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National Institute for Health and Clinical Excellence (impact on Carers)

Greg Clark accordingly presented a Bill to require the National Institute for Health and Clinical Excellence to consider the impact of proposed drugs and treatments on carers and patients when assessing their cost effectiveness; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 27 April, and to be printed [Bill 59].

7 Feb 2007 : Column 863

Opposition Day

[5th allotted day]

Al-Yamamah Arms Agreement

Mr. Deputy Speaker (Sir Alan Haselhurst): I must announce to the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

1.41 pm

Dr. Vincent Cable (Twickenham) (LD): I beg to move,

I think that this will be a wide-ranging debate on the whole al-Yamamah saga, but that it will focus specifically on the Government’s decision to discontinue the investigation into BAE Systems last month.

The position of the Liberal Democrat party is that the Government’s decision has done enormous damage, which has undermined the rule of law and Britain’s reputation within the Organisation for Economic Co-operation and Development as a country that applies international law. It has also undermined both our reputation in the developing world—where the Government, through the Chancellor and the Secretary of State for International Development in particular, lecture on corruption—and that of honest, good British companies which are trying to apply the law, whether in relation to financial services or manufacturing. It has also undermined the position of the House because of the anomalous situation in respect of the unpublished Public Accounts Committee report of 15 years ago, which, I understand, no Member present—including you, Mr. Deputy Speaker, and the Chairman of the Committee—has ever read.

Mr. Edward Leigh (Gainsborough) (Con): The hon. Gentleman is right; I have not read it, but let me explain the history. My predecessor as Chairman of the Committee—who was, of course, in the minority Labour party—had a private hearing with the senior Conservative member and the Comptroller and Auditor General. The Comptroller and Auditor General has told me that during that private hearing no evidence whatsoever of corruption on the part of the Ministry of Defence was found. [Interruption.] Well, because the National Audit Office is concerned with the Government and not private companies, there was no discussion of any corruption or alleged corruption by anybody else. Therefore, there is nothing in that report that should alarm the House or lead it to believe that any aspect of the British Government was corrupt.

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Dr. Cable: As my hon. Friends just commented from a sedentary position, in that case there is absolutely nothing to be lost from publishing it. Moreover, I understand that— The Daily Telegraph has reported thisthere was a second report in 1997, which updated the previous one and is more relevant to the account the hon. Gentleman describes, so why cannot that be published either?

In proceeding with my argument, I wish first to pay tribute to some of the non-governmental organisations that have brought this issue to the light of day, particularly Transparency International, the Campaign Against Arms Trade and The Corner House. I also pay tribute to Members of all parties who have tried to open up this debate. In that regard, I shall start by mentioning the debate in the other place last week led by Baroness Williams. My hon. Friend the Member for Southport (Dr. Pugh) has made a major contribution in his role on the PAC and through his ten-minute Bill. An excellent Adjournment debate was introduced by my hon. Friend the Member for St. Ives (Andrew George). Over the years, my hon. Friend the Member for North Norfolk (Norman Lamb) has persistently pursued the issue of corruption and BAE Systems. Pertinent questions have also been asked by my hon. Friends the Members for Hornsey and Wood Green (Lynne Featherstone), for Richmond Park (Susan Kramer), for Cheltenham (Martin Horwood), for Lewes (Norman Baker) and for Somerton and Frome (Mr. Heath).

There has been consistent interest in this issue among not only Liberal Democrat Members, but Labour Members. I can refer back as far as the late Robin Cook who in his attempt to introduce an ethical foreign policy repeatedly ran into a brick wall called BAE Systems. He recorded with some frustration in his diaries that:

Other Members have also pursued the matter. I single out the hon. Member for Kingswood (Roger Berry), who has tried to do so on a multi-party basis, and the hon. Member for Leyton and Wanstead (Harry Cohen) and the right hon. Member for Birmingham, Ladywood (Clare Short), among others.

I hope that we can also draw the Conservatives into this big tent because they frequently argue their belief in the rule of law. We know that there is some embarrassment over this matter—and events of the past few weeks have reminded us why that is so. It was revealed in the Financial Times that one of the names on the Swiss bank accounts that were being investigated by the Serious Fraud Office was Wafiq Said, who is well known. He is a long-standing, loyal and committed supporter of Oxford university and the Conservative party, and in his time he was, I believe, a close business associate of Mr. Jonathan Aitken, who played a key role in the al-Yamamah affair—as people remember—as a Defence Minister, sandwiched between periods when I believe that he was a paid servant of the Saudi Government with an association with Prince Mohammed bin Fahd.

A few weeks ago, there was a little reported piece of news that the authorities in Gibraltar had decided to grant residency status to Sir Mark Thatcher, waiving their normal rules about people with criminal records.
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He is now able to enjoy his retirement unmolested by the Inland Revenue, which might otherwise have been particularly interested in how he acquired his personal fortune. We know from the testimony of Mohammed Khilewi and from the large amount of documentation that he brought from Saudi Arabia, and from a deposition in this House made by Tam Dalyell when he was a Member which was based on American and BAE sources, that that fortune was acquired when he was resident at No. 10 Downing street on the basis of the al-Yamamah contract.

However, those documents are small fry. There is an even more important set of documents that briefly appeared in the National Archives, after it had been been unintentionally deposited there by the Department of Trade and Industry. Fortunately, it was copied by the Campaign Against Arms Trade before it was retrieved by the Government. It described the bitter battle that raged in Whitehall in the mid to late 1980s when the then Prime Minister and Michael Heseltine were fighting to ensure that there should be a taxpayers’ loan guarantee of the al-Yamamah contract worth something in the order of £1.5 billion—or £2.8 billion at present prices. That was ferociously opposed by the Treasury, the Bank of England and the then Department of Energy as being wholly contrary to British interests and as putting seriously at risk British taxpayers’ money. We do not know because none of us has read it, but I suspect that that was one of the elements addressed in the PAC report that we are not allowed to see.

Let me bring the arguments up to date by dealing with the two big sets of unresolved issues that have emerged since the Attorney-General’s statement of 14 December. There are two groups of questions that we need to pursue. First, was there a secure basis for investigation by the SFO? We need to remember that the investigation was pursued by, I think, 18 officers over several years, and that it had at last identified two sets of key bank accounts leading to the sources of the inquiry. The inquiry, led by a professional prosecutor, had been advised that it could proceed by its silk, Mr. Tim Langdale QC. The head of the SFO has publicly stated that he believed that there were very good grounds for proceeding with the inquiry.

On the strength of reading the papers for several hours, the Attorney-General came to the conclusion that the case was unlikely to succeed. How is that reconciled with the Attorney-General’s acknowledgement toward the end of the debate last week in the other place that

Can the Ministers deconstruct the phrase “contemplated inviting”? My understanding is that BAE and certain of its executives were so invited. Were they, or were they not? Was a plea bargain offered, or not? If there was a plea bargain, what is the basis for arguing that there was no legal case? What is the precise position of the Ministry of Defence police, who were separately pursuing an inquiry into the role of MOD officials, who apparently were aware of the offences being committed, and apparently supported
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them? Has that inquiry been discontinued? Finally on the broad issue of the investigation, it is reported in the press today that the Attorney-General has launched an inquiry into the SFO’s effectiveness in pursuing bribery cases. Is that correct? That is a little like somebody who has just escaped from Dartmoor demanding an inquiry into prison security.

Rob Marris (Wolverhampton, South-West) (Lab): I am grateful to the hon. Gentleman for giving way in his usual, gracious way. Has it occurred to him that an alternative explanation might be that the SFO was delighted to be let off the hook by the Government’s decision because it was being very slow and inefficient, and in two and a half years it got absolutely nowhere in pursuing this case—possibly because there was nowhere to get?

Dr. Cable: The hon. Gentleman is rather clutching at straws. If there were any hint that that was the problem, the head of the SFO would surely have indicated that he did not have reservations about the eventual decision.

Let me move on to the other issue, which, in many ways, is more serious: national security. I am one of those Members of the House who, in an earlier incarnation—

Mr. John Spellar (Warley) (Lab): Can the hon. Gentleman, who has been speaking for some 11 minutes, tell us whether he thinks it a good or a bad idea to sell planes to Saudi Arabia? Secondly, not once has he mentioned all the jobs that the contract has created for ordinary workers in this country. Does he have no interest in or concern about that issue?

Dr. Cable: Yes, the issue of jobs is of course important, and it does concern me and I will return to it. However and as the right hon. Gentleman knows, it is not relevant to the anti-bribery case and is specifically precluded by the convention. There is another issue, which I hope that he will face: whether he believes, however important employment is, that a situation in which jobs are subsidised or underwritten by the taxpayer, underpinned by corruption and subject to blackmail by the customer is sustainable. That said, jobs are clearly important and I will return to that theme.

Let me turn, as I said, to national security. I am one of those Members who have signed the Official Secrets Act and who worked alongside the security services in an earlier job, so I have a great deal of respect for that Act and those services, and we should take very seriously any advice on national security that they give us. The problem here is not the security services, but how their advice has been used. The Attorney-General said in his original statement that

The following day, three broadsheets were briefed, apparently by the head of the Secret Intelligence Service himself, who rejected the assertion that the Saudis would sever links and said that he had refused to sign a dossier stating that MI6 endorsed this assertion in
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advance. Subsequently, and understandably in view of that, the Government diluted their argument—so much so that, at the end of the debate in the other place last week, the Attorney-General was reduced to producing the following, utterly anodyne comment:

Well, we can all agree with that.

One of two conclusions must emerge. The Prime Minister has done what he did in the case of Iraq, which was to exaggerate and distort the advice received from the security services; alternatively and much more alarmingly, he was right, and the Saudi authorities, who are supposed to be our allies, are threatening us with terrorism.

Andrew George (St. Ives) (LD): My hon. Friend has kindly acknowledged the debate that took place on 24 January, in which I questioned the plausibility of the claim regarding the national security context in which the decision was taken. Surely Ministers need to demonstrate the plausibility of the view that the Saudis would not wish to co-operate, given that al-Qaeda sees them as one of its main targets.

Dr. Cable: One practical way in which the Minister for the Middle East, who I think will be speaking next, could help us is by giving some indication of how the advice from the Saudi Government was received. If it was a formal demarche from the Saudi authorities, that is of a very different order from the British ambassador’s having tea with one of his contacts and passing on his impression of what might be the case. It would help if the Minister clarified how we were briefed by the Saudis.

Let me turn to the history of this issue. The al-Yamamah contract originated in the mid-1980s, and the context is often forgotten. It was not achieved primarily as a result of competition and British technological excellence; the context at that time was the very close relationship between Saudi Arabia and the United States, which both sides wished to perpetuate. However, the problem was that, as President Reagan provided Saudi Arabia with more and more sophisticated equipment, there were objections from Israel. Perfectly understandably, the Israelis were concerned about one of their potential adversaries acquiring sophisticated technology. The situation was not helped, of course, by the tirade of anti-Semitic abuse that often comes from the Saudi authorities. Israel protested, and friends of Israel in the United States Congress blocked the F-15 deal, which was in turn passed on to Britain and Mrs. Thatcher.

The Reagan Administration were very anxious to bless this arrangement. They owed the Saudis various favours. They were supporting the Nicaraguan Contras and helping gallant freedom fighters in Afghanistan—such as Osama bin Laden. Reagan was perfectly happy to support this British arrangement, which proved to be one of the largest arms deals in history. It has been worth about £40 billion to date, and could be worth something of the same magnitude again in the future. It is not merely an arms deal, but one of extraordinary complexity that involves two major subsidiary features. One is an offset agreement, which, essentially, is a joint
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venture set of arrangements under which British companies put in capital and expertise, and their Saudi partners take their cut. There is also an oil element. There was an oil barter arrangement whereby oil was marketed, initially by Shell and BP, and the proceeds were routed through the MOD to BAE Systems.

There was much criticism of these arrangements in the Treasury. Of course, the British taxpayer was taking the risk of oil price fluctuations. One consequence of the deal was that Saudi over-produced and drove down the price of oil, damaged the British North sea oil industry—among other things—and contributed to the lack of capacity that we are experiencing.

Mr. Tobias Ellwood (Bournemouth, East) (Con): I am grateful to the hon. Gentleman for giving way and I am conscious of his experience in the oil industry. Bearing in mind not only the question of trade and the £40 billion deal that he mentioned, but the security implications of our relationship with Saudi Arabia and the important question of Iraq, is he suggesting that, if the SFO had continued its investigations, Anglo-Saudi relations would not have been tarnished at all?

Dr. Cable: They would not necessarily have been tarnished in the way that has been portrayed by the Government. I am merely echoing the judgments that were made by, for example, the Treasury, the ECGD and the Bank of England, which all considered that that deal was extremely bad for Britain. That was the key point.

Mr. Dominic Grieve (Beaconsfield) (Con): I appreciate the hon. Gentleman’s point, but I am interested in trying to understand whether with the benefit of hindsight he still considers that the deal was bad for Britain. That was not quite the impression that I had of a deal that had apparently delivered £40 billion-worth of commercial benefits. If we look at the matter commercially, is he now saying that those opinions were right and that the deal was wrong? Or is he actually, as he develops his speech, pointing out how wrong some people were back in the 1980s about whether the deal would endure and confer benefits on the country?

Dr. Cable: Perhaps the hon. Gentleman should consult his former colleague, John MacGregor, who has exceptionally strong views about the abuse of taxpayers’ money in that context.

At the heart of the controversy is the way in which that complex contract led to corruption. Nobody has ever denied that large commission payments and corruption were involved in this case. Prince Bandar, who was the Saudi ambassador to the United States, fully acknowledged that over three decades roughly £50 million of the £40 billion spent by the Saudis was creamed off in the form of commissions to the royal family, adding, “So what?”

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