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Our motion calls for the report to be released, and if it is passed, that will be a clear indication that it should be released. I hope that the Conservatives will reflect on the fact that, if they vote against the motion, which we will certainly put to the vote, they will be voting
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against, among other things, the proposal that the NAO report, which remains secret, should come out into the open.

The Serious Fraud Office, having been set up in 1988, started its investigations. There was a preliminary investigation in 2001, and questions and early-day motions were tabled in this House not only by Liberal Democrats, but by colleagues on the Government side who expressed concern about this issue. It was out in the open, and questions were regularly asked of Ministers. In the end, the SFO started a serious investigation, as it should. That is what it is there for, and what Parliament wanted it to do.

Colleagues are of course right to say that until 2001, when we passed new legislation on this issue, it was much more difficult to deal with bribery and corruption—to deal with the paying of money outside a contract to achieve a benefit that one would not otherwise get without that wrongful payment, which is a simple principle to understand. So the 2001 legislation that the Labour Government introduced was welcome, and a new regime—a new backcloth—became part of the landscape from then on.

I share the view of the hon. Member for Beaconsfield that it is a great frustration to many that it is, however, now nine years since a new bribery Bill was contemplated. I am not blaming the Government entirely for that. I know what happened—such a Bill came up for scrutiny, and the pre-legislative scrutiny Committee rejected the idea of proceeding with it. There has since been a Home Office consultation paper, but our approach to this issue will not appear serious to this country, let alone to the rest of the world, until the other part of the legislative package—serious anti-bribery legislation—is in place. I call on the Government and the Minister for the Middle East to indicate that they will turn the planned anti-bribery Bill into a reality, so that we can have a new anti-bribery Act.

Mr. Grieve: I agree with that and of course, such a Bill would allow us to have a sensible debate about definitions. As the hon. Gentleman knows, being a lawyer, definitions are rather important in this regard, particularly a definition of what constitutes, or might not constitute, a criminal offence. That is why it is so important that we examine this issue.

Simon Hughes: I agree entirely. I can do no more than say that the Liberal Democrats want that to happen soon.

Next came the reports in early December that the Saudi Arabians were thinking of taking a defence order from this country and giving it to France. Within days of that report—a fortnight at most—the Attorney-General made a statement to the House of Lords and the Solicitor-General made one to this House, late on a Thursday evening, to inform us that the decision had been taken that the SFO investigation should be discontinued. I respect the fact that the Solicitor-General said that he could not give me a full answer to my question, but he appears to have confirmed this afternoon that the discussion about whether lesser charges should be brought—the Attorney-General confirmed that it happened—against lesser individuals in return for an agreement that the people from BAE Systems would plead guilty also happened in December last year. Suddenly, as bank accounts became accessible in Switzerland and
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charges were being contemplated in London, there was huge activity in Riyadh and elsewhere that quickly resulted in the announcement that the investigation would be discontinued.

Mr. MacNeil: Is not it strange that an inquiry that rumbled on for two years was discontinued just as all the factors that the hon. Gentleman mentions came to a head? The inquiry was ended a matter of days later, which undermines the whole national security argument that the Government have advanced.

Simon Hughes: I shall come to the issue of national security, because in the end it clearly determined the decision. However, I first wish to take the series of events to its conclusion. The statements were made in both Houses on a Thursday evening. The following day the Prime Minister was asked about the decision to discontinue the prosecution. Any normal reading of what he said makes it clear that it was his call that the proceedings were discontinued.

Since those few days in December, what troubles many people is that the argument for the discontinuation of the prosecution appears to have shifted, depending on who was explaining the reasons. For example, the Attorney-General has said both privately and publicly that there were two factors in his mind and that of the director of the Serious Fraud Office. The same two factors are involved in the decision on any prosecution. The first is whether it has a better than 50 per cent. chance of success and the second is whether it is in the public interest. The right hon. and learned Member for Kensington and Chelsea (Sir Malcolm Rifkind) alluded to different types of prosecution, but the same two considerations apply equally every day, whether on decisions to prosecute old ladies who take things from supermarkets or on huge international contracts.

One of the reasons given on 14 and 15 December, which later appeared to be less secure, was that the director of the Serious Fraud Office thought that there was no more mileage in the prosecution. However, we know that he thought that further investigation might have led somewhere because he confirmed it a day or two later, and he had a difference of view with the Attorney-General. The Attorney-General took a different view and said so. His view was that it was unlikely that even further months of investigation would lead to a successful conclusion.

The security and intelligence services were also prayed in aid. It is still not clear what they said to Ministers, to the ambassador, to the director or to Law Officers. When the Attorney-General was questioned about that in the other place, in the debate initiated by Baroness Williams last week—it was a positive and engaged debate in which many of my colleagues took part—he said:

I will not read the whole paragraph into the record, but hon. Members can check that I am not misrepresenting by omission. However, the Attorney-General went on to say:

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No one can argue with that: of course a relationship with an ally to deal with terrorism is valuable. The Attorney-General went on to say that the view of the SIS was

We accept that too, but it is at least likely that the intelligence-sharing exercise by the UK Government and their agencies and the Saudi Government and their agencies is as valuable to Saudi Arabia as it is to us. Given that al-Qaeda’s prime objective is to destroy the house of Saud, which it believes has betrayed and corrupted the Islamic tradition, Saudi Arabia has a clear interest in making sure that it gets the intelligence that the UK, as a huge and effective centre for intelligence, acquires.

There is no dispute about what the Attorney-General quotes the director of the SIS as saying. What has never been clear is that the director of the SIS gave a warning that caused the decision not to pursue the investigation to be taken.

The Solicitor-General: The SIS is happy for me to tell the House that it considered that there would be a risk to the UK’s national security interests if the al-Yamamah investigation were pursued. It had been informed of a threat to curtail co-operation directly.

Simon Hughes: I understand that, and do not dissent. Of course I accept what the Solicitor-General says and what he has been told. The question that exercises us is as follows: if the Prime Minister and the Defence and Foreign Secretaries say, on advice, that a case poses a risk to our national security, must that automatically be something with which the Attorney-General cannot disagree? I put that point to the right hon. and learned Member for Kensington and Chelsea, who was both Defence Secretary and Foreign Secretary.

The tradition has always been that Law Officers give advice independent from the Government. We believe that the public interest of the UK is not confined to questions about whether a case might pose a risk to our relations with Saudi Arabia. It also has to do with the risk that corruption poses to the wider interests of our commercial reputation around the world. It is in the public interest to prevent that, and that is why we want to ensure that Law Officers’ decisions are guided by the balance of all our interests.

However, we are not persuaded by the evidence that we have seen so far that the balance of considerations in this case was appropriate. Every time that the Prime Minister spoke, he appeared to add in questions of jobs and relations with other states—the two things that the OECD convention makes it clear cannot be considered in that context.

The Solicitor-General: I may regret saying this, as I am sure that it will produce a great deal of comment, but the hon. Gentleman is right to say that the Law
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Officers and the director of the SFO have to make independent judgments. He is aware of the views of my right hon. Friend the Prime Minister, because they have been publicly expressed. He is also aware that there were a number of what are called Shawcross exercises, which are perfectly proper. He is aware too of the nature of the Prime Minister’s response on those occasions, and of their dates. He is, therefore, aware that the director of the SFO and the Law Officers took a view at certain points that the investigation should continue. However, there came a point—in December last year—when the view was taken that it would take 18 months to reach a decision about whether a prosecution could be brought. That 18 months of further investigation had to be weighed in the balance with national security issues, so the independence of the Law Officers and the director of the SFO is clearly demonstrated in the sequence of events relating to those Shawcross exercises.

Simon Hughes: I completely understand that argument, but it would have been perfectly proper for Law Officers to respond to the Prime Minister, and through him to others involved in the investigation, including BAE and the Saudi Arabians, that although they understood that it was in the interests of those people to discontinue, it was in the greater public interest to see the investigation through to its conclusion. The Law Officers could have said that they would allow the independent, non-political prosecuting authority to complete its work.

I share the Solicitor-General’s sentiments about the director of the SFO, who is well respected. The director said:

We know that access to bank accounts had just been opened. We know from people who talked to my hon. Friend the Member for North Norfolk (Norman Lamb) that the police were on the trail. We know that the investigators felt they were getting somewhere, yet just at that moment the investigation was discontinued.

I realise that there was pressure from an important ally. There was also huge pressure from BAE, which from all the evidence—not least that cited by my hon. Friend the Member for Twickenham—is probably the most effective manufacturing lobbyist in the UK. That is not a criticism of the company; the Government have clearly been responsive to its lobbying. I accept that there was great pressure, but it was still possible for Law Officers to resist it and to say that the investigation should go on. The Attorney-General and the Solicitor-General are not obliged to agree with the director of the SFO—as they know; they could have taken a different decision. The interests of dealing with corruption are sufficiently important that the presumption should have been in favour of continuing the investigation.

My hon. Friend the Member for Twickenham and I cannot be absolutely certain whether our judgment is right, because we do not have all the information. That is why one of the things called for in our motion, and by my noble Friend Lord Goodhart in the other place last week, is an inquiry into what has happened thus far to bring it into the open. On 1 February, my noble Friend Lord Garden asked the Attorney-General whether we could see the correspondence and all communications. The Attorney-General said that he
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would go away and think about it—he did not say yes or no—so I repeat my noble Friend’s request. Perhaps the Minister for the Middle East will answer when he responds to the debate. Will Law Officers and Ministers put into the public domain all the evidence—the communications, messages and advice—that led to the decision taken on 14 December and brought Law Officers to Parliament? Only then will we know whether there was a proper balance between the security interests, in terms of intelligence between the UK and Saudi Arabia, the non-consideration of things such as jobs and relationships with another country, which is not allowed under the OECD convention, and whether pursuing a bribery investigation at the highest publicly known level was in our national interest.

Two relevant Ministers appear not to have been consulted: the Secretary of State for Trade and Industry, although he clearly had an interest; and the Secretary of State for International Development, even though he was appointed by the Prime Minister in June last year to lead anti-corruption activity in Whitehall.

If we can see those papers and documents, we will know the answers to those questions. The Minister may say that there may be some confidential issues to do with national interests, and of course there may, but there are forums in this place for documents to be revealed. We have an Intelligence and Security Committee, which can meet in private and which is made up of representatives of Parliament. There are ways in which that inquiry can be carried out and we ask for that to happen.

We are clear that the matter raises the issue of the country’s international reputation. It is not just us saying that, or voluntary organisations such as Transparency International and Campaign Against Arms Trade; it is organisations such as the OECD. The OECD is investigating what has happened. That is not an invention. It is coming back and asking for information in March. It clearly stated:

in December


For us, there are two substantive matters that remain to be dealt with. They go to the heart of confidence in the Government and in Law Officers, whoever they may be personally. There is the question of how we restore a reputation that, in the international community, has been spoilt by an illegal decision to go to war in Iraq nearly four years ago, following advice from Law Officers, which was not disclosed, and which involved some distortion of intelligence and a dossier that said one thing, but had no evidence to back it up. That advice was what gave the Prime Minister the justification for coming to Parliament to ask for the decision that Parliament took. This matter has again allowed Law Officers to be put in the position of taking a controversial decision that is not supported by the evidence. The problem for Law Officers, whoever they may be, is if they now think that they will have credibility if they are confronted with a Crown Prosecution Service file saying that they
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will have to consider what to do about cash for peerages. I fear that the Solicitor-General must be absolutely clear: there will not be any credibility.

The Solicitor-General: The hon. Gentleman has just said that Law Officers made a decision. In fact, it was the director of the Serious Fraud Office who made it, but we concurred with it. The hon. Gentleman said that the decision was made without evidence, but, on the contrary, we have been at pains to explain what that evidence was and that we did in fact, at least as far as the Law Officers were concerned, speak to senior members of the intelligence community and undertake a Shawcross exercise. We made it clear in all our statements that there was evidence before us, and, indeed, the director of the Serious Fraud Office had evidence from the Shawcross exercise before him. I entirely dispute the hon. Gentleman’s claim that the decision was made without evidence. It was made after great and careful consideration.

Simon Hughes: I want to conclude, because we are keen to hear the response from the Minister for the Middle East. What have we got? Where are we in politics in Britain on this issue today? We have a Serious Fraud Office that has suffered from a loss of morale and self-confidence. We have an incomplete investigation, which was called off when we knew people were getting hot on the trail.

Mr. Khalid Mahmood (Birmingham, Perry Barr) (Lab) rose—

Simon Hughes: I am not going to give way.

We had, by the Attorney-General’s own admission, consideration given to bringing forward lesser charges in return for a plea bargain. We have inconsistent explanations of whose decision it really was to discontinue the investigation. We have the only example in the history of the National Audit Office of a report not being published. We have had a severe blow to the credibility of the United Kingdom as a country committed to leading the international fight against corruption.

We on the Liberal Democrat Benches are clear what we should have and what we as a country would benefit from: a change in the decision not to publish the NAO report; an inquiry into the events leading up to the decision to discontinue the investigation into the BAE and Saudi Arabian arms deals; a tough new corruption Act that will give us much more effective tools for dealing with corruption at home and abroad; a change in the constitutional relationship between Law Officers, the Government and Parliament; and a restoration of the principle that the national interest of the UK is to defend, uphold and promote the rule of law above everything, so that we have a reputation for integrity at home and abroad. In the words of my noble Friend Lord Garden last week,

That is why we tabled the motion and I hope that colleagues on both sides of the House will support us.

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