UK Serious Fraud Office closes bribery enquiry

The UK's Serious Fraud Office has closed its corruption investigation into an Export Credit Guarantee Department (ECGD) guaranteed British defence contract with Saudi Arabia. ECA Watch members CAAT and the Corner House have retained solicitors and requested the SFO, Attorney General and Prime Minister to withdraw their decision to discontinue the investigation.

It has been alleged that BAE Systems made secret payments of millions of pounds to Swiss accounts linked to an arms broker for the Saudi Royal family, who is said to be a friend of Peter Mandelson, the EU Commissioner for Trade and a former UK Labour Cabinet Minister, in return for continued Saudi commitments to spend Billions of Pounds for 72 Eurofighter Typhoon jet fighters.

In an editorial dated 19 December 2006, The Economist noted that “It will undermine efforts to promote the rule of law abroad in countries like Iraq and Afghanistan.”

Britain is party to the OECD Anti-Bribery Convention, under which damage to foreign relations with another state, the Government's stated reason behind the canceling of the criminal investigation, is not allowed to stand in the way of efforts to stamp out bribery. The OECD notes that "Thirty-six countries have ratified the OECD Anti-bribery Convention.. [and] complying with the Convention requires unwavering support from the OECD and its Working Group on Bribery. Country monitoring and extensive follow-up ensure that all 36 countries win the fight against bribery."

In addition, the UK's ECGD which guaranteed the BAE Systems contract, has subscribed to the OECD's Action Statement on Bribery and Officially Supported Export Credits. ECA Watch will be monitoring actions taken by other OECD export credit agencies (ECAs) to determine the effectiveness of the peer review procedures outlined in this Statement. There are serious questions as to whether ECGD should continue to support BAE Systems on further contracts to Saudi Arabia and other countries given the nature of the corruption allegations.

Britain criminalised overseas corruption in 2002, but has not yet brought a prosecution, although the Serious Fraud Office is said to be continuing with its investigation of BAE Systems contracts in South Africa, Tanzania, Romania and the Czech Republic where allegations of corruption have also been made.