In a recent landmark judgment, a division bench of the High Court in the United Kingdom thwarted the government’s attempt under Saudi pressure to terminate investigations by the Serious Fraud Office (SFO) into allegations of bribery by BAE Systems (BAE) in relation to the Al-Yamamah military aircraft contracts with Saudi Arabia.

The facts are startling. In October 2005, BAE sought to persuade the attorney general and the SFO that continued investigations would adversely affect relations between the UK and Saudi Arabia and prevent the UK from securing the largest export contract of Typhoon aircraft in the last decade. Notwithstanding this, investigations continued throughout the first half of 2006.

On October 14, 2005, the SFO issued a statutory notice to BAE requiring it to disclose details of payments to agents and consultants in respect of the Al-Yamamah contracts. On November 7, 2005, in response to that notice, BAE’s solicitors, in a memorandum described as “strictly private and confidential” addressed to the attorney general, urged that the investigations be halted because that would seriously affect relations between the UK and Saudi Arabian governments. Investigations however continued.

In July 2006, the SFO was about to obtain access to Swiss bank accounts. There was panic reaction. Prince Bandar conveyed to the then prime minister, Tony Blair’s chief of staff that if the SFO’s looking at the Swiss accounts didn’t stop there would be no contract for the export of Typhoon aircrafts and, moreover, intelligence and diplomatic relations between the two countries would cease. Blair and other ministers in their statements were emphatic that continuance of the investigations was likely to have serious negative consequences for the UK in terms of both national security and “our highest priority foreign policy objectives in the Middle East.” In these circumstances, the director of the SFO concluded that continuance of the investigations meant real and imminent damage to the UK’s national and international security and would endanger the lives of UK citizens and service personnel and therefore terminated the investigations.

... contd.