The Corner House and CAAT win landmark ruling on BAE-Saudi corruption case
This past Friday, 9 November 2007, just before 1 pm, two High Court judges granted permission to Campaign Against Arms Trade (CAAT) and The Corner House for a full judicial review hearing against the UK Government's decision in December last year to cut short a Serious Fraud Office (SFO) investigation into alleged corruption by BAE Systems in recent arms deals with Saudi Arabia.
Within minutes, the news was being broadcast on radio, television and the web around the world, from 'The Hindu' to the 'Houston Chronicle'. Both groups were inundated with requests for media interviews - including from media channels that we didn't think covered the news . . .
Our apologies, therefore, that we're a little slow on this Monday morning in informing our own listserve of what has happened. Following is a summary of Friday's decision and updated background to the case, together with some of the major news articles.
PERMISSION GRANTED
At an oral hearing on Friday 9 November in the UK's High Court, Lord Justice Moses, sitting with Mr Justice Irwin, granted permission to Campaign Against Arms Trade (CAAT) and The Corner House to bring a full judicial review hearing against the UK Government's decision to cut short a Serious Fraud Office (SFO) investigation into alleged corruption by BAE Systems in recent arms deals with Saudi Arabia. (The Serious Fraud Office is a UK government department that investigates and prosecutes complex fraud.)
Lawyers for the two groups had argued before the judges that the SFO decision was unlawful under the OECD's Anti-Bribery Convention, which the UK signed in 1997
(To see our arguments, go to: http:/www.thecornerhouse.org.uk/summary.shtml?x=558468).
Lord Justice Moses agreed with the groups that the issue 'cries out for a public hearing' because it involves 'matters of concern and public importance'. He concluded that 'it is in everyone's interest that a full hearing take place' and was 'surprised' that the Government had opposed the application.
The full judicial review hearing has now been scheduled for some time after 28 January 2008, and is expected to last two days. The hearing will not be about the allegations that BAE ran a 'slush fund' to influence officials for its Saudi arms contracts, but will consider only whether the UK Government acted illegally in ending the SFO investigation into these allegations.
In the meantime (but probably before the end of this year), a further Court hearing will take place to prepare for the judicial review. At this Directions Hearing, the Court will rule on matters such as:
- the extent to which the Government may apply for Public Interest Immunity Certificates to prevent public disclosure of the Government's evidence;
- what, if any, safeguards may be put in place (such as the appointment of security cleared Special Advocates to represent CAAT and The Corner House in the event of any closed hearing);
- the full details of the Protective Costs Order awarded to CAAT and The Corner House in principle (see below).
Symon Hill of CAAT said of the judges' decision to give permission for a judicial review, 'This is brilliant news for everyone who wants to see an end to arms companies' influence over government and for everyone who cares about justice in Britain. We are now one step further today to the point when BAE Systems is no longer calling the shots.'
Nicholas Hildyard of The Corner House said, 'Today is a great day for British justice. The courts have today shown that no one is above the law -- not BAE Systems, not the Government, not Saudi princes. There are key legal principles at stake here. At last this case will get the public hearing it deserves.'
BACKGROUND TO LEGAL CHALLENGE
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, the UK's largest arms manufacturer.
(For more information, go to http:/www.guardian.co.uk/baefiles and http:/www.controlbae.org/)
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. One allegation is that BAE ran a £60 million 'slush fund' for the personal benefit of Saudi royals.
On 14th December 2006, the SFO announced that it was ending its investigation into these bribery allegations on the grounds that continuing the investigation might lead to Saudi Arabia withdrawing diplomatic cooperation with the UK on security and intelligence.
Just four days later, on 18th December 2006, The Corner House and CAAT wrote to the UK Government arguing that the SFO decision was unlawful and should be reversed.
The basis for the legal challenge hinges on the UK's obligations under the Anti-Bribery Convention of the Organisation for Economic Co-operation and Development (OECD), which Britain signed in 1997. Article 5 of the Convention expressly forbids the termination of corruption investigations on grounds other than the merits of the case being investigated. Signatory governments specifically undertake NOT to be influenced 'by the potential effect [of an investigation] upon relations with another State . . .'
(For more on this, go to the 'Corruption' pages of The Corner House website: http:/www.thecornerhouse.org.uk/subject/corruption/)
Yet the SFO decision was purportedly based on considerations of potential damage to relations with Saudi Arabia, and thus to the UK's national security, if the BAE-Saudi arms deals investigation continued. The Saudis had reportedly stated that if the investigation was not called off, they would no longer supply the UK with intelligence information to the UK on terrorist threats. The source of this threat is believed to be Prince Bandar bin Sultan, one of those who allegedly received some of the 'corrupt payments' from BAE. At the 9th November oral hearing, Lord Justice Moses summarised the Saudi position as he understood it as a threat to withdraw intelligence cooperation with the UK, and thereby potentially see people in Britain blown up, rather than continue the investigation and see one of their number being accused of bribery or involvement in corruption.
As the Government did not restore the SFO investigation, on 23rd 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 had been discovered that BAE had obtained CAAT's confidential and privileged legal advice about the judicial review. In a separate legal action brought by CAAT, BAE Systems revealed that it had been paying a private investigator to obtain information about CAAT. The group has since learnt that BAE has been involved in yet further unlawful acts of spying, and is continuing to pursue, through the Court process, answers to questions of how confidential information came into the hands of BAE.
It was thus only on 18th April 2007 that CAAT and The Corner House were able to lodge their full grounds for an application for a judicial review.
In May, a High Court Judge, Mr Justice Collins, considered these grounds, and the Government's response to them, which is to deny any breach of the OECD Anti-Bribery Convention -- but to declare that the Government would have taken the decision to terminate the SFO investigation anyway, regardless of any violation of international law, in the interests of national security. According to the Government, compliance with the Convention 'was not . . . a critical or decisive matter' in making the decision. The OECD Anti-Bribery Convention, however, has no exemption for national security.
On 29th May 2007, Judge Collins refused to grant permission for a judicial review hearing on the grounds that 'national security must always prevail', stating that the request was 'wholly unarguable'. The groups appealed this decision, resulting in the November oral hearing. The decision by Lord Justice Moses and Mr Justice Irwin to give the go-head for the judicial review overturns this refusal.
In granting permission for the judicial review, Lord Justice Moses stressed that the issue was closely concerned with the legal system in this country that 'judges have to protect'. He was referring to the controversial overlap of powers in the UK between the Attorney General (the chief legal adviser to the Government who ultimately decides whether to go ahead with a prosecution or not) and the Executive (or the government). Lord Justice Moses was asserting the Court's' constitutional right to review a case where there is an apparent conflict of interest between these two powers.
The Government's defence was that the case made by The Corner House and CAAT for a judicial review (on the grounds that Article 5 of the OECD Anti-Bribery Convention has been breached) is unarguable. It claims that a UK court has no jurisdiction to interpret or apply this international treaty because the Director of the Serious Fraud Office would have taken the same decision even if it did violate the Convention. It asserts that, in any event, the Director's decision does not violate the Convention. It therefore believes 'there are no arguable domestic law grounds on which to challenge the decision'.
(To read the Government's defence, go to: http:/www.thecornerhouse.org.uk/summary.shtml?x=558470)
Since the Serious Fraud Office terminated its investigation in December last year, the Department of Justice in the United States has launched a criminal inquiry into alleged corruption in BAE Systems' deals with Saudi Arabia and the company's compliance with US anti-corruption laws. The Department made an official request for 'mutual legal assistance' to the Home Office, which has delayed passing the request to the Serious Fraud Office. The SFO has important documentation relevant to an investigation gained from its inquiry into payments made to members of the Saudi royal family.
In addition, a US pension fund and BAE shareholder started to sue past and present directors of BAE Systems in September this year over allegations that the company spent more than $2 billion bribing Saudi Arabian officials to win business. The fund charges the company officers with breaching their fiduciary duties.
PROTECTIVE COSTS ORDER
At the oral hearing, the two judges also considered our request for a Protective Costs Order: a limit or cap on the extent of the other side's legal costs that we should pay if we lose the case. We requested this Order on the grounds that the issues the case raises are of general public importance that should be resolved for the good of the public interest. As The Corner House and CAAT are small organisations, we can't risk such a liability and would have to stop the legal proceedings without such a Protective Costs Order. Through fund raising, including a comedy benefit night in September organised by British comedian activist Mark Thomas, we've managed to raise £70,000 -- an indication of the extent of public support for bringing the judicial review. Our lawyers thus requested a Protective Costs Order of £70,000, which was granted by Lord Justice Moses and Mr Justice Irwin.
(To see a copy of the comedy benefit night programme, go to: http:/www.thecornerhouse.org.uk/summary.shtml?x=558467),
At the hearing, however, the Government requested that its risk of paying our legal costs also be limited to £70,000. Our legal team (solicitors Richard Stein and Jamie Beagent at Leigh Day & Co, and barristers David Pannick QC, Dinah Rose QC and Ben Jaffey of Blackstone Chambers, and Philippe Sands QC of Matrix Chambers) has taken on this case on a 'no-win, no fee' basis -- if we don't win, they don't get paid. If we do win, however, they will recover their legal costs from the other losing side. It is these costs that the Government wanted to limit to £70,000. Lord Justice Moses and Mr Justice Irwin refused the Government's request, implicitly rejecting the claim that the risk for bringing this court case is balanced equally between the two sides -- after all, the Government's legal team will get paid, win or lose.
The judges agreed, however, that the amount of its costs that our legal team can claim from the losing side, if we win, should not be limited to the arbitrary sum proposed by the Government, but to 'solicitors' fees and a fee for a single advocate of junior counsel status that are no more than modest', a wording determined in a previous judicial review and protective costs order application brought by The Corner House in 2005
('Corner House Double Victory on UK Government Department's Anti-Bribery Rules and Public Interest Litigation', http:/www.thecornerhouse.org.uk/item.shtml?x=107362)
The final details of these funding arrangements will be confirmed at the interim Directions Hearing later this year (see above).
Here's just a selection of the media coverage of the decision to give permission for a judicial review.
1. 'High court to review halted BAE-Saudi investigation', Guardian Unlimited
2. 'TI welcomes judicial review of major foreign bribery case', Transparency International
3. 'Campaigners win judicial review of BAE arms case', The Independent, UK
4. 'Court agrees to challenges on BAE slush fund accusations', Euronews
5. 'Judicial review of BAE probe ordered', Daily Telegraph
6. 'Good to see that the judiciary still has teeth', Daily Telegraph Business Comment
7. 'Court challenge on Saudi 'bribes': Campaigners believe that the Government has acted illegally ', The Times, UK
8. 'UK court to hear BAE challenge', Al Jazeera television network
9. 'Blow for U.K. in BAE scandal: Court allows case against decision to drop investigation', The Hindu
10. 'U.K.-Saudi arms deal gets renewed scrutiny', International Herald Tribune
11. 'Group Wins Hearing on BAE-Saudi Probe', Houston Chronicle
12. 'BAE-Saudi Bribery Case Probe to Be Reviewed by Court', Bloomberg
13. 'High Court to review BAE-Saudi decision', Financial Times
1. 'High court to review halted BAE-Saudi investigation' By Haroon Siddique and agencies Friday November 9, 2007 Guardian Unlimited
Anti-corruption campaigners today won permission to bring a high court challenge over the decision to end investigations into alleged corruption by BAE Systems in arms deals with Saudi Arabia.
Lawyers for the Campaign Against Arms Trade (CAAT) and the Corner House argued that the UK government's decision to cut short an investigation by the Serious Fraud Office (SFO) was unlawful under the OECD's anti-bribery convention, which the UK signed in 1997.
Lord Justice Moses, sitting with Mr Justice Irwin, said 'matters of concern and public importance' had been raised and the challenge 'cries out for a hearing'.
The £20bn-plus al-Yamamah contract with Saudi Arabia, which formed the focus of the legal challenge, was negotiated by the Thatcher government and involved the sale of Tornado jets made by BAE. Prince Bandar bin Sultan of Saudi Arabia allegedly received a secret £1bn payment to facilitate the 1985 contract.
The government has denied any breach of the convention and declared that it took the decision to terminate the investigation on the grounds of 'national security'.
Tony Blair, the prime minister at the time the inquiry was halted, said that continuing the investigation would have jeopardised Saudi cooperation on counter-terrorism.
The campaigners' lawyers argued that the SFO decision failed to take into account the national security implications of not proceeding with the investigation.
They said that the government's willingness to turn a blind eye to corruption within Saudi Arabia had the potential to encourage more international resentment towards the UK.
Notwithstanding those arguments, the campaigners contend that Article 5 of the OECD's anti-bribery convention precludes the UK from taking into account the potential effect of an investigation or prosecution on another state - even where there was concern over its impact on national security.
The CAAT spokesman Symon Hill told Guardian Unlimited today's decision was brilliant 'for everyone who cares about justice in Britain'.
'It's great news for everyone thinking that BAE and the government should not be above the law that the rest of us have to follow,' he said.
In September, the two countries announced a £4.4bn deal for the sale of 72 Eurofighter Typhoon aircraft, also made by BAE, to the desert kingdom.
The same month, the UK government was accused of obstructing an American criminal investigation into the al-Yamamah contract by the US inquiry team.
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.2. 'TI welcomes judicial review of major foreign bribery case' Transparency International Press Release Berlin, 09 November 2007
Transparency International (TI) welcomes today's ruling by the British High Court allowing a full judicial review of the UK government's decision to terminate an investigation into allegations of bribery by BAE Systems on the Al Yamamah arms project in Saudi Arabia.
'We are encouraged and hopeful that commitments made under the OECD Anti-Bribery Convention will prevail. This decision will help to ensure that the Convention is implemented and investigations are carried out when necessary', said Huguette Labelle, Chair of Transparency International.
The UK government's assertion that national security concerns overrode its commitment to prosecute foreign bribery created a loophole that other governments might readily use to sidestep the convention's provisions. Since the investigation was stopped by the Serious Fraud Office, TI has argued that Article Five of the convention forbids termination of a corruption investigation for any reason other than the merits of the case. The convention contains no provision for a national security exception.
'Hopefully, the judicial review will strengthen the case for effective prosecution of foreign bribery by the UK without political interference -- which is critical to restoring the UK's credibility in fighting international corruption', said Laurence Cockcroft, Chair of Transparency International UK.
The OECD's Anti-Bribery Convention is an essential legal framework committing the world's leading industrialised nations to criminalise the bribery of foreign public officials. Almost ten years after its adoption, there has been little or no enforcement in two-thirds of signatory countries.
TI's 2007/ Progress Report on OECD Convention Enforcement issued in July, shows that more than half of 34 parties to the OECD Convention on Combating Bribery of Foreign Public Officials are not enforcing the Convention or keeping their commitments.
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. 3. 'Campaigners win judicial review of BAE arms case' By David Prosser, Deputy Business Editor, The Independent, UK 10 November 2007
Anti-arms campaigners have won a judicial review of last year's decision by the Serious Fraud Office to end its investigations into the defence company BAE's contracts with Saudi Arabia.
The judgment will be hugely embarrassing to the Government, which opposed the review and has consistently backed the SFO's decision to drop the case.
Yesterday two High Court judges granted an application from the Campaign Against the Arms Trade and Corner House for the right to mount a full challenge to the SFO, which in December last year dropped an inquiry into allegations that BAE had made secret payments to Saudi officials in order to secure a series of massive contracts.
Lord Justice Moses and Mr Justice Irwin said the case involved 'matters of concern and public importance', and that the challenge 'cries out for a hearing'. The judges, who will now decide how to proceed with the case, likely to be a two-day hearing in the new year, said they were 'surprised' the Government had opposed the campaign groups' application.
The SFO's decision last year prompted speculation that it had come under pressure from the Government, as ministers became concerned about a deterioration in relations with Saudi Arabia. The SFO's director, Robert Wardle, insisted he alone had taken the decision to drop the probe, begun in 2004, following advice that failing to do so might damage national security. Mr Wardle said he would have preferred to continue the investigation into BAE, which centred on the £50bn Al Yamamah arms deal signed in 1986, and believed it was progressing. However, Lord Goldsmith, then the Attorney General, said he thought there was little chance of a successful prosecution.
In yesterday's hearing, lawyers for the campaign groups argued that the SFO had failed to consider the threat to national security posed by discontinuing the investigation, which, they said, could leave the UK open to additional resentment from international foes. The groups also argued that, in any case, the OECD's anti-bribery treaty, to which the UK is a signatory, did not allow countries to suspend such investigations for national security reasons.
A judicial review of the SFO's decision will consider the legality of dropping the inquiry, rather than investigating the allegations against BAE. Nevertheless, the hearing will embarrass ministers, who had hoped to put the controversy behind them. It will also cause irritation at BAE, which is facing a separate inquiry into Al Yamamah from US regulators.
Symon Hill, a spokesman for the Campaign Against the Arms Trade, said: 'This is brilliant news for all those who have campaigned against the influence that arms companies bring to bear on government.'
A spokesman for BAE, which has always denied any wrongdoing, said yesterday: 'This is a matter for Corner House, the CAAT and the Government -- we were not a party to this case.'
A spokesman for the SFO declined to comment.
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4. 'Court agrees to challenges on BAE slush fund accusations' Euronews
Britain's High Court has agreed to hear a challenge on the legality of the decision by the Serious Fraud Office to drop a corruption probe into Europe's biggest defence company, BAE Systems. The Serious Fraud Office called off a two-year investigation last December into the biggest export deal in British History, the huge Al Yamamah arms deal between Britain and Saudi Arabia. The then British Prime Minister Tony Blair was criticised after claiming the investigation would damage Britain's national security. Two pressure groups, Corner House Research and and the Campaign Against Arms Trade, want a judicial review. The allegations centre on a 61 billion euro deal with Saudi Arabia in 1985, which provided Tornado and Hawk aircraft and other military hardware. BAE was accused of operating a slush fund to secure the contract, an accusation the company denies. BAE has since been contracted to provide 72 Eurofighter jets worth some 6.2 billion euros to Saudi Arabia.
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5. 'Judicial review of BAE probe ordered' By Katherine Griffiths 10 November 2007 Daily Telegraph
Campaigners have won a judicial review into the dropping of the investigation of alleged bribery by BAE Systems in Saudi Arabia.
The High Court yesterday said the decision by the Serious Fraud Office (SFO) to end its two-year probe into Al-Yamamah, the £40bn arms contract between BAE Systems and Saudi Arabia, might have been unlawful.
It will now be subjected to a two-day judicial review hearing early in the New Year.
If the judges then rule that the decision to stop the investigation was against the law, it is possible the SFO could restart the probe.
The case involved allegations that BAE facilitated the payment of millions of pounds in bribes to senior Saudis in order to win Al-Yamamah, at the time the largest defence contract in history.
The SFO dropped its investigation of Al-Yamamah last December after its director, Robert Wardle, decided that carrying on could hurt Britain's national security. He had received briefings from senior British officials warning that Saudi Arabia might cut off co-operation in the fight against terrorism if the SFO continued the investigation.
A judicial review was called for by anti-arms groups The Corner House and Campaign Against Arms Trade (CAAT).
As a signatory of the 1997 Anti-Bribery Convention drawn up by the Organisation for Economic Cooperation and Development (OECD), Britain has a duty to investigate allegations of corruption, even if national security is at risk, the two pressure groups argued.
Lord Justice Moses agreed, saying the issue 'cries out for a public hearing'. He added: 'It is in everyone's interest that a hearing take place.'
Symon Hill of CAAT said: 'This is brilliant news for everyone who wants to see an end to arms companies' influence over government. We are one step further to the point when BAE Systems is no longer calling the shots.'
Nicholas Hildyard of The Corner House said, 'The courts have shown no one is above the law -- not BAE Systems, not the Government, not Saudi princes. '
BAE denies any wrongdoing. A spokesman said of the judicial review: 'This was a matter between Corner House, CAAT and the Government'.
The SFO is continuing to investigate BAE over its business in other countries, including South Africa, the Czech Republic and Tanzania.
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6. 'Good to see that the judiciary still has teeth' By Damian Reece Daily Telepgraph Business Comment
Anyone who believes government, and its agencies, have become more overbearing than ever before under Labour can celebrate a significant legal decision.
Judges have granted leave for a judicial review of the Serious Fraud Office's decision to drop its investigation into BAE Systems. It reveals a judiciary that still has teeth and is willing to put into practice, on our behalf, the principle of the separation of powers.
As a check on executive power, the judicial review will examine how the SFO's decision came about and will go some way to burnishing the somewhat tarnished corporate reputation of the UK under Labour.
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7. 'Court challenge on Saudi 'bribes': Campaigners believe that the Government has acted illegally'
The Times November 10, 2007 by Michael Evans, Defence Editor
The controversial decision by the Serious Fraud Office to drop its investigation into bribery allegations involving BAE Systems and members of the Saudi Arabian Royal Family is to be put to the test in a High Court case.
Ruling in favour of two pressure groups who yesterday sought an application for a judicial review of the decision, made in December last year, Lord Justice Moses said that 'matters of concern and public importance' had been raised. The challenge by Corner House Research, an anticorruption pressure group, and the Campaign Against the Arms Trade 'cries out for a hearing', the judge said.
The decision against the SFO reversed a ruling made by Mr Justice Collins in May, in which he said that the request for a judicial review was 'wholly unarguable'.
The SFO had been investigating allegations of corruption against BAE for more than two years. It was alleged that Britain's biggest defence company had paid huge sums of money in bribes to certain members of the Saudi Royal Family in connection with the £43 billion al-Yamamah arms deal in the 1990s, which included the sale of 72 Tornado aircraft.
BAE has always denied any wrongdoing and has emphasised that the al-Yamamah contract was a government-to-government deal. When Robert Wardle, the SFO director, announced that the corruption investigation was being dropped, Tony Blair, then Prime Minister, said that if it had continued it would have damaged Britain's national security interests. Mr Blair said that Britain and Saudi Arabia shared key intelligence in the fight against international terrorists, and thousands of jobs were also at stake because the Saudis were threatening to pull out of a new deal to buy Typhoon Eurofighters to replace the ageing Tornados.
In May Mr Justice Collins said that 'no state could be expected to take action which jeopardises the security of the State or the lives of its citizens'.
However, Lord Justice Moses, sitting with Mr Justice Irwin at the High Court, said it was in everybody's interest that there should be a full hearing.
A spokesman for the Campaign Against the Arms Trade said: 'This is a great success for us. Our case is that the Government acted illegally.'
Norman Lamb, Lib Dem MP for North Norfolk, who has been highly critical of the SFO decision, said: 'This is a significant breakthrough and puts the Government on the spot.'
Dinah Rose, QC, acting for the two pressure groups, argued that the SFO director misdirected himself in law by taking into account the 'irrelevant consideration' that continuing the investigation into BAE would risk prejudicing Saudi Arabia's cooperation on counter-terrorism issues, which would have an adverse effect on security.
She said that under European anti-bribery laws, to which Britain is supposed to adhere, the Government was precluded from taking into account the potential effect of an investigation or prosecution on another state, even where there was concern about its impact on national security.
Lord Justice Moses said: 'It seems to me in everybody's interest that there should be a full hearing.'
The case will be heard after January 28 next year.
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8. 'UK court to hear BAE challenge' Al Jazeera television network
Pressure groups will challenge the UK fraud office's decision to stop probing the BAE-Saudi deals [AP].
Britain's high court has agreed to hear a legal challenge to the government's decision to stop an investigation into alleged corruption by BAE Systems in an arms deal with Saudi Arabia.
The Serious Fraud Office (SFO) called off a two-year investigation in December into the biggest export deal in British history.
The case alleged that BAE ran a $126 million 'slush fund' to influence officials from Saudi Arabia as part of the Al-Yamamah arms deal in the 1980s.
The deal saw BAE supply Tornado fighter jets and other military equipment, which Saudi Arabia paid for with oil.
Tony Blair, British prime minister at the time, took responsibility earlier this year for halting the investigation, saying it threatened national security interests.
However, lawyers for the Campaign Against Arms Trade (Caat) and the anti-corruption group, Corner House Research, have now argued that the decision to stop the inquiry was unlawful under the Organisation for Economic Cooperation and Development (OECD) anti-bribery treaty.
Eurofighter deal
The full extent of the deal was never revealed but it was widely believed to be Britain's largest-ever export agreement.
Saudi Arabia bought 72 Eurofighter Typhoons from BAE as recently as September [AP]
As recently as September, Saudi Arabia signed a $8.84 billion agreement with Britain to buy 72 Eurofighter Typhoon jets from BAE.
After a brief hearing on Friday, the UK court gave the two pressure groups permission to seek a full judicial review of the SFO's decision.
Lord Justice Alan Moses said that the case concerned 'a question of great public importance' and 'cries out for a hearing'.
'This closely involves the judicial process and the criminal justice system in this country of which the guardians are the judiciary and not the government,' he said.
Swiss fulcrum
Dinah Rose, a lawyer for Corner House and Caat, told the court that the inquiry was called off shortly after the SFO had obtained search orders for Swiss bank accounts.
'That was the point at which the acute pressure seems to have been applied,' she said.
Moses, sitting with Justice Stephen Irwin, said he was passing no comment on the arguments put forward by Caat and Corner House ahead of the full hearing.
'This is something that the judges are here to decide and in my view requires a full public hearing and consideration,' he said.
BAE was not available for immediate comment, but has previously denied all accusations of wrong doing.
Prince Bandar bin Sultan, former ambassador to the US and now head of Saudi Arabia's National Security Council, has also denied that he profited from the deal.
In the meantime, the US justice department is continuing its own investigation, which started in June and is likely to end in February, into BAE's compliance with anti-corruption laws.
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9. 'Blow for U.K. in BAE scandal: Court allows case against decision to drop investigation ' By Hasan Suroor The Hindu
LONDON: In an embarrassing development for the British government, the High Court on Friday allowed two pressure groups to challenge its controversial decision to drop a criminal investigation into allegations that BAE Systems, Britain's biggest arms supplier, paid millions of pounds in secret commissions to win a £43-billion defence contract with Saudi Arabia in 1985.
The court granted permission to the Campaign Against the Arms Trade and Corner House Research to seek a judicial review of the Government's decision on grounds that the matter was of 'public importance.' Judges said it 'cries out for a hearing.'
The ruling gave a new twist to the long-running controversy sparked by the former Prime Minister, Tony Blair, when, last December, he intervened to stop an investigation by the Serious Fraud Office claiming that it would have a 'devastating' effect on Britain's relations with Saudi Arabia, a key ally in the 'war' against terrorism.
'Damage to ties'
'I think that had we proceeded with this investigation, it would have significantly materially damaged our relationship with Saudi Arabia....It would have done damage to a major strategic partnership right at the moment when we need that strategic partnership, in terms of Iraq and other issues. And all of that leaves aside the issue of the fact that we would have lost thousands of UK jobs,' he said responding to criticism that he had acted under pressure from the Saudi government.
It was reported at the time that the Saudis had threatened to call off another multi-billion pound deal with BAE if the inquiry went ahead. Within months of the inquiry being dropped Saudi Arabia signed a deal with BAE to buy 72 Eurofighter Typhoon jets for about £4.4 billion.
At the heart of the controversy was the allegation that BAE paid up to £1 billion to Prince Bandar bin Sultan, a former Saudi Ambassador to America, for his role in negotiating the contract, known as the Yamamah deal signed by Prime Minister Margaret Thatcher. Prince Bandar has denied receiving any 'improper' payments. BAE also says it was not involved in any wrong- doing.
The groups, which brought the challenge, argued that there was no justification for scrapping the investigation even if national security was at risk.
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10. 'U.K.-Saudi arms deal gets renewed scrutiny' Bloomberg News, Reuters, The Associated Press International Herald Tribune
LONDON: The British High Court on Friday ordered a full judicial review of the government's decision to stop an investigation into alleged corruption by BAE Systems in an arms deal with Saudi Arabia.
The court agreed to hear a challenge on the decision to stop the inquiry, which was made in December 2006. The Serious Fraud Office called off a two-year investigation into what is possibly the biggest export transaction in British history, a weapons deal between the British and Saudi governments with a value estimated at £40 billion, or more than $80 billion. The investigation focused on BAE, which served as prime contractor and supplied Saudi Arabia with fighter jets.
Two groups, Corner House Research and the Campaign Against Arms Trade, made the plea for the review. Corner House said the review was likely to last two days and be held in the winter.
Tony Blair, prime minister when the inquiry was dropped, was criticized by political opponents after saying that Britain's national interests would be damaged if the Serious Fraud Office proceeded with its investigation. They said the decision went against the rule of law and accused the government of ceding to pressure from the Saudi royal family.
The British government denied taking into account any commercial considerations in the decision. Such influence would violate rules of the Organization for Economic Cooperation and Development, of which Britain is a member.
The two interest groups argue that Britain violated the rules. The OECD itself expressed 'serious concerns' about the termination of the investigation. The U.S. Justice Department is conducting an inquiry into BAE.The British government signed a secondary deal for BAE to supply Saudi Arabia with Eurofighter jets in September, at a price of £4.4 billion.
Lord Justice Alan Moses said the case concerned 'a question of great public importance' and 'cries out for a hearing.'
BAE made it clear it was not a party to the court hearing Friday. Scott Hailstone, the company's spokesman in London, said, 'Any questions should be directed to those parties.' BAE has denied making improper payments in connection to its dealings with Saudi Arabia.
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11. 'Group Wins Hearing on BAE-Saudi Probe' By JANE WARDELL AP Business Writer (c) 2007 The Associated Press, 9 November 2007 Houston Chronicle
LONDON - Britain's High Court agreed on Friday to hear a challenge to the legality of the government's decision to stop an investigation into alleged corruption by BAE Systems PLC in an arms deal with Saudi Arabia.
Lawyers for the Campaign Against Arms Trade and the anti-corruption group Corner House Research argued that the decision to stop the inquiry was unlawful under the Organization for Economic Cooperation and Development's anti-bribery treaty.
Then-Prime Minister Tony Blair took responsibility earlier this year for halting the probe by the Serious Fraud Office, saying the investigation threatened national security interests.
Lord Justice Alan Moses said the case raised 'a question of great public importance' and 'cries out for a hearing.'
'This closely involves the judicial process and the criminal justice system in this country of which the guardians are the judiciary and not the government,' he said.
Moses, sitting with Justice Stephen Irwin, said he was passing no comment on the arguments put forward by CAAT and Corner House ahead of the full hearing.
'This is something that the judges are here to decide and in my view requires a full public hearing and consideration,' he said.
The Serious Fraud Office was investigating allegations that BAE ran a 60 million pound ($126 million) 'slush fund' offering sweeteners to officials from Saudi Arabia in return for lucrative contracts as part of the Al-Yamamah arms deal in the 1980s.
BAE has denied the accusations. Prince Bandar bin Sultan, former ambassador to the United States and now head of Saudi Arabia's National Security Council, has also denied that he profited from the deal.
Al-Yamamah, meaning 'the dove,' was the name given to an agreement under which BAE supplied Tornado fighter jets and other military equipment to Saudi Arabia, which paid the British government with oil.
The full extent of the deal was never revealed but it was widely believed to be Britain's largest-ever export agreement.
The SFO's investigation was called off in December, and Blair told reporters in January that 'had we proceeded with this investigation it would have significantly materially damaged our relationship with Saudi Arabia, that that relationship is of vital importance for us fighting terrorism including here in this country.'
Saudi Arabia subsequently signed a 4.43 billion British pound ($8.84 billion) agreement with Britain to buy 72 Eurofighter Typhoon jets from BAE in September.
Dinah Rose, a lawyer for Corner House and CAAT, told the court that the inquiry was called off shortly after the SFO had obtained search orders for Swiss bank accounts.
'That was the point at which the acute pressure seems to have been applied,' she said.
Philip Sales, a lawyer acting for the government, said that SFO Director Robert Wardle had made a decision based on the evidence provided by the government and would make the same decision again.
'The material that he was given to consider was so pressing in regard to national security that he would have taken the same decision no matter what the OECD convention,' said Sales.
'These matters have been looked at again and refreshed in the context of this litigation ... and the same view has been found,' he added.
The U.S. Justice Department is continuing its own investigation, started in June, into BAE's compliance with anti-corruption laws.
A hearing to settle some legal and cost issues will be held on the High Court case before the end of the year. The full challenge, which is expected to take two days, will be held in late January or early February.
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12. 'BAE-Saudi Bribery Case Probe to Be Reviewed by Court' By James Lumley and Emmet Oliver, November 9 2007 Bloomberg
Britain's abandonment of a bribery investigation into BAE Systems Plc weapons deals that former Prime Minister Tony Blair said might damage relations with Saudi Arabia will be reviewed by London's High Court.
An examination of the Serious Fraud Office's decision to end the probe is ``in the public interest,'' two judges said at a hearing today. The SFO called off its investigation of 43 billion pounds ($90 billion) of Saudi contracts with London- based BAE on Dec. 14, citing national security concerns.
'I don't think this is going to change the outcome of the original decision, but it will be an irritant for BAE to have the issues aired once again,' said Howard Wheeldon, a defense analyst at BGC Partners in London.
Since the probe was dropped, BAE has won a 4.43 billion- pound contract to sell 72 Eurofighter Typhoon warplanes to Saudi Arabia, whose King Abdullah last month made the first Saudi state visit to the U.K. in two decades. BAE, Europe's biggest arms maker, has denied wrongdoing throughout the three-year investigation.
Shares of BAE fell 7 pence, or 1.4 percent, to 502.5 pence today. The stock has gained 18 percent this year, valuing the company at 17.6 billion pounds.
Today's case was brought by two pressure groups, Campaign Against Arms Trade and Corner House, which claim SFO Director Robert Wardle didn't take into account a treaty obligation by Britain to prosecute corruption cases. They won the right for what is termed a judicial review.
Heart of the Matter
A review is of 'public importance' because it 'goes to the heart' of confidence in Britain's legal system, Lord Justice Alan Moses, one of the two judges hearing the application, said today. Moses said he was 'surprised' the U.K. government opposed the application for a judicial review.
'BAE was not a party to today's court hearing, which was a matter between Corner House, the CAAT and the Government,' said Scott Hailstone, a company's spokesman in London. 'Any questions should be directed to those parties.'
A spokesman for U.K. Prime Minister Gordon Brown said he had no immediate comment.
Blair, Brown's predecessor, said on June 7 that the SFO corruption probe would have been disastrous for U.K. relations with Saudi Arabia had it gone ahead.
'I don't believe the investigation would have led anywhere except for the complete wreckage of a vital relationship for our country, quite apart from the fact that we would have lost thousands and thousands of British jobs,' he said at the time.
A full hearing will take place next year. The High Court will examine the decision-making process used by the SFO. If the court finds against the public body, the authority can be ordered to reconsider the decision. The SFO would be allowed to draw the same conclusion provided all procedures are correctly followed.
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13. 'High Court to review BAE-Saudi decision' By Michael Peel and Jimmy Burns Published: November 9 2007 21:44 | Last updated: November 9 2007 21:44 Financial Times
Anti-corruption campaigners on Friday won their bid to mount a High Court challenge to the Serious Fraud Office's much-criticised decision to scrap the probe into alleged bribery of Saudi Arabian officials by BAE Systems, the arms company.
Lord Justice Moses overturned an earlier High Court decision to throw out the challenge, ruling that the case raised questions of 'great public importance' around Britain's decision to drop a criminal investigation on national security grounds after pressure from Saudi officials.
The ruling is the latest twist in a case whose international fall-out has dogged the government since the Serious Fraud Office announced the abandonment of its probe almost a year ago.
Lord Justice Moses, sitting with Mr Justice Irwin, emphatically endorsed the need for the full airing of a case 'in which the courts and the legal systems are also closely concerned'.
'Plainly it cries out for a hearing,' he said.
He said he was making no comment on the cogency of the campaigners' claim, which would 'undoubtedly face considerable difficulties'.
Corner House Research and Campaign Against Arms Trade argue the government broke a key international anti-bribery treaty, which prohibits countries from scrapping investigations because of the harm they will potentially cause to relations with other states. The Serious Fraud Office denies the allegation.
Lord Justice Moses outlined the 'hypothesis' that Saudi officials had threatened to withdraw intelligence co-operation with London, threatening 'British lives on British streets', rather than see 'one of their number being accused of bribery or involvement in corruption'.
Prince Bandar bin Sultan, Saudi Arabia's former ambassador to Washington, has denied allegations that he received more than £1bn of secret payments from BAE in connection with the £43bn Al-Yamamah arms deal between London and Riyadh.
Nick Hildyard, co-director of Corner House, said the court had shown that 'no one is above the law: not the government, not BAE, not Saudi princes'.
'The courts have recognised that this is of major public interest and national importance,' he said.
The case -- which is due to be heard early next year -- is a potential political problem for Gordon Brown, who had hoped to put the BAE affair behind him after a big new arms deal was signed with Saudi Arabia this year.
The case could reveal evidence that ministers and officials would have preferred to keep secret, at a time when they want to maintain good diplomatic relations with Riyadh.
The High Court will examine the decision-making process used by the Serious Fraud Office. The court could then order the office to reconsider the decision. But the office would be allowed to draw the same conclusion if all procedures were correctly followed.
'I don't think this is going to change the outcome of the original decision, but it will be an irritant for BAE Systems to have the issues aired once again,' Howard Wheeldon, an analyst at BGC Partners in London, was quoted as saying by Bloomberg News.
Dinah Rose, a lawyer for the two interest groups, told the court that the investigation was called off shortly after the Serious Fraud Office obtained search orders for Swiss bank accounts. 'That was the point at which the acute pressure seems to have been applied,' she said.
Philip Sales, a lawyer for the government, said that Robert Wardle, director of the Serious Fraud Office, had made the decision based on the evidence provided by the government and that he would make the same decision again.
'The material that he was given to consider was so pressing in regard to national security that he would have taken the same decision no matter what the OECD convention,' Sales said.