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From Westminster to Riyadh, British arms deals stink of corruption

January 20, 2015 at 10:06 am

This week, Campaign Against Arms Trade (CAAT) released new figures which reveal the £3.8 billion in arms sales that the British government has approved for export to Saudi Arabia since 2010. The bulk of this has come from Britain’s largest arms company, BAE Systems.

Whether it’s cowardice, laziness or, as a report by the European Council of Foreign Relations judged recently, simply being let off the hook by the scale of American military might, it’s unclear exactly why Saudi Arabia spends all these billions on arms. It is the Middle East’s regional policeman who’s happy to buy the shiniest truncheon but rarely swings it.

After demanding the West to provide military protection against revolutionary Iran, then insisting that Western states also liberate Kuwait from Saddam Hussein before its own troops chased Al-Qaeda out of their own country but left it to the West, again, to chase the movement out of Yemen, the House of Saud now cites fears of a “backlash” in not deploying that big shiny truncheon against the Islamic State (ISIS). Pity Paris, New York or London.

One of the rare foreign military excursions mounted by Saudi Arabia was to deploy tanks in neighbouring Bahrain in 2011; not to fight terrorists or quell insurgents, you understand, but to attack pro-democracy protesters.

Saudi Arabia is the biggest military spender in the Middle East apart from Israel. It has hundreds of top of the range aircraft and over a thousand hi-tech tanks more or less rotting away in the desert, even though the region is facing a fundamental threat to its stability. So why the massive spending on arms?

It makes a little more sense when you follow the money. The House of Saud’s Prince Turki bin Nasser is reported to have benefited from most of a £60 million slush fund that BAE Systems set up to ease the Al-Yamamah arms deal. This remains the largest export deal in British history, instigated by Margaret Thatcher and reportedly worth £40 billion by 2005, when the Guardian exposed it as hideously corrupt.

Senior members of the Saudi monarchy were implicated, including Prince Bandar Bin Sultan, the head of the National Security Council. It is alleged that he took £1 billion in secret payments from BAE to ensure that it won the contract.

These arrangements were being scrutinised by the Serious Fraud Office in the early 2000s, until Bandar himself flew to London and warned the then British Prime Minister Tony Blair that, unless he dropped the investigation, the UK risked “another 7/7” and “deaths on British streets”. How would this be achieved? By stopping Saudi intelligence from handing over information on terror plots aimed at the UK. Feeble Tony Blair called off the investigation the very next day.

In corruption investigations involving the Czech Republic, Hungary and Saudi Arabia, BAE has been fined hundreds of millions of dollars for using sub-contractors to deliver bribes to its clients. The use of these sub-contractors is key to understanding how corruption in British arms deals has effectively been legalised and then endorsed by the British government.

The UK taxpayer currently employs around 130 civil servants to promote BAE and other defence companies abroad, mainly in Saudi Arabia. In arranging the deals, the civil service team typically hires a company to manage the detail. That contractor then hires a sub-contractor, who just happens to pay a bribe. “Nothing to do with us!” protests the British government when this, almost inevitably, is exposed.

Take “SANGCOM”, for example, a peculiar organisation paid for by the House of Saud but employing 50 British army and civilian personnel based in Riyadh, who handle the sale and implementation of a range of telecoms and internet surveillance equipment by British companies to the Saudi National Guard. This equipment is then used to listen in on all those home-grown terrorists whom Prince Bandar once threatened to unleash on the UK, as well any Saudi political dissidents who call for anything controversial, such as a democratic vote.

Thanks to an investigation last year involving Private Eye magazine, SANGCOM is now being investigated by the Serious Fraud Office for bribery on an industrial scale. The head of Transparency International has written to the government arguing that the UK “cannot afford another Al-Yamamah” and stressing that any investigation must not be interfered with again.

Like previous BAE deals, SANGCOM appears to have used sub-contractors to deliver bribes. Its structure is ideal: British civil servants lend a veneer of respectability; it’s paid for by the Saudis to avoid accusations of favouritism or wasteful spending; and it employs private contractors, who then hire sub-contractors to facilitate the actual corruption.

SANGCOM isn’t unique. A large part of the £3.8 billion in arms sales that CAAT has just announced derives from the BAE Eurofighter Typhoon jets that Cameron has been flogging desperately since he came to power. Once again, this deal was promoted and is being implemented by a team of British civil servants whose salaries are paid for by the Saudis; so-called “MODSAP” also employs private contractors. It costs just £50 million per year for the Saudis to operate the organisation. That’s a huge sum in ordinary terms, but if Prince Bandar made one billion dollars in bribes, coughing up a fraction of that to fund this organisation is nothing. MODSAP or SANGCOM are made-to-measure vehicles for corruption.

If the UK arms trade is so corrupt, why do British politicians tolerate it? The arms lobby has been clever; it claims publically that arms exports generate jobs for British workers, which is one argument that British voters will tolerate. Shortly before the corruption investigation into Al-Yamamah was called off, a lobbyist for the arms industry is reported to have put considerable pressure on MPs whose constituencies contain BAE factories.

However, the jobs argument is flawed. Just 0.2 per cent of the UK workforce is actually involved with arms exports, with each of those jobs subsidised to the tune of £9,000 per year. BAE is also inflating the job numbers. Its recent sale of Eurofighters to Saudi Arabia was sold to the public on the basis of it generating 50,000 jobs, a figure quoted by many British media outlets. A study commissioned by the Eurofighter consortium, of which BAE is a part, found the real figure to be a tenth of that. Now the deal is signed, a production line has been set up in Saudi Arabia. Two-thirds of the aircraft will be manufactured there, not in the UK.

Covertly, those involved with the Saudi arms trade are also political donors in Westminster. In the period just preceding the 1992 General Election, an investigation by the Guardian alleged that “senior figures” in Saudi Arabia had made payments of up to £7 million to the Conservative Party. Both the Conservatives and the House of Saud denied the allegations, the newspaper made a strong case for its allegations.

Wafic Said, a Syrian-born businessman who made his millions building roads and water infrastructure for the House of Saud in the Seventies and Eighties, was also closely involved in the Al-Yamamah arms deal. While still a British citizen, Said gave substantial amounts to Thatcher’s Conservative Party. In 2008, Said, who is no longer British and therefore not eligible to give money to political parties in Britain, caused controversy by channelling funds to the Conservatives through his daughter Rasha. At the 2010 General Election, his wife gave the Tories £250,000. The latest records, meanwhile, show that £450,000 more has been paid since then in readiness for the push to have David Cameron re-elected in May.

The British arms trade to Saudi Arabia does little to keep the Middle East safer. Rather than creating jobs for British workers, BAE Systems is lining its own pockets and greasing the palms of individuals belonging to an oppressive absolute monarchy. Key players in the trade are funding major political parties in Westminster. It’s time for a serious re-assessment of whether any of this is really in the public interest.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.