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Mr. Borrow: I agree wholeheartedly. It is not only people working for the supply chain and the big companies in Lancashire who are affected. Few constituencies in this country do not have defence companies with direct links with either BAE Systems or another company that could be damaged by the continuation of this campaign by the Liberal Democrats. I sometimes wonder whether the Liberal Democrats realise that they have defence companies in their own constituencies. Do they realise the consequences of the campaign that they are waging,
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or are they so busy listening to the metropolitan chattering classes that they have forgotten the jobs, families, mortgages and so on that will be at stake if they continue to stain the reputation of the defence industry in the UK?

David Howarth: Everyone in the House realises what economic interests are at stake. It is just that some of us think that the rule of law is more important, because on the rule of law depends the whole of the economy, not just parts of it.

Mr. Borrow: Here we come to the heart of the problem. My hon. and learned Friend the Solicitor-General explained in detail the constitutional process that the Government and the Law Officers went through with the SFO before a decision was made to stop the investigation into the deal with Saudi Arabia—a deal that started more than 20 years ago. But Liberal Democrat Members do not accept the basis of that decision, so they wave the rule of law and say that it is not being applied, even though Ministers have explained in great detail every stage of the process that led to a decision that was made in the national interest. I assume that they do not agree that the decision was in the national interest, either, and that they are prepared to put at risk UK security by continuing their campaign.

Mr. Hendrick: Has not our hon. and learned Friend the Solicitor-General convincingly made the case that the correct process was gone through and that the rule of law has been applied? What is in question is the Liberal Democrats’ motives. Clearly, the rule of law has been applied and part of the assessment has been put to them. Why do they persist in stirring the pot, causing all this uncertainty and instability in our industries, when they know full well that many jobs are at stake?

Mr. Borrow: I agree completely with my hon. Friend. Over the weekend, thinking about the debate, I wondered what the Liberal Democrats would do if, by some fluke, after the next election they found themselves in government, with one of their number responsible for this matter. Would they open all the cupboards and filing cabinets and publish all the information on the complexities of the agreement that was made in 1985 with Saudi Arabia and subsequent agreements—agreements that were made Government to Government as well as with BAE Systems and that were largely confidential? Would they simply forget about all those understandings between Governments and simply print, publish and distribute every bit of information they had? They seem to be arguing that that should be done.

Lynne Featherstone (Hornsey and Wood Green) (LD): Why does the hon. Gentleman think that the OECD is coming to investigate the case?

Mr. Borrow: I understand that the OECD is not doing so.

The Solicitor-General: Even the Liberal Democrat spokesman, the hon. Member for Twickenham (Dr. Cable), understood and asserted that we were not dealing with
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an OECD inquiry into the case. Perhaps the hon. Member for Hornsey and Wood Green (Lynne Featherstone) should listen.

Mr. Borrow: I have been around this place long enough and tangled with Liberal Democrats locally often enough to know that the truth and the Liberal Democrats are rarely in the same room.

I have spoken with a lot of my constituents who work for BAE Systems. They recognise that we have to follow procedures and, if something wrong has been done, they want people to be prosecuted. However, they also say to me, “David, this deal was done 20-odd years ago, when Mrs. Thatcher was Prime Minister in a Conservative Government. We have had a Labour Government for 10 years, and the law has been changed and tightened up. The allegations that have been made relate to a deal that was made in 1985. The payments were presumably made after that, with the knowledge of the Saudi Arabian Government, with the knowledge of our Government and with the knowledge of BAE Systems. Where is the bribe? Where is the criminal activity? What is legally wrong? If all that was known by the SFO, why did it not prosecute? What else is there that could suddenly make what was done a criminal activity?”

My constituents simply want some security. They want to be assured that the jobs that they have been doing, and doing well, for the past 20 years making military aircraft that have been sold to and flown in Saudi Arabia can continue with the next deal for the Typhoon. Many workers in Brough are waiting for a similar deal on the Hawk. Those workers do not want their jobs to be put at risk by people continuing to stir the pot and besmirch the good name of BAE Systems.

Mr. Evans: If companies and countries could sponsor motions, the motion before the House would certainly be sponsored by all BAE Systems’s competitors outside the United Kingdom. The French, the Germans, the Spanish and of course the Americans would rub their hands if they saw the motion. The real winners would be our competitors, and the real losers would be our constituents and those who work for BAE Systems and its suppliers.

Mr. Borrow: Yes, and I cannot really see our opposite numbers in Congress, or in the French National Assembly, having this sort of debate, or their parliamentarians seeking to damage their own defence industries and put their own workers out of jobs.

The issue does not just affect BAE Systems; that is what causes me ever more concern. The continuation of the campaign is damaging the reputation not of one company, but of the whole defence industry in the UK. Most defence industry companies will not go on the public record and say so, but senior people in many leading defence companies in this country tell me privately that they are beginning to worry about the impact that such campaigns will have, if they continue, on their ability to get orders and keep work for their companies.

A number of Liberal Democrat Members have major defence companies in their constituencies. They are being carried along by the campaign and the
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applause of The Guardian and “Panorama”, but they ought sometimes to scratch their heads and wonder whether they are forgetting that the bread and butter of politics is people being in jobs, being able to pay the mortgage, and feeling secure about the future.

Mr. Hendrick I have just heard the accusation made, from a sedentary position, that we are turning a blind eye to the issue, but no one has accused anybody of being guilty. The Liberal Democrats do not have the guts to make a clear allegation—not even in their motion. Let us be clear: there has not been a crime. Any payments made were made over the table, and not under it, as has been alleged by the Liberal Democrats.

Mr. Borrow: The Liberal Democrats have done a lot of mud-slinging at BAE Systems and the Government this afternoon. None of it amounts to anything, but it does damage the reputation of a fine company. I do not think that the Liberal Democrats truly understand the damage that they are doing. They have not come up with a single allegation of criminal wrongdoing, but they insinuate that there has been wrongdoing all the time. Fundamentally, things come down to one key issue: they do not believe that the Serious Fraud Office inquiry should have been stopped. They think that it was wrong of the SFO to stop it, and they do not accept the information that my hon. and learned Friend the Solicitor-General has given to the House. Liberal Democrat Members are nodding their heads; they just do not accept that information, but they have no evidence to justify not accepting it. They simply prefer to go along with certain people in the media and stir things up, hoping that they can continue to damage the Government, without realising that they are damaging the prospects for the continued employment of many of our constituents.

6.4 pm

David Howarth (Cambridge) (LD): In the final paragraph of his speech—but sadly not in the rest of it—the hon. Member for South Ribble (Mr. Borrow) made some points with which I agree. I shall raise five issues that arise from the events that we are discussing. The first is the damage done to the Serious Fraud Office’s, and the country’s, reputation for pursuing corruption. That such damage was done was conceded by Mr. Wardle in his evidence to the Select Committee on Constitutional Affairs; he said that “of course” there had been damage. The question now is what we—a country that likes to think of itself as being at the forefront of the fight against corruption across the world—can do to restore our reputation.

Of course, the one thing that we should not do is refuse to co-operate with other countries that are attempting to investigate the events from their point of view. That is why the issue of investigation by the US Department of Justice is so important: it gives our country an opportunity to show that it is not being evasive, that it is not trying to avoid the truth coming out, and that it wishes, along with other institutions and countries, to pursue corruption.

My second point is about the position of the Attorney-General. The hon. Member for Huntingdon (Mr. Djanogly) asked why we mentioned that issue in our motion. There are two distinct points to be made, both of which have been referred to already, largely by
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the Solicitor-General. One is about the Shawcross exercises, and the other is about the Attorney-General’s lack of distance from particular decisions to prosecute. As the Solicitor-General said, in the Shawcross exercises, Ministers make their views about the public interest known to prosecutors via the Attorney-General. The problem that arose from the case that we are considering is that until very recently, it was unclear precisely what happened, precisely how many Shawcross exercises there were, and precisely how they were dealt with.

The first Shawcross exercise was in December 2005. The second, which has only recently come to light, was in September last year, and the third one took place at the turn of the year. Is that the right way for the Government to communicate their views on the public interest to prosecutors? That process needs to be far more open. I welcome the fact that the Solicitor-General said that the case might be the start of providing at least some openness to Parliament. I understand that she said that the underlying points about national security should be revealed to a committee of Privy Councillors—people who could be trusted with the information from a national security point of view. That is a good place to start. The fact that a Shawcross exercise has taken place—but not necessarily all the information in it, which it might not be wise to put in the public domain—ought to be revealed to the House. It should be revealed that the Government have taken a policy decision to make a point to a prosecutor. That point needs to be discussable, at least in general terms, on the Floor of the House.

I want to discuss the Attorney-General’s distance from individual prosecutions and, perhaps more importantly, the confusion about what the Attorney-General’s precise role is. The statutory language states that the Attorney-General has “superintendence” over the Director of Public Prosecutions, the director of the Serious Fraud Office and the equivalent in Her Majesty’s Revenue and Customs, but what does the word mean? How does the relationship really work? The case that we are discussing illustrates the problem. Here I refer to the Government’s response on the judicial review proceedings between the Serious Fraud Office on the one hand, and Corner House Research and Campaign Against Arms Trade on the other. It reveals that in the first Shawcross exercise in December 2005, “The Attorney-General decided” that the investigation should continue. He did so quite properly, because the argument that had been put to him by the Prime Minister was entirely improper. It was an argument based on commercial considerations, which are ruled out by the OECD treaty.

The Solicitor-General: There was nothing improper about the Prime Minister putting forward his concerns about commercial considerations. What would have been improper would have been for the Attorney-General, in breach of the convention, to take that on. Obviously, the Prime Minister puts forward concerns to Ministers about a range of matters. He is not constrained, as the Attorney-General is, by the OECD treaty, because the decision is taken elsewhere.

David Howarth: That raises an interesting point about the degree to which the Prime Minister is bound by international law, which has all sorts of interesting consequences that I will not go into today but that are
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important. Nevertheless, the point that I was trying to make was: who made the decision? The decision in December 2005 to continue with the investigations was made by the Attorney-General, and it was the right decision.

With regard to the September Shawcross exercise, again information comes from Ministers to the Attorney-General, and again the document says that the Attorney-General made the decision. At that point the issue was national security. At that point what was being put to the Attorney-General was that the relationship between this country and Saudi Arabia might be prejudiced and that therefore there might be a national security consequence. At that point, again, the Attorney-General took the decision that the investigation should continue.

In the final exercise, in December 2006, we are told—there is no reason to disbelieve this—that the director of the SFO, not the Attorney-General, took the decision. Mr. Wardle looks at the papers that have come to him from the Prime Minister’s office, from Sir Richard Mottram, and takes the initiative to talk to our ambassador in Saudi Arabia, and at that point, the director decides to call off the prosecution for reasons of national security.

The Attorney-General does not take that decision; he has a different opinion about the case. His opinion is that not only is national security an important issue, but that the prosecution will not succeed, because he has a different interpretation of the law. Why is it the Attorney-General twice took the decision and the director once? What makes a difference in these decisions? This comes back to the vagueness of the idea of superintendence. That term cannot be the basis in the future of the relationship between the Attorney-General and the director of the DPP. We need far more clarity.

The Solicitor-General: I too think that the term “superintendence” is vague, but I suspect that the Shawcross exercise was carried out in 2005, it displayed that the only concerns were commercial interest, and therefore the Attorney-General had no advice to offer to the director of the SFO. In that sense, he did decide that nothing should interrupt the prosecution or investigation. Again, clearly, the issues raised about national security cannot have been so compelling that they required the Attorney-General, in his view, to give advice to the SFO on the second occasion either. Therefore, rightly, as the hon. Gentleman says, he decided that the prosecution should go on, but in both cases I think that what he decided was not to give any advice to the director of the SFO. But on the third occasion, he took the decision to do that, and it is at that point that the decision has to be made by the director of the SFO. That is probably what happened, and that is probably nothing other than a very sensible position, and the right one, bearing in mind the nature of the Shawcross exercise, and that that advice is or is not transmitted to the decision maker.

David Howarth: That is a possible interpretation of what happened. It raises the question of what precisely changed the Attorney-General’s mind, which was the question I sought to ask early. We still do not know what happened there. It comes back to the point, with
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which I am glad the Solicitor-General agrees, that “superintendence” is too vague a term to describe this relationship. We need far more specificity about how the prosecution authorities and the Attorney-General relate to one another.

My third point has been raised on a number of occasions already, and it is the definition of corruption. When hon. Members say no crime has been committed, or there is no proof of any crime, they do not quite understand that the problem here is a legal one, not a factual one. I think that everybody knows what happened—that money moved from the Saudi Government to Saudi officials via somebody else. The question is whether that was a crime. The Attorney-General and the director disagreed about whether that was a crime under existing British law. It is an interesting question, and one that should have been tested in the courts, rather than have been decided abruptly in the way that the Attorney-General might have decided had he been taking the decision, although we are told that he did not.

But there is a further question on this point. If one reads the OECD treaty and the Corruption Bill, which has passed through all its stages in the other place, there is not much doubt that the events that everyone knows took place are criminal. The question that I want to ask the Government is simply this. The Solicitor-General now says that she is waiting for the Law Commission to report and that she looks forward to a Bill being brought forward, but is it her view, not that that sequence of events is criminal, but that it should be criminal?

Mr. Borrow: The hon. Gentleman has just said that the sequence of events is criminal. Does he mean that the sequence of events would be criminal if the law were amended on the basis of the Lords Bill, or that it is criminal on the basis of the law that obtained at the time that the actions took place?

David Howarth: That raises profound questions that are before the courts about the status of international law in English law. If one follows the definition in the treaty, one would conclude that the actions were unlawful. If one follows the definition in the draft Bill, which is not yet law, one would conclude that the actions were unlawful. As to whether the actions were unlawful at the time depends on how one interprets existing law, and on that there was a profound difference of opinion between the Attorney-General on the one side and the director of the SFO on the other. Ultimately, that is a question that should be decided in the courts, not on the Floor of the House of Commons.

The fourth issue is the Government’s attitude towards international law. One of the most disturbing things to come out of the Government’s statement of their case in the judicial review is that they are now saying to the court in that case that even if the treaty were to mean that the case should not have been stopped for reasons of national security in those particular circumstances, the Government would still have gone ahead and stopped the prosecution, even in violation of international law. That is an extraordinary
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position for the Government to take. It might well be that they are forced into that position by tactical considerations in the litigation, but nevertheless that is the position that they have adopted. It is not a position that the Government of a civilised state should ever adopt.

Mr. Hendrick: Who has said that, and where has the hon. Gentleman got that information from?

David Howarth: The statement comes from the Government’s summary grounds of resistance on behalf of the defendant in their judicial review case where Corner House Research and the Campaign Against Arms Trade are bringing proceedings against the director of the SFO and BAE Systems. If the hon. Gentleman wants to know the names of the lawyers, I will send him the entire document.

Mr. Hendrick: Who said that? I do not want the documents: I want to know who said it on behalf of the Government.

David Howarth: I shall send the hon. Gentleman the documents and he can work it out for himself. [Interruption.] I do not think that it is right to read out the names of the Government’s lawyers on the Floor of the House, although I shall if he carries on asking that question.

Let me just move on to my final point. [Interruption.] I do know. Okay, I shall now read out the names of the Government’s lawyers. They are Philip Sales QC, Hugo Keith and Karen Steyn, and obviously the instructing solicitor was the Treasury solicitor.

Mr. Hendrick: Will the hon. Gentleman give way?

David Howarth: No, I shall not give way to the hon. Gentleman. He never makes any sense, and he does not allow the debate to continue on any rational grounds.

Let me move on to my final point, which is not a legal point, but a point about the decision that had to be taken. I disagree with those of my colleagues who think that the decision was easy. It was very difficult, but nevertheless, the wrong decision was made. The question is: what should a country do if there is a threat to its national security from the very people who are being investigated for illegality? I do not deny, as some people might, that the threat was real; the question is what does one do if that is the situation that one perceives.

The Government gave way to the threat, but the other argument is that doing so helps the fight against neither terrorism nor corruption. If that is what happened in this case, it sends out a very dangerous signal. In the long run, there is a greater threat to national security in giving way to such a threat than in resisting it.

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