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SFO wrong to drop BAE inquiry, court rules
Peter Walker and agencies
April 10 2008

The Serious Fraud Office (SFO) acted unlawfully in dropping an investigation into alleged bribery in an arms deal between BAE Systems and Saudi Arabia, the high court ruled today.
In a stunning victory for the activist groups that launched the legal challenge, the two judges said Tony Blair's government and the SFO caved in too readily to threats by Saudi Arabia over intelligence sharing and trade.
In an often scathing judgement, Lord Justice Moses and Justice Sullivan rejected the SFO's argument that it was powerless to resist the Saudi threats.
"So bleak a picture of the impotence of the law invites at least dismay, if not outrage," they said.
"Had such a threat been made by one who was subject to the criminal law of this country, he would risk being charged with an attempt to pervert the course of justice."
To give in so easily, the judges said, "merely encourages those with power, in a position of strategic and political importance, to repeat such threats, in the knowledge that the courts will not interfere with the decision of a prosecutor to surrender".
Campaign Against Arms Trade (CAAT) and Corner House Research had sought a review of the decision by the SFO director, Robert Wardle, in December 2006 to drop the investigation into allegations of bribery and corruption over the £43bn Al-Yamamah arms deal, signed in 1985.
"No one, whether in this country or outside, is entitled to interfere with the course of our justice," Lord Justice Moses and Mr Justice Sullivan ruled.
"It is the failure of government and the defendant [Wardle] to bear that essential principle in mind that justifies the intervention of this court."
The judges ruled that the SFO decision was unlawful but made no formal orders for further action - something they will consider at a further hearing. It is believed the most likely course will be that the SFO will have to reconsider its decision.
They had harsh words for the attitude of the SFO and the Blair government in never even considering the option of telling the Saudis their threats would be ignored.
"No-one suggested to those uttering the threat that it was futile, that the United Kingdom's system of democracy forbad pressure being exerted on an independent prosecutor whether by the domestic executive or by anyone else; no-one even hinted that the courts would strive to protect the rule of law and protect the independence of the prosecutor by striking down any decision he might be tempted to make in submission to the threat."
At a two-day hearing in February, lawyers for CAAT and Corner House argued that the SFO dropped its investigation due to Saudi Arabian pressure that amounted to diplomatic blackmail.
Blair, the then prime minister, said the Saudis had privately threatened to cut intelligence cooperation over terrorism unless the inquiry was stopped.
The government did not dispute this version of events, the judges noted in their ruling.
They decided that Wardle "was required to satisfy the court that all that could reasonably be done had been done to resist the threat", and said: "He has failed to do so."
CAAT and Corner House greeted the ruling with delight.
"This is a great day for British justice," said Susan Hawley, of Corner House. "The judges have stood up for the right of independent prosecutors not to be subjected to political pressure and they have made sure that the government cannot use national security arrangements just because a prosecution is not in their interests."
Symon Hill, of CAAT, said the judgment "brings Britain a step closer to the day when BAE is no longer calling the shots".
He said: "It has been clear from the start that the dropping of the investigation was about neither national security nor jobs."
At the February hearing, lawyers for CAAT and Corner House said Blair put "irresistible pressure" on the SFO and his attorney general, Lord Goldsmith, to end the investigation.
Blair "stepped over the boundary between what is a permissible exercise and impermissible attempts to influence or dictate a decision on the investigation by expressing his view," Dinah Rose QC, representing the activist groups, told the court.
"This is the clearest case of intervention that goes too far."
David Leigh, the Guardian's investigations editor, said: "The Guardian unearthed and published the facts about BAE's dealings with Saudi Arabia as long ago as 2004. We passed our evidence to the SFO, who embarked on a long inquiry.
"Recently we also decided to name Prince Bandar as the recipient of £1bn from BAE. We are very pleased that today's high court judgment vindicates all the work the Guardian has done in the public interest to expose this scandal."
The judges were told Prince Bandar, a Saudi national security adviser allegedly involved in the bribery, was behind threats to hold back information about potential suicide bombers and terrorists.
According to an SFO document, the British ambassador to Saudi Arabia warned that "British lives on British streets" were at risk if the fraud investigation continued. The memo added: "If this caused another 7/7, how could we say our investigation is more important?"
The Al-Yamamah arms deal involved BAE Systems – then still called British Aerospace – providing Saudi Arabia with 72 Tornado and 30 Hawk jets plus other military equipment.
Soon after it was signed by the Saudi defence minister, Prince Sultan, and the then defence secretary, Michael Heseltine, allegations emerged that the contract had been won through the payment of hundreds of millions of pounds in bribes.
BAE and Prince Bandar deny the accusations.

The Guardian


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