A nine-year-old policy that barred the US from doing business with a Saudi Arabian subsidiary of a British defence firm, which pled guilty to fraud in a multibillion-dollar arms deal in 2010, thought to have been the most corrupt arms deal in history, has been rescinded by the Trump administration.
According to a notice published in the Federal Register, the policy was rescinded at the request of BAE Systems Saudi Arabia. “Notice is hereby given that the Department of State has rescinded the policy of denial concerning BAES SAL, a subsidiary of BAE Systems plc,” a US Department of State notice said yesterday.
The notice affirmed that “on March 2, 2010, a judgment was filed against BAE Systems plc (BAES) for conspiring to commit offenses against the United States in violation of 18 U.S.C. 371, including conspiring to violate the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR).”
The administration of Barack Obama imposed the ban in 2011 after BAE Systems pleaded guilty to fraud in the 1985 Al-Yamamah arms deal with Saudi Arabia.
Announcing the lifting of the ban, the notice said that it was carried out “in response to a request from BAES for rescission of this policy of denial” after which the State Department had conducted a thorough review of the circumstances surrounding the conviction and the imposition of the policy of denial. The department said it “has determined that it is in the national security and foreign policy interests of the United States to rescind the policy of denial concerning BAE SAL, including its divisions and business units, and successor entities.”
The rescission of the policy of denial for BAE Systems comes as Secretary of State Mike Pompeo faces allegations of cover-up over arms sales to Saudi and the United Arab Emirates. With the denial lifted, American companies will now be able to do conduct arms deals with BAE Systems Saudi Arabia without restrictions.
The infamous Al-Yamamah arms deal with Saudi Arabia is thought by many to be the one of the most corrupt deals in the industry’s history. The 1985 agreement is alleged to have been obtained thanks to vast sums of money being paid in bribes, and the maintenance of a multi-million dollar “slush fund” used to buy luxury holidays and pay for shopping sprees. When the Serious Fraud Office (SFO) began investigations into what came to be regarded as Britain’s largest ever export agreement, it was apparently ready with incontrovertible evidence to seek arrest warrants for the chairman and chief executive of BAE Systems.
However the Saudis are said to have intervened directly with Downing Street and warned the then Prime Minister Tony Blair that if the investigation was not stopped then future arms deals with Britain would be terminated. Blair duly obliged and closed down the investigation, citing Britain’s national interests as the reason. His decision to halt the SFO inquiry was condemned in 2008 by British courts, which called for an inquiry into allegations that BAE had made secret payments to Saudi officials in order to secure a series of massive contracts.