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Deception in High Places

July 15, 2014 at 4:52 pm

Author: Nicholas Gilby

Paperback: 256 pages

Publisher: Pluto Press

ISBN-10: 0745334261

Review by Alastair Sloan

To say the international arms trade is corrupt is much like asserting that water is wet: it was peculiar then to hear Prime Minister David Cameron speaking at the Farnborough Airshow this week, that he would be “taking action to sustain our thriving defence industry, as part of our long-term economic plan to back business, create jobs and secure a brighter future for hardworking people.”

As would be expected of a supposedly upstanding Western liberal democracy, the official position on corruption is sternly “against.”

But Cameron didn’t mention that the arms trade is estimated to contribute around forty percent of all corruption in global transactions. Promoting such a rotten set of firms is surely anathema to the profoundly British sense of fair play.

Serious questions remain after an official investigation into the corruption-riddled al-Yamamah deal with Saudi Arabia was cancelled in 2006 The company involved continues to be supported by David Cameron – BAE Systems, as it has done for decades by successive Prime Ministers.

Meeting regularly with the Prime Minister and his inner circle, BAE executives have marshalled millions in government subsidies, and extensive personnel support by tax-payer funded officials within the Department for Business Innovation and Skills.

Though investigations from the Serious Fraud Office are rare, there is every reason to believe the arms trade is still corrupt, says author Nick Gilby, talking about his new book “Deception in High Places.”

It’s an exhaustive review, seven years in the making, which details how the British government has been intimately involved with facilitating corrupt deals, albeit through agents and middle men, since the 1960s.

The arms trade middle man, who acts as playmaker between the relevant sheikh or procurement minister, plays a central role in Gilby’s account.

Though he may suffer months or years between pay days, the agents eventual winnings can run into the millions. The play-maker is alluring to sheikhs, princes and kings because his commission fee, paid by the arms company with the knowledge of the UK government, includes an unofficial budget for bribes.

This is a way of doing business which is standardised in the Middle East; a stance which the British government readily admits, as Gilby points out.

In 1968, the British government were happy to hire middle men directly, working for a new department called the Defence Sales Organisation.

Ironically, it was anti-corruption drives by the monarchs of Iran and Saudi Arabia which led to this practice ending – though the government found new solutions, for example creating an “arms length” company known as Millbank Technical Services to grease deals, as well as hiring local agents with good connections at high levels.

In March 1969, the Head of the Arabian Department at the Foreign and Commonwealth Office, Donal McCarthy, discussing an enormous deal with the Saudi Arabian National Guard which would require a “fixer,” wrote

“I finally said that I did not like the scheme at all, but that I saw no alternative way of getting the business.”

Gilby argues that corruption is not a victimless crime. He points out that at the same time BAE Systems (yes, again), became embroiled in a corruption scandal in South Africa, the money consumed in a corrupt arms deal could have paid for much-needed HIV programmes, for example.

Their absence led to the deaths of 330,000 citizens from HIV between 2000 and 2005. The deal was also equivalent to 64% of the education budget and 84% of the health budget.

In the Gulf, though oil reserves have enriched them temporarily – corrupt arms deals represent money siphoned off, money which will not be available when the oil runs out and money which in some cases is desperately needed to maintain the millions of citizens facing rapidly increasing costs and rising unemployment.

Gilby’s book took years to compile. He cross-examined a former Ambassador to Saudi Arabia before a Tribunal, was cross-examined himself in a bid to release classified information, implemented several Freedom of Information requests, and spent years trawling through declassified archives.

That the book took so long is not only testament to Gilby’s hard work, but also the non-transparency of the government in effectively dealing with corruption, nor their willingness to admit complicity.

The ins and outs of the deals are complex, and on occasion following the thread of what went on where can require concentration. But the cut-and-thrust of arms deals makes for exciting, if distasteful, reading.

The governments lasting approach, in which Cameron and friends loudly back an industry riddled with graft, is best summed up by Gerald Howarth, the Parliamentary Under Secretary of State (International Security Strategy) at the Ministry of Defence, speaking to Parliament in 2010.

Gilby quotes him as saying:

“Senior officials within the Project Office seek assurances from the project prime contractor that procedures are in place for the prevention of bribery, in accordance with the detailed guidance published by the Ministry of Justice.”

That speech was given to the British Parliament just as BAE Systems were fined $400m by the United States government, after pleading guilty to corruption charges. The following year, the company agreed to settle 2,591 violations of the Arms Export Control Act and International Traffic in Arms Regulations, and was fined a further $79m.

The company was also fined in 2010 by the UK government, lending some credibility to Howarth’s claims that “Prevention of Bribery” is official government policy.

Except they fined a paltry £500,000, a rounding error on the $33 billion in military contracts the company secured that year.

Howarth would either have to be stupid or incompetent to claim the government does everything it can to stop corruption, or, as Cameron’s favourable overtures for BAE Systems have made clear, simply doesn’t care.

There are more than a hundred and fifty civil servants totally dedicated to supporting arms exports, while all other non-arms sectors have a combined total of just under a hundred and forty.

Given the arms industry contributes just over one percent of total UK exports, the disproportionate focus is a detriment to the economy overall.

The majority of British companies take great pains not to be tempted by bribery. That our largest, most profitable, and most vigorously supported industry tolerate and promulgate corruption says a great deal about not only their own morality, but also our governments. Gilby’s book is a much-needed historical briefing of what has gone on.