 September 2007: You Cannot Be [So] Serious!
9 November 2007: Permission to bring Judicial Review
 

14 December 2006:
Corruption investigation dropped

Since the 1980s, the UK has supplied Tornado fighter and ground attack aircraft and associated products and support services to the Kingdom of Saudi Arabia under a series of very high-value arms deals known as "Al Yamamah" ("The Dove"). The aircraft sold to Saudi Arabia under the Al Yamamah deals are all manufactured by BAE Systems, the UK’s largest arms manufacturer. It is the UK’s largest-ever export agreement from which BAE has earned £43 billion. (For more background, see CAAT's website or The Guardian's BAE files.)

In 2004, the Serious Fraud Office (SFO) initiated an investigation into alleged bribery and false accounting by BAE in relation to the Al Yamamah deals, including corruption offences since March 2002, when bribery of foreign officials became a crime in the UK under Section 109 of the 2001 Anti-Terrorism, Crime and Security Act.

In November and December 2006, it was widely reported that the Government of Saudi Arabia had threatened to suspend diplomatic ties with the UK and cancel a further proposed order for 72 Eurofighter Typhoon aircraft if the SFO investigation was not halted.

On 14 December 2006, the SFO declared that it was ending its investigation into these bribery allegations. The reason given was that continuing the investigation might lead to Saudi Arabia withdrawing diplomatic cooperation with the UK on security and intelligence. A press release from the SFO announcing the decision stated that:

This decision has been taken following representations that have been made both to the Attorney General and the Director of the SFO concerning the need to safeguard national and international security.

It has been necessary to balance the need to maintain the rule of law against the wider public interest.

No weight has been given to commercial interests or to the national economic interest.

On the same day, 14 December 2006, the Attorney General (who is responsible for all crown or state prosecutions and who superintends the Serious Fraud Office) announced the SFO decision in the House of Lords. He referred to the views of the Prime Minister and of the Foreign and Defence Secretaries that continuing the investigation would cause serious damage to UK/Saudi security, intelligence and diplomatic co-operation, and the likelihood that this would have seriously negative consequences for the United Kingdom public interest in terms of both national security and our highest priority foreign policy objectives in the Middle East´┐Ż He also said:

Article 5 of the OECD [Anti-bribery] Convention . . . precludes me and the Serious Fraud Office from taking into account considerations of the national economic interest or the potential effect upon relations with another state, and we have not done so.

The decision was widely criticized by parliamentarians and non-governmental organizations internationally, and by leading financial fund managers (see pages 20-21 of the Comedy Benefit Programme) who stated that it could compromise London’s standing as a financial centre.

 

18 December 2006:
Beginnings of a legal challenge

On 18 December 2006, four days after the SFO announcement, The Corner House and Campaign Against Arms Trade wrote letters to the Director of the Serious Fraud Office, Robert Wardle; to the Attorney General, Lord Goldsmith; and to the Prime Minister Tony Blair arguing that the SFO’s decision was unlawful and should be reversed.

The legal challenge centred on the UK’s obligations under the Organisation for Economic Co-operation and Development (OECD) Anti-bribery Convention, which the UK signed in 1998. The Convention is a multilateral treaty aiming to ensure that all 30 OECD countries and seven other non-member signatory countries present a combined and united front against bribery and corruption of foreign public officials.

Article 5 of the Convention expressly forbids the termination of corruption investigations on grounds other than the merits of the case. Signatory governments specifically undertake NOT to be influenced "by the potential effect [of an investigation] upon relations with another State . . . "

But the SFO stated that its decision was based on the grounds that continuing the corruption investigation would damage relations with Saudi Arabia and hence the UK’s national security.

The OECD itself expressed "serious concerns" on 18 January 2007 as to whether the SFO decision was consistent with the OECD Anti-bribery Convention. In March 2007, its Working Group on Bribery announced that it would be carrying out an in-depth review of the UK’s implementation of the Anti-bribery Convention, which was published in October 2008 (see below).

 

23 February 2007:
Spying delays court case

Following our December 2006 letter, and the failure of the Government to restore the investigation, on 23 February 2007 The Corner House and CAAT began an application for a judicial review -- a court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body. However, the full application was delayed because it was discovered in January 2007 that an email from CAAT containing confidential and privileged legal advice about the judicial review from the groups' solicitors had been obtained by BAE Systems.

CAAT went to court in January 2007 to require BAE to identify the source of the leak, arguing that the judicial review proceedings could be severely prejudiced if BAE had access to CAAT’s (and The Corner House’s) confidential legal advice.

BAE was thus forced to reveal that it had been paying £2,500 per month to LigneDeux Associates, the business vehicle of Paul Mercer -- a private investigator with right-wing links -- who monitored and passed information about CAAT to BAE's Director of Security, Mike McGinty. Paul Mercer denied that he had misappropriated the confidential email, alleging that he had received it anonymously through the post. Mr Mercer has now given binding lifelong undertakings to the court not to misuse confidential information belonging to CAAT again and to inform CAAT if any such material comes into his possession. Any breach of those undertakings could lead to his committal to prison for contempt of court. BAE's Director of Security, Mike McGinty has insisted that he expected LigneDeux Associates to operate within the law.

CAAT subsequently obtained further material suggesting that BAE had been involved in unlawful acts of spying to a greater extent than the company originally implied.

As legal action continued, so did BAE’s admissions. As of June 2008, the company has confessed to having used another investigation agency in addition to LigneDeux Associates. Mr McGinty has admitted that BAE had employed Evelyn Le Chene to do similar work to that of LigneDeux Associates. Claims that Le Chene had spies within CAAT had emerged back in 2003, but McGinty's admission is the first time that BAE has acknowledged its involvement with her. As a result of a court order on 30 October 2007, BAE has had to make an unprecedented undertaking to the court that it will not seek to procure any further unlawfully obtained non-public documents belonging to CAAT.

 

19 April 2007:
Full application lodged . . .

On 19 April 2007, CAAT and The Corner House were able finally to lodge their full grounds for their application for a judicial review. Accompanying the application were witness statements from each group:

  • The 'witness statement' from Campaign Against Arms Trade provided detailed background on the Al-Yamamah arms deals between the UK and Saudi Arabia from the 1980s to 2006; and the December 2006 decision to end the SFO investigation into alleged corruption in these deals;
  • The 'witness statement' from The Corner House outlined the nexus between corruption and bribery, and international trade, economic investment, terrorism and national security; and provided background on legislative and other steps to combat corruption.

 

29 May 2007:
. . . and refused . . .

On 29 May 2007, a High Court Judge considered the papers filed by lawyers for CAAT and The Corner House and the Government's response (see below) to these papers -- and made a preliminary decision refusing to grant permission for a full judicial review hearing, saying the application was "wholly unarguable". Despite acknowledging the "importance of the issues raised", the judge said in a written statement:

"It is clear that national security must always prevail and no state could be expected to take action which jeopardizes the security of the state or the lives of its citizens."

 

. . . but the proceedings continued

The Corner House and CAAT thus took the next step in the proceedings, which was to request a formal hearing before a Judge so as to argue why the case should proceed. That hearing was scheduled for 9 November 2007.

 

June 2007:
New allegations

In the meantime, separate revelations came to light in June 2007, via the BBC's Panorama television programme and in The Guardian newspaper that the UK Government itself may be implicated in the corrupt activities that the Serious Fraud Office was investigating.

Panorama's principal allegation was that BAE, with approval of the UK's Ministry of Defence, made payments worth at least £1 billion over two decades to bank accounts under the personal control of Prince Bandar bin Sultan, the son of Prince Sultan bin Abdul Aziz who has been the Saudi Defence Minister since 1962. The documentary suggested that some of the payments were for the personal expenditure of Prince Bandar bin Sultan and were allegedly paid into accounts at Riggs Bank in Washington DC whist Prince Bandar was serving as Saudi Arabia's ambassador to the United States.

The allegations raised further concerns about the shelving of the SFO investigation. They suggested that, since 1985, successive British governments under Prime Ministers Margaret Thatcher, John Major and Tony Blair have used Ministry of Defence bank accounts to facilitate corrupt payments to a foreign official. These allegations are more serious than the widely reported ones of a £60 million "slush fund" run by BAE for the personal benefit of Saudi royals that the SFO was investigating, because they suggest the active involvement and complicity of the UK Government.

 

9 July 2007:
UK Government is prepared to break international law . . .

The Government refused to sanction the public disclosure of its response to our judicial review proceedings. So activist and comedian Mark Thomas applied to the High Court for the document to be released, which the High Court initially refused on 18 June 2007 but a few weeks later, on 9 July 2007, allowed.

In its response the Serious Fraud Office Director denied any breach of the OECD Anti-bribery Convention -- but declared that it would have taken the decision to terminate the SFO investigation anyway regardless of any violation of international law. According to the response, compliance with the Convention was not . . . a critical or decisive matter in making the decision.

The Corner House and CAAT wrote to the OECD to draw its attention to the UK Government's willingness to break the OECD Anti-bribery Convention, which is binding on signatories -- despite the Government specifically confirming to the OECD in 2005 that none of the considerations prohibited by Article 5 would be taken into account as public interest factors not to prosecute and despite it stating in January 2007 that the UK had complied with the Convention in deciding to terminate the SFO's BAE-Saudi inquiry.

In effect, the Government was spinning one story to the OECD and another to the UK courts.

The Government claimed that continuation of the SFO inquiry would have endangered "British lives on British streets". Yet revelations in The Guardian newspaper and by BBC's Panorama television programme strongly suggest that the source of these security fears was Prince Bandar -- the very person whose receipt of funds from BAE was being investigated by the Serious Fraud Office. The OECD Anti-bribery Convention has no exemption for national security. The UK Government’s arguments are widely seen as threatening to undermine the Convention.

 

25 June 2007:
. . . while US Government picks up where UK left off

On 25 June 2007, BAE acknowledged that the US Department of Justice had decided to investigate the company’s compliance with US anti-corruption laws, particularly the 1977 Foreign Corrupt Practices Act, in its Al Yamamah deals. Over 30 years, the US has had a strong record on corruption prosecutions.

In July 2007, the US Department of Justice made an official request to the UK Government for "mutual legal assistance", asking for information that the SFO had gathered during its investigation. As of February 2009, the UK had not responded to the request or forwarded it to the SFO.

In May and June 2008, during visits to the US, three UK-based BAE personnel – Mike Turner, CEO; Nigel Rudd, non-executive director; Alan Garwood, now Business Development Director and former head of DESO, which was the Government's arms sales unit – were served with subpoenas (orders to give evidence) from US Department of Justice officials as their incoming flights landed in the US. US legal magazine Corporate Counsel called it "a smack heard round the world".

However, in September 2008, another US publication, Defense News, reported that the US and UK authorities were attempting to negotiate an end to the US investigation.

On 20 November 2008, meanwhile, an article in Corporate Counsel entitled "In BAE Probe, US Steps In Where Brits Fear to Tread", journalist Sue Reisinger highlighted the critical importance of the Department of Justice investigation for BAE, given that the likes of the US Air Force, Navy, Marine Corps and Department of Defense "awards contracts worth tens and hundreds of millions of dollars each month to BAE", such that the US market accounts for 59 per cent of BAE’s overall sales:

"If BAE were tried and convicted for bribery, the company would be barred from contracting with the US government [under the 1977 US Foreign and Corrupt Practices Act]. Because of the close connections between the US military and BAE, most observers believe that the Justice Department will allow the company to enter a settlement or a nonprosecution agreement. Boeing entered such an agreement in July 2006, paid $615 million in civil and criminal penalties, and was still able to take part in government contracts. At press time [November 2008] sources said talks between BAE and Justice were continuing."

Indeed, although BAE has argued that its Saudi Arabian contracts meant jobs in Britain, the company has made considerable cuts in its UK workforce over recent years while shifting its focus to the USA. In the run-up to the decision to stop the SFO’s BAE-Saudi investigation, figures of up to 50,000 jobs under threat were appearing in the press. But a June 2006 report commissioned by the Eurofighter PR and Communications Office stated that the Saudi Eurofighter deal would secure around 11,000 jobs throughout the whole of Europe. Less than 5,000 of these would be located in the UK.

 

23 September 2007:
You Cannot Be [So] Serious!

On 23 September 2007, activist comedian Mark Thomas organised a comedy benefit night at London's Apollo Theatre. A line-up of the UK's top comedians took part in "A Seriously Funny Attempt to Get The UK's Serious Fraud Office In The Dock!" in front of a packed house of 3,500 people.

The aim of the event was to raise public awareness of the decision to drop the SFO investigation and to support our legal challenge.

The evening's programme, designed as a "secret file" dossier, was given to all those who attended. It provided concise background information not only on the comedians but also on BAE and its arms sales to Saudi Arabia and other countries; the UK arms trade; national security; and corruption. The evening raised some £40,000, a clear indication of the strong public interest in getting the Serious Fraud Office investigation re-opened.

 

9 November 2007:
Permission granted to bring judicial review in a landmark ruling

On 9 November 2007, at an oral hearing in the High Court, two judges, Lord Justice Moses sitting with Mr Justice Irwin, granted permission to bring a full judicial review hearing against the decision by the Director of the Serious Fraud Office to terminate the SFO investigation.

Lord Justice Moses said that the issue "cries out for a public hearing" because it involves "matters of concern and public importance". He stressed that the issue was closely concerned with the UK's legal system that "judges have to protect".

Lord Justice Moses concluded "it is in everyone's interest that a full hearing take place." Within minutes of the Judge's decision, the news was being broadcast on radio, television and the web around the world, from 'The Hindu' to the 'Houston Chronicle'.