BAE in new multibillion-pound deal to sell Hawk jets to Saudis
Sunday, 8 July 2007
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British arms manufacturer BAE Systems is locked in negotiations for a new multibillion-pound deal to sell military aircraft to Saudi Arabia, just six months after the Government scrapped a corruption inquiry into a huge arms deal between the firm and the Saudis.
Opposition MPs last night demanded to know whether the new deal for 60 Hawk training aircraft was a factor when representations were made by the Saudis last year to have the corruption investigation scrapped.
Norman Lamb, the Liberal Democrats' health spokesman, said: "One questions whether this was envisaged at the same time that the Prime Minister advised against the investigation continuing."
The arms industry bible Jane's Defence Weekly reports that BAE and the Saudi government are negotiating a new £1bn contract for 60 Hawk trainer jets. If that goes ahead, it will lock the Saudi air force, BAE and Britain's Royal Air Force into years of training co-operation that would be worth billions of pounds.
Arms industry insiders said the deal was "business as usual" following the series of massive Al-Yamamah arms deals that began in 1985. These were the biggest the world has seen, earning BAE £40bn over the past 20 years. Yet they have been dogged by allegations that BAE bribed members of the Saudi government.
The Serious Fraud Office (SFO) was believed to be closing in on allegations of secret commissions involving Swiss bank accounts and a "slush fund" when the Government pulled the plug on the inquiry last December.
The decision by the SFO to drop its investigation was criticised by the OECD as having been against international anti-corruption agreements. The US Department of Justice is now looking into the deal.
It is believed the Saudi royal family had threatened to cancel the final tranche of the Al-Yamamah contract, a multibillion-pound order for 72 Typhoon aircraft, unless the investigation was scrapped.
Liberal Democrat MPs said yesterday that it was possible the Saudis had dangled the current deal during representations to drop the corruption inquiry.
Mr Lamb added: "If this contract was envisaged and the Saudis were saying your prospects of winning this contract hang in the balance, that would be yet more evidence of a breach of OECD rules.
"It certainly needs to be pursued. Particularly if there is a link between this contract, supply of work, and the decision in December."
Mr Lamb's colleague Vince Cable, a Treasury spokesman, said: "Prince Bandar was coming to Britain and landing at Brize Norton about every fortnight. They can't just have been discussing dropping the investigation."
Defence analyst Paul Beaver said the deal showed how tightly BAE and the Saudis were linked. "If they have the European fighter, they have to have the leading fighter trainer."
A spokesman for BAE refused to confirm negotiations were under way, saying: "We are talking to our long-standing customers about their requirements."
