13 June 2007Richard Norton-Taylor, David Leigh and Rob Evans
Des Browne, the defence secretary, yesterday refused point-blank to say whether his department's £1bn backdoor payments to Prince Bandar of Saudi Arabia for arms deals were still continuing. Visibly uneasy and irritated at a lunch with defence journalists, he claimed "national security" was the reason for his silence.
He also refused to say whether he or his predecessors were aware of the payments allegedly processed by MoD officials and wired to an American bank via the arms firm BAE as an integral part of Britain's biggest arms deal. "I am not going to discuss the detail of these confidential contracts for the very reason it would generate the consequences we do not want to generate," he said.
The Liberal Democrats' leader, Menzies Campbell, last night criticised Mr Browne's silence. "We need a full investigation to determine whether the Ministry of Defence has been directly involved in processing payments to Prince Bandar. The department's failure to clarify this issue is unacceptable. We need to know whether any payments took place after 2002 and whether they breached anti-corruption legislation. If it appears the law has been broken then it would be a matter for the police."
If the funds continued past 2002, when Britain outlawed payments by firms to overseas public officials to gain contracts, they might have been contrary to the Blair government's own much-trumpeted legislation. Jeremy Carver, a lawyer and board member of Transparency International, told BBC Panorama this week: "Those payments, on the face of it, are straightforward bribes as defined by the OECD anti-bribery convention ... it's quite plain that he meets the test of who is a foreign official for the purpose of the OECD convention."
As all departments of the British government tried to stonewall on the payments, Prince Bandar issued a statement to the local Saudi press agency denying that BAE had paid him the money.
The arms company does not dispute making the payments, which it says were with the "express approval" of the MOD. British legal sources also say specifically that BAE made the cash transfers.
But according to Reuters news agency, Prince Bandar, who denies any impropriety, claimed yesterday there was no link between the money and BAE. "These accounts by no means belong to the British aerospace firm," he said. "The aforementioned accounts are audited and reviewed annually by the ministry of finance in the kingdom of Saudi Arabia."
In London the multi-milllionaire prince has hired for his defence the city lawyers Herbert Smith, and two PR firms. His latest spokesman, the Smithfield PR group, said the prince had no comment on further allegations aired in the Wall Street Journal in the US yesterday.
The paper said that, according to Riggs Bank investigators, a batch of travellers' cheques, for $1,000 each, had on one occasion been ordered by Prince Bandar to be taken from deposits in the Washington accounts. Some were cashed, it was alleged, at the MGM Grand Casino in Las Vegas. The embassy, it was reported, told bank investigators such cheques were sometimes given to aides as bonuses.
Anti-corruption campaigners said yesterday they would seek an urgent appeal against a preliminary ruling by a judge that "national security" claims prevented their taking the government to court over the way the prime minister and the attorney-general, Lord Goldsmith, halted the Serious Fraud Office inquiry into BAE's payments.
Nick Hildyard, spokesman for the campaign group Corner House, said: "These latest revelations undermine the government's claim that the SFO inquiry had to be halted for legitimate reasons of 'national security'. We are seeking to overturn urgently the judge's ruling."
