BAE wants SFO review
is urging the to into whether the defence giant paid illegal bribes and commissions in its massive Al-Yamamah defence deal with Saudi Arabia.
In an exclusive 91Èȱ¬ interview broadcast on the Today Programme this morning, BAE's chairman, , told me he wanted the SFO to seek senior legal advice - known as counsel's opinion - on the prospects for mounting a successful prosecution against his company.
BAE's chairman believes a legal review of the Saudi case file would show that there would be little chance of bringing a successful prosecution.
It would, in his view, lift the shadow hanging over the defence contractor.
Some 18 months ago, the Serious Fraud Office abandoned its probe of the Al-Yamamah deal with Saudi Arabia, following representations from the British government that failure to do so would increase the risk of a terrorist outrage - because Saudi Arabia was threatening to withdraw security cooperation.
The High Court recently ruled that it was unlawful for the SFO to abandon the case on those grounds - though the SFO has since appealed to the House of Lords.
Mr Olver wants the evidence in the Al-Yamamah case reviewed whatever the outcome of the appeal, because he fears the reputation of his company will otherwise be indelibly stained by the insinuation that it has something to hide.
Funnily enough, he takes comfort from the recent High Court ruling that so embarrassed the SFO. In it, Lord Justice Moses said that the way the SFO stopped the Al-Yamamah probe was wrong, but he also said there was good reason to doubt whether the allegations in respect of the Al-Yamamah contract could be proved to be true.
This is the relevant part of Lord Justice Moses's judgement:
"According to the Attorney General's evidence, BAE has always contended that any payments it made were approved by the Kingdom of Saudi Arabia. In short they were lawful commissions and not secret payments made without the consent or approval of the principal.
The cause of anti-corruption is not served by pursuing investigations which fail to distinguish between a commission and a bribe. It would be unfair to BAE to assume that there was a realistic possibility, let alone a probability, of proving that it was guilty of any criminal offence. It is unfortunate that no time was taken to adopt the suggestion to canvass with leading counsel the Attorney's reservations as to the adequacy of the evidence."
Or to put it another way, Lord Justice Moses's judgement against the SFO wasn't quite as bad for BAE as was widely reported. That said, Dick Olver is taking something of a risk: there is no guarantee that a new review of the evidence by the SFO would lead it to abandon the case once and for all.
The SFO could decide to do precisely the opposite and re-open the probe. You'll probably remember that only last week, Robert Wardle, who has just retired as the Director of the SFO, told me that there were reasons to believe that pursuing the investigation could eventually amass sufficient evidence for a prosecution.
Dick Olver is making a calculated judgement - and he'll probably be prompting a little anxiety in Saudi Arabia, where the ruling family is no more enthusisastic than it ever was about having its business dealings with BAE raked over.
But BAE's chairman is gritting his teeth and hoping that his Saudi customers will ultimately recognise that the stain from Al-Yamamah can only be scrubbed clean by allowing a rigorous analysis of the propriety of the deal under British law.
He wants a new start for BAE. Which is why he also told me that he was committed to implement all the recommendations of the former Lord Chief Justice, Lord Woolf, on cleaning up the way BAE conducts business
Mr Olver added that creating a deepseated ethical culture in a company employing 97,000 would not be quick or easy - though he would have no hesitation in sacking anyone who breaches the new code of conduct.
I'm 
Comment number 1.
At 7th May 2008, ice-poweredbodrul wrote:this investigation should go through
and shouldnt have been stopped in the first place.
on one hand we tell countries root out corruption before we help or do business and so on
and on the other hand when a company sees billions, people start to look the other way.
money and the lust for power seem to be the biggest factor when it comes to ignoring moral responsibility.
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Comment number 2.
At 7th May 2008, d1sciple wrote:Whether this investigation goes through is irrelevant to me as nothing will be done about it.
There needs to be installed a set of working practices to prevent British companies from conducting themselves in this manner. Only then can Britain take an ethical moral stance that can benefit the country.
The punishment for corrupt practices needs to be increased to limit the opportunity of conducting corrupt practice.
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Comment number 3.
At 7th May 2008, alan_addison wrote:Are we really surprised that a company that makes machines used for killing indulges in a bit of shady behaviour from time to time.
If we are happy to be the supplier of arms to the world then we must allow BAe and the other makers of killing systems to operate freely. Including paying "commissions" to the cronies of Saudia Arabia and other repulisive regimes.
Or we accept that the defence industry supplies us and our allies only. And forgo the jobs and foriegn exchange that they could have created.
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Comment number 4.
At 7th May 2008, solomanbrown wrote:Dear Robert
The consequencies to the economy regards defence projects and jobs has been poited out, even if there are slush funds.
There is though a very serios issue, that is going unnoticed since devolution,
The number of Government jobs closed down in ENGLAND, only to be resurected in NORTHERN IRELAND, WALES AND SCOTLAND.
PASSPORT OFFICE ETC,
England is being discriminated against, of that there is no doubt, and the latest, defence back stab, is the contract to build the armies new generation of amoured vehicles with and American Contractor, the cancellation of the Nimrod Replacement, and the Lynx, cancellation by Gordon Brown,
THATS HOW SERIOUS THE ABYSS HAS BECOME, VERY SERIOUS INDEED.
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Comment number 5.
At 7th May 2008, Slug wrote:Business vs Ethics
Money vs Morals
Only ever going to be one winner in either of the two contests above. I fail to see why BAE should be investigated. Had they not done the deal, the Saudis simply would have purchased their weapons elsewhere. Getting the deal done meant a great deal of money and jobs for British companies and British people. In the light of this, the SFO should back off.
What possible good can it do to unravel the deal and throw the directors of BAE in prison? For a start, large parts of BAE would probably go bust, billions of pounds of taxpayers money would be lost and probably there would be redundancies running into thousands. But at least the peaceniks could sleep well at night knowing that 'justice' had been served. Money makes the world go round, my friends, and greasing the wheels is a pretty standard way of speeding the process.
You can go and wear a hair shirt and live in a commune if this makes you feel so uneasy, but hey, when it really comes down to it, I'll bet some of you still have a sneaking admiration that the British Defence Industry can still get one over the Americans now and again, even if we had to grease a few palms to do it...
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Comment number 6.
At 7th May 2008, politicianhater wrote:No-one seems to recognise that the defence industry employs hundreds of thousands of people across the UK and brings in £5bn per year to the UK economy in exports alone.
The Al-Yamamah issue is over a decade old and the industry has agreed Europe-wide common industry standards since then.
It's important to clear up issues from the past but everyone is dwelling in it.
The damage this is doing to an industry that has reformed cannot be overstated.
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Comment number 7.
At 7th May 2008, Rich Indeed wrote:"He fears the reputation of his company will otherwise be indelibly stained" - these people are arms dealers for Gods sake, I don't think their reputation can sink much lower.
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Comment number 8.
At 7th May 2008, terencekiff wrote:This comment was removed because the moderators found it broke the house rules. Explain.
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Comment number 9.
At 9th May 2008, Hippy god says Peace and Love likes RT wrote:Unfortunately it is a fact of life that certain parts of the world accept bribery and kickbacks as a normal part of business.
If BAE is guilty (not yet proven) then it would be guilty of doing what every other European company in that region HAS to do.
They don't get an option.
It's pay up or the Country in question will do business with someone else (who will).
So it another of lifes stark choices:
Grease the wheels, or lose the jobs, and foreign exchange.
Of course British Pension Funds invest in Arms companies, so unless you have an ethical Pension fund you too will share in the Arms companies success or failure.
Please check your consciences by the Door !
And don't forget your ticket......
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Comment number 10.
At 11th May 2008, Geoff Berry wrote:Robert,
The practices of business in the Middle East are historically different, I have the 'T' Shirts.
As a well respected journalist, certainly in my opinion, I will ask you a single question.
Do you think that the French or USA media and governments would spend one minute 'turning over the stones' of an armaments deal with Saudi Arabia 25 years after the event ?
A better use of time would be to investigate and inform about the politics behind the scenes that has put BAe in this situation.
The decision to stop the SFO investigation was the only sensible thing this government has done in 11 years of it's axis of incompetence.
I look forward to a change of direction in your reporting of this subject, go for it !
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Comment number 11.
At 13th May 2008, Hippy god says Peace and Love likes RT wrote:It would be nice if the SFO would investigate some of the short selling of British firms by Hedge funds.
I believe I read somewhere that the SEC are doing just that (regarding American firms) in the US.
It would be nice to see the rumour profiteers brought to book.
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