LONDON:Saudi Prince Secretly Made $2B in 1985 Arms Deal

Prince Bandar bin Sultan, a member of Saudi Arabia's
royal family and the kingdom's former ambassador to the United States,
pocketed about $2 billion in secret payments as part of a $80 billion
arms deal between Britain and Saudi Arabia first signed in 1985,
British media reported Thursday.



The reports revived questions about the British government's decision
in December to drop a fraud investigation into the deal, which has
been plagued by allegations of bribes and secret slush funds for
almost two decades.



In remarks Thursday, Prime Minister Tony Blair did not comment
directly on the reports made on the BBC and in the Guardian newspaper.
But he repeated his often-made defense of the decision to drop the
investigation on national security grounds.



"This investigation, if it had it gone ahead, would have involved
the most serious allegations in investigations being made into the
Saudi royal family," Blair said at a meeting of the Group of
Eight nations in Germany.



He added, "My job is to give advice as to whether that is a
sensible thing in circumstances where I don't believe the
investigation incidentally would have led anywhere except to the
complete wreckage of a vital strategic relationship for our country. .
. . Quite apart from the fact that we would have lost thousands,
thousands of British jobs."



Prince Bandar declined to comment, according to the news outlets. A
spokesman for BAE Systems, the arms manufacturer involved, denied any
wrongdoing and told the Guardian that the company had "acted in
accordance with the relevant contracts." BAE Systems is Europe's
largest defense contractor, with annual sales of more than $22
billion, according to the company Web site.



The contract, signed when Margaret Thatcher was prime minister,
provided for the sale of 120 fighter jets and other military equipment
to Saudi Arabia over more than 20 years. Saudi Arabia paid the British
government in oil. Bandar helped negotiate the deal, known as Al
Yamamah, which means "the dove" in Arabic.



According to the British media reports, BAE funneled secret payments
into an account in Washington controlled by Bandar, who reportedly
received at least 120 million pounds, or about $240 million at current
exchange rates, every year for at least 10 years.



Bandar, who left Washington in 2005 after 22 years as ambassador and
now serves as Saudi Arabia's national security adviser, reportedly
used part of the money to operate his private Airbus aircraft.



Britain's Ministry of Defense was aware of and authorized the secret
payments to Bandar despite repeated government denials that any such
"commissions" had been paid, according to the reports. A
ministry spokesman on Thursday declined to comment on the allegations
because that "would involve disclosing confidential information
about Al Yamamah and that would cause the damage that ending the
investigation was designed to prevent."



The secret payments were reportedly discovered during an investigation
by the government's Serious Fraud Office. British officials shut down
that probe in December, citing national security concerns.



In January, Blair said that pursuing the investigation would have been
"devastating for our relationship with an important country with
whom we cooperate closely on terrorism, on security, on the Middle
East peace process and a host of other issues."



Both the Paris-based Organisation for Economic Co-operation and
Development and the U.S. government protested the decision.



On Thursday, Jack Straw, a top Labor Party member of Parliament, said
the government's prime concern in the case was maintaining security
cooperation with Saudi Arabia at a time of increasing threats from
Islamic extremists.

• 106 Money & Politics