David Leigh and Rob Evans4 May 2004
Files have been seized by Ministry of Defence police alleging corruption on a massive scale by Britain's biggest arms firm, BAE Systems. Payments totalling more than £60m to prominent Saudis are listed, a far greater amount than has been previously alleged.
MoD fraud squad detectives investigating allegations of bribery of a civil servant have seized 386 boxes of "slush fund" accounts.
Most explosively, the documents detail £17m in benefits and cash allegedly paid by BAE, which is chaired by Sir Dick Evans, to the key Saudi politician in charge of British arms purchases, Prince Turki bin Nasser. He is recorded under the codename "PB", alleged to mean "principal beneficiary".
BAE is trying to secure another £1.5bn of arms deals from the Saudi regime, following the sale of planes, missiles and warships worth £50bn to them over the past 15 years.
The documents list by name every Saudi official alleged to have received benefits from BAE in recent years. These include a number of military attaches at Saudi Arabia's London embassy, recorded as being provided with luxury London houses at BAE's expense.
The documents, seized last week from a warehouse in Hertfordshire, include thousands of entries in accounts ledgers, itineraries, travel bookings and records, stretching back 10 years.
The Guardian has obtained copies of the key files. The picture they present may cause serious difficulties for BAE in its relations with law enforcement agencies, with the MoD and with US contractors. Lockheed, which uses BAE as a sub-contractor on the F35 fighter, is reported to have demanded that BAE directors sign statements promising they do not pay bribes or commissions.
Sir Kevin Tebbit, the permanent secretary at the MoD, rebuffed a Serious Fraud Office approach when allegations surfaced of the existence of a BAE slush fund, in 2001.
According to the files, while Sir Kevin was accepting personal assurances from Sir Dick that there was no need for an MoD investigation, BAE was not only providing free holidays to one of his own MoD officials, but also pouring millions into providing a lavish lifestyle for Saudi politicians and generals.
The files indicate that payments continued past February 14 2002, when it became illegal under UK law to pay foreign officials. A hotel bill of more than £70,000 is recorded for a Rome holiday for Prince Turki's wife after this date.
Another such bill in the records is for £32,500 to continue paying the rent on a £1m Mayfair house for the then Saudi defence attache, Brigadier General Abdul Aziz Nasser Al-Abaykan.
The contents of the documents may be of interest to BAE's auditors. False invoices appear to have been prepared under which BAE transferred millions of pounds to a travel agency under the heading: "Accommodation services and support for overseas visitors."
The agency, Travellers World Ltd, is alleged to have acted on BAE's instructions. It forwarded cash to Prince Turki and others, according to the documents, rented property for Saudis, processed the payments for luxury cars, private medical bills and gifts, and then invoiced these sums directly back to BAE.
The Travellers World files were the ones seized by MoD police last week, and detectives have extensively questioned a director of the company, according to legal sources.
MOD police said: "The MoD fraud squad is investigating allegations of corruption against a retired civil servant. It would be inappropriate to discuss the details".
The Guardian asked BAE if it was still paying Prince Turki. BAE spokesman Richard Coltart refused to answer. The company issued a statement saying: "As we have said on several previous occasions, BAE Systems rigorously complies with the laws of the UK and of the countries in which it operates. BAE denies any allegations of wrongdoing".
The Saudi embassy said: "The kingdom of Saudi Arabia does not condone corrupt practice of any kind. We have no knowledge of the allegations." The Guardian faxed Prince Turki in Riyadh for his comment, but received no response.
Prince Turki's £17m is ac counted for in the records by 306 major payments and a host of smaller ones.
In analysing the amounts, the Guardian has only totalled bills clearly linked to Prince Turki, his wife Princess Nura, (codename "PN" ) his 30-year-old son Prince Faisal ("PF"), or his chief aide, General Abdul Aziz Maghrabi ("AAM"). The final total of alleged payments may be much higher still.
The files include large cash payments into Prince Turki's Bank of America account in Los Angeles, where he has acquired a Beverley Hills mansion. More picturesque items include a peacock-blue Rolls Royce for Prince Turki's wife, and a £175,000 Aston Martin Le Mans for himself.
BAE's representative, retired RAF wing commander Tony Winship, is recorded as sending the prince a fax in Riyadh on March 3 2000. Addressing him as "Dear Prince Turki" and signing off "Very best wishes as ever, Tony" he wrote that BAE wanted a biographical note for the Duke of Kent, who they had arranged would meet Prince Turki in April.
He went on: "Aston Martin Le Mans. Delivery date is end May ... Silver Seraph for Princess Nura. I was informed this morning that it should leave the factory in 10 days time. I hope you are having a great time in the desert. We all look forward to seeing you very soon."
On another occasion, in 1995, an air charter company is shown arranging the $291,000 (£165,000) hire of a cargo plane to carry Prince Turki's shopping.
The manager of DAS Aviation Services in Florida faxed Prince Turki confirming "Personal and confidential ... I organised a DC8-63 series aircraft to take 1 Rolls-Royce and crates of furniture from Los Angeles to Dhahran ... Today I spoke with Tony Winship and he advised me you would like to bring 2 cars back from Saudi Arabia to Los Angeles."
An email to the finance di rector of Travellers World, Stuart Fordyce, says in July 2000: "Tony has requested that we pay to T1's private LAX bank account the sum of US$132,030" (T1 was an internal abbreviation used for Turki).
In October 2000, a second email from Mr Fordyce says: "We need to transfer a further $66,000 to Prince Turki's account in LA". A Barclays Bank statement records the money going through on October 10 2000 "in favour of HRH Prince Turki bin Nasser".
The bulk of the £17m payments detailed in the files is made up of huge bills for summer holidays taken by the Turki family, accompanied by their up to 35-strong entourage of servants, drivers and bodyguards.
Their alleged journeys read like a roll call of the world's most expensive hotels - the George V in Paris, the Majestic in Cannes, the Beverly Hills Hilton, the Grand Wailea, Hawaii, and in London, the Royal Lancaster and the Carlton Tower, where Prince Turki occupied the £1,100-a night presidential suite on the 18th floor, allegedly at BAE's expense.
In August 2001 the Turki family flew in two private airliners, an Airbus and their pink-painted Boeing business jet, P4-TBN, for a holiday in Cancun, Mexico. The files show BAE picking up the £41,000 bill at the Cancun Ritz-Carlton.
BAE had begun that year, the files say, by putting $30,000 into an account for Prince Turki's daughter to buy a Mercedes.
Her mother stopped in Cairo which cost £38,000, and went on to Spain. Her stay at the Hotel Alfonso in Seville cost £54,000 and a visit to the five-star Melia Sancti Petri outside Cadiz cost £17,000.
BAE is shown as having paid £99,000 for Nura's son, the 30-year-old Prince Faisal, to ski at an exclusive Colorado resort, The Peaks at Telluride, and another £56,000 to charter him a plane. Prince Faisal had come fresh from spending £21,000 in Italy, at the Four Seasons in Milan.
Prince Turki himself is recorded spending the spring first at the George V in Paris (£87,000), then holidaying in Morocco (£94,000). He passed through the Grosvenor House hotel in London (£63,000) and on to Barcelona (£36,000 at the Hotel Rey Juan Carlos).
The summer saw Prince Turki's wife embark on a major round of European junkets, apparently at BAE's expense.
She spent £56,000 at the Intercontinental hotel in Athens and another £36,000 on a Prestige Limousine Service while she was there. Hiring a yacht cost another £13,000. She is shown moving on to Italy that June.
At the Grand Hotel des Bains, near Rimini, BAE is said to have handed over another £26,000, plus £28,000 for limousines and £14,000 for bodyguards. The princess and her family then proceeded to the south of France, to run through £99,000 at the Majestic in Cannes.
The summer's climax for the princess, according to the records, was to fly across the Atlantic, to settle in her friends and guests at the Beverly Hills Hilton, Los Angeles, within walking distance of the famously expensive shopping experience of Rodeo Drive. The cost: £101,000.
BAE also allegedly paid more than £400,000 to provide squads of 24-hour bodyguards throughout the summer at the Turkis' residential mansion in Beverly Hills.
After the trip with her husband in the two private jets to Cancun, Princess Nura appears to have proceeded slowly back east.
Her stay at The Plaza - "Crown Jewel of Manhattan's Fifth Avenue" - is alleged to have cost BAE no less than £195,000.
Her transit via Paris and the Hotel Le Bristol took another £102,000 and a brief autumn stopover in Egypt, at the Cairo Marriott, added a final £35,000 to BAE's recorded bill for Princess Nura for 2001.
Meanwhile, her husband had apparently been equally energetic. It is alleged that BAE promised him the world's most expensive car - a £250,000 Daimler Maybach - and started to accumulate provision for it in their accounts. He arrived in London, where £36,000 went at the Carlton Tower.
No want of Prince Turki's at the Carlton Tower appeared to be too small to be paid for by BAE. Files depict payments for vitamin pills and Harrods hairbrushes, as well as £150 tips to doormen to ensure his limousine could park in prime position at the hotel entrance.
Turki moved on to spend £62,000 at Maxim's de Paris. He returned to the Carlton Tower in London (£49,000) before flying to Caesar's Hotel in the US (£46,000) and expending £69,000 of BAE's money in Washington, at the Tyson's Corner Ritz-Carlton, according to the files. They say Capital Limos provided a fleet of cars at a cost of another £75,000.
As 2002 started, Prince Turki's benefits appear to have continued unabated, despite the passage of an anti-corrup tion clause in the 2001 Anti-terrorism Act outlawing payments to foreign public officials.
It is alleged he ran up a £16,000 bill in February in Amsterdam, at the Hotel de L'Europe. His wife headed for Italy again, and spent more than £80,000 in Rome, at the Hotel de Russie, where the Picasso Suite costs £1,500 a night.
Correspondence in the Travellers' World files says the agency became uneasy about the law, and passed some payments over to a second BAE front company, Robert Lee International (RLI), to handle.
RLI's managing director, John Sharp, did not dispute handling some BAE payments, but told us: "We strenuously deny that any activity undertaken by Robert Lee International is or was illegal." This echoes BAE's repeated denials of wrongdoing.
Norman Lamb, the Liberal Democrat MP, said last night: "The allegations against BAE are now mounting up. There should now be a thorough, exacting investigation into these allegations so that we can get to the bottom of what is increasingly looking like a serious scandal involving a company heavily subsidised by the public purse."
£195,000 at the Plaza, New York £101,000 at the Beverly Hills Hilton £99,000 at the Majestic, Cannes £35,000 at the Marriott, Cairo
http://www.guardian.co.uk/print/0,3858,4915781-108733,00.html
