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We knowfrom people who have left the service of BAE Systems and sources such as Charles Freeman, who was the US ambassador to Saudi Arabia, and the CIA, whose material has been publishedthe way in which the slush funds operated. It is a long story, so I shall give the House a flavour of what happened through one or two vignettes. For example, in 1995, Prince Turki bin Nasr, who was head of the air force and one of the main recipients of commissions, went on a shopping trip. At some point, he and his party must have run out
of plastic bags, because they ordered a cargo plane to take the shopping back to Saudi Arabia. They then billed BAE Systems for £165,000. In 2000, the same Minister paid a visit to the then Secretary of State for Defence, the right hon. Member for Ashfield (Mr. Hoon), and was sufficiently stressed by the experience to need to clock into a health clinic for a couple of days, for which he billed BAE Systems £30,327. We know from the same sources that that Minister was paid roughly £3 million a year. His monthly credit card bill of £100,000 was routinely accepted.
All that was justifiedit has just been justified again by the hon. Member for Beaconsfield (Mr. Grieve) and the right hon. Member for Warley (Mr. Spellar), a former Defence Ministerin the interest of jobs. As a constituency MP who frequently defends jobs in his constituency, I think that it is proper and appropriate for Members to advance that argument, but the issue is whether those jobs were justified by the way in which this matter proceeded. As I pointed out to the right hon. Member for Warley, those jobs were heavily subsidised and underwritten by the taxpayer, underpinned by corruption and eventually made us subject to blackmail. However, I accept that jobs were created by the project, and my final points centre on that issue. Employment was of course created in that industry and that company. The question is whether the price was worth paying and we need also to ask what that price was.
Mr. Grieve: The hon. Gentleman may have misconstrued my intervention. I had noted that at an earlier stage in his speech he had suggested that at the time the deals were set up he thought that they would be financially disadvantageous to this country. He left up in the air whether he still held that view. He may have other reasons to object to the agreement, but I wanted to understand his position, especially as he is his partys Treasury spokesman. Does he consider that the deal has been financially disadvantageous to the UK and if so, why?
Dr. Cable: I think that it has been financially and economically highly questionable. It is a future issue as well as a past issue, because the ECGD still needs to make a judgment on export credit for the current negotiations. Among other things, it will need to produce a warrant attesting to the fact that no corruption is involved. The issues that the hon. Gentleman raises are therefore highly relevant, not matters of history.
Mr. Ellwood: Will the hon. Gentleman confirm that had the Liberal Democrats been in powerlet us stretch our imagination so farwhen this deal came up, they would, knowing everything that they know now, have ignored a £40 billion deal for this country?
Dr. Cable: It is economically illiterate to say that any £40 billion deal is acceptable at any price. Had the hon. Gentlemans party known about the corruption involved, I suspect that he would have had great reservations about it.
Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP): Is not the overriding consideration that we live under the rule of law? Members on both sides of the Chamber have suggested that there is a price at which we should suspend reasonable judgment and take the £40 billion.
Dr. Cable: The hon. Gentleman puts the point well. That is indeed what is humiliating this country and the Government in our dealings with other OECD countries. We have now signed an international agreement to that effect.
Sir Malcolm Rifkind (Kensington and Chelsea) (Con): The hon. Gentleman says that he has reached his final comments, but he has not yet addressed the issue of whether in the rare circumstances in which national security could have been endangered it is legitimate not to pursue a prosecution. Is he saying that, even if he were satisfied that national security might have been significantly endangered by the continuation of the work of the Serious Fraud Office and the bringing of charges, it would still have been wrong to, terminate the prosecution?
Dr. Cable: National security considerations must of course be at the centre of decisions of this kind. The point that I made earlier was that all the evidence that has emerged shows that that was not the advice of the intelligence services. Had it been, the story would have been a very different one.
My final points are about the price that we are paying as a country. As the hon. Member for Na h-Eileanan an Iar (Mr. MacNeil) suggested, we are paying a price in terms of our respect in the developed world. Britain was admonished several months ago, even before the decision, for being the least compliant country, alongside Italy, in respect of the anti-bribery convention. People may say that such things happen everywhere, and what about the French? But the French have launched 11 prosecutions and initiated a major inquiry into corruption in Elf, which was looting Gabon. Everybody up to the French Foreign Minister was brought before the court. The French judicial prosecutor has commented on the British decision:
The UK decision is a betrayal of the British people and every principle that Britain is committed to uphold.
We know also that there is serious corruption at the upper levels of German business. Siemens is now being prosecuted and has lost substantial business with Nokia as a result. Volkswagen and Daimler have a bad history of corruption. The difference is that in Germany such behaviour is being prosecuted: in Britain it is not.
The Minister for the Middle East (Dr. Kim Howells): The hon. Gentleman has just made a serious allegation against BAE Systems [ Interruption. ] One of his colleagues says, from a sedentary position, Quite right. The hon. Gentleman has already accused those people of being guilty. He has said that they should be prosecuted and convicted before anyone has reported on the issue, but he should think very carefully before he blackens the character of such people.
I was going to come on to that point, but I have read the comments by the company carefully, as I was surprised to note that BAE Systems never denied that large commissions were paid. It was open about that, but it has claimed that it was not, legally speaking, bribery because their principaldefined in lawwas the Saudi Arabian Government. BAE Systems does
not deny what happened, so I am not manufacturing any accusations that are not entirely supported by legitimate sources.
Mr. Grieve: The hon. Gentleman seems to be moving to a key issue. On the one hand he says that the payments were corrupt, and on the other that the defendants say that no legal corruption was involved. If he is going to accuse people in this country of being corrupt, he must say how corruption, as defined by the Corruption Act 2006, has taken place. I should like to hear what he has to say, as the matter is so important.
Dr. Cable: The hon. Gentleman is rehearsing the legal arguments for one side, but there is another sideour Serious Fraud Office. In view of what he has said, it is all the more regrettable that BAE Systems has been denied its day in court, when it could have made these points itself.
As for our relationship with the developing world, many hon. Members will have seen the comments made by Thabo Mbeki to the Prime Minister at Davos, when he accused the British Government of outright hypocrisy. He asked: if the British Government can invoke the national interest as a reason not to pursue an investigation that might have highlighted the crown prince of Saudi Arabia, why should they pursue an investigation into a case that might highlight the vice-president of South Africa? Britain is applying double standards
I was talking about our relationships with developing countries. I do not know whether the Minister for the Middle East has seen the DVD that his Department is promoting around Africa, but it is a sort of do-it-yourself guide to how not to be corrupt. It is entitled, apparently with no sense of irony, The Crimes of the Establishment. That is the British message to the developing world.
Then there is the impact on the reputation of British companies that are trying to be honest and comply with the law. Several leading financial institutions that are involved in managing City funds have commented on the matter to the Prime Minister. One of the largest, Hermes, said:
The decision has threatened the UKs reputation as a leading financial centre and will have high long-term costs for business and investment
I agree that the Government handling of the affair has damaged the reputation of Britain and the efforts of many responsible companies to build transparent relationships in overseas operations and contract negotiations will be set back and affected by suspicion and cynicism.
The report was suppressed in 1992, but it is now clear that the reason had nothing to do with national security, because the whole al-Qaeda operation was not in flow thenindeed, it was on our side. The Chairman of the PAC at the time was Bob Sheldon, who said that the report would have embarrassed the Saudis, but how could that possibly have happened? Everything about commissions and bribery in Saudi Arabia is in the public domain already.
It appears that Crown Prince Sultan has been one of the main recipients of the funding. He was described on television by his own nephew as the most corrupt Minister in the world. I cannot imagine that the House of Commons Clerks, or the Comptroller and Auditor General, could craft a more damaging phrase.
The details of the corruption in Saudi Arabia are presented in many publications, but I recommend the one by Mr. Sandy Mitchell and his collaborator Bob Hollingsworth. Mr. Mitchell was a Glaswegian medical technician who was arrested and charged with terrorism because the Saudi Interior Minister, Prince Naif, wanted to pretend that al-Qaeda terrorism was committed not by Saudis but by
British intelligence and the Jews.
That was the opinion of one of Britains allies. Mr. Mitchell was detained in prison for three years, brutally tortured and sentenced to be executednot by the humane method of beheading but by crucifixion. He has, of course, been released, as that sentence was ludicrous even by Saudi Arabian standards of judicial inquiry, but he is a very angry man. He is very angry with the Saudis, but also with the British Government, who dragged their feet repeatedly and made it clear that his plight, and that of his fellow suspects, was far less important than the pursuit of an arms contract in Saudi Arabia.
If all those facts are known and in the public domain, why are the Government concerned about keeping the report hidden? It may be that it establishes that no criminal offence has been committed: that is what the Chairman of the PAC says, although I think that he has not read the report, but why can it not be shown to us? What is being concealed? That
concealment is making the House look utterly foolish. I and my colleagues believe that the report should be published now.
notes that the Serious Fraud Offices (SFO) decision to discontinue its investigation into BAE Systems plc and Saudi Arabia was taken independently by the Director of the SFO on grounds of national security in the public interest and in accordance with the Code for Crown Prosecutors; further notes that the SFO is vigorously pursuing a number of other lines of investigation in relation to BAE Systems plc; welcomes the steps being taken by the Government to tackle international corruption; and further welcomes the Governments commitment to compliance with the United Kingdoms obligation under the Organisation for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions..
I suppose that one could say that this case has it all for the headline-grabbing MParms deals, Arab princes and a big corporation, as well as allegations of corruption and of Swiss bank accounts. In reality, however, it is all about the rule of law, and it is on that I want to focus.
The Liberal Democrats may use innuendo to claim that there was something wrong with the decision to discontinue the investigation, but the fact is that the investigation into BAE Systems and the al-Yamamah deal was discontinued by the director of the SFO, according to the law. That decision was accepted by the Attorney-General, according to the rule of law. The Liberal Democrats may not like the obligations on prosecutors to consider the public interestwhich includes the security of this countrybut, according to the rule of law, prosecutors are obliged to do so. In fact, to fail to do so would be to undermine the very rule of law that we in this House should seek to protect.
Decisions like that are not easy. Sometimes, they may be deeply uncomfortable. They sometimes allow opponents to seize the political opportunity to challenge the integrity of the decision, or the integrity of individuals. The consequences in terms of perceptions may also be difficult, but the director of the SFO had an obligation to make a judgment, and he made it with integrity. I refute any claim that it was made with other than complete integrity.
The Attorney-General looked with great care at the details of this investigation. He
reached the same conclusion that I didthat discontinuing the investigation was the right thing to do.
The Liberal Democrats do not have to make difficult decisions: all that they need to do is wring their hands and criticise those who do have to make them. That, I suppose, is the nature of their politics. However, those who have criticised this decision need to come clean about what they are saying. Are they saying there was no risk to national security that would justify dropping the investigation? The Saudis were not silent about their concern about the investigation, and anyone who knows anything about the terrorist threat recognises the value of the co-operation of Saudi Arabia in dealing with it. Are the Liberal Democrats saying that the security threat was not as great as we understood it to be? If so, why is their judgment better than those who are best placed to judge the threat? Are they suggesting that it was all about jobs and the economy and not about security issues?
The Solicitor-General: Well, the OECD convention makes it clear that it is illegal to bring in economic issues. The Liberal Democrats claim that an improper decision was made, but the director of the SFO has made it clear that he did not bring in economic issues; he made the judgment based on national and international security grounds. The Law Officers have also made it clear that we excluded economic arguments from our consideration.
Are the Liberal Democrats saying that although there was a national security risk the SFO investigation should have continued regardless? Are they seriously arguing that they would have put at risk the lives of our citizens? The more I look at the position of the Liberal Democrats, the more I conclude that it is untenable. Asking questions is one thing, but it is wrong to make implications of improper motives or decisions without sufficient evidence.
The Solicitor-General: I shall give way to the hon. Gentleman because I want him to provide evidence that Robert Wardle, the director of the SFO, made a decision that was improper according to the convention. He knows that Robert Wardle would not do that, so where is the evidence for his allegations?
Simon Hughes: The Solicitor-General knows that no one on the Liberal Democrat Benches has impugned the integrity of the director of the SFO. We have said that we want the Solicitor-General to explain why the Governments explanation has regularly changed. When the Attorney-General was asked in the debate in the other place about the phrase used in the explanation
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