UK: BAE: secret papers reveal threats from Saudi prince

Previously secret files describe how investigators were told they
faced "another 7/7" and the loss of "British lives on
British streets" if they pressed on with their inquiries and the
Saudis carried out their threat to cut off intelligence.

Prince Bandar, the head of the Saudi national security council, and
son of the crown prince, was alleged in court to be the man behind the
threats to hold back information about suicide bombers and terrorists.
He faces accusations that he himself took more than £1bn in secret
payments from the arms company BAE.

He was accused in yesterday's high court hearings of flying to London
in December 2006 and uttering threats which made the prime minister,
Tony Blair, force an end to the Serious Fraud Office investigation
into bribery allegations involving Bandar and his family.

The threats halted the fraud inquiry, but triggered an international
outcry, with allegations that Britain had broken international
anti-bribery treaties.

Lord Justice Moses, hearing the civil case with Mr Justice Sullivan,
said the government appeared to have "rolled over" after the
threats. He said one possible view was that it was "just as if a
gun had been held to the head" of the government.

The SFO investigation began in 2004, when Robert Wardle, its director,
studied evidence unearthed by the Guardian. This revealed that massive
secret payments were going from BAE to Saudi Arabian princes, to
promote arms deals.

Yesterday, anti-corruption campaigners began a legal action to
overturn the decision to halt the case. They want the original
investigation restarted, arguing the government had caved into
blackmail.

The judge said he was surprised the government had not tried to
persuade the Saudis to withdraw their threats. He said: "If that
happened in our jurisdiction [the UK], they would have been guilty of
a criminal offence". Counsel for the claimants said it would
amount to perverting the course of justice.

Wardle told the court in a witness statement: "The idea of
discontinuing the investigation went against my every instinct as a
prosecutor. I wanted to see where the evidence led."

But a paper trail set out in court showed that days after Bandar flew
to London to lobby the government, Blair had written to the attorney
general, Lord Goldsmith, and the SFO was pressed to halt its
investigation.

The case officer on the inquiry, Matthew Cowie, was described by the
judge as "a complete hero" for standing up to pressure from
BAE's lawyers, who went behind his back and tried to secretly lobby
the attorney general to step in at an early stage and halt the
investigations.

The campaigners argued yesterday that when BAE failed at its first
attempt to stop the case, it changed tactics. Having argued it should
not be investigated in order to promote arms sales, it then recruited
ministers and their Saudi associates to make the case that
"national security" demanded the case be covered
up.

Moses said that after BAE's commercial arguments failed, "Lo and
behold, the next thing there is a threat to national security!"
Dinah Rose, counsel for the Corner House and the Campaign against the
Arms Trade, said: "Yes, they start to think of a different way of
putting it." Moses responded: "That's very unkind!"

Documents seen yesterday also show the SFO warned the attorney general
that if he dropped the case, it was likely it would be taken up by the
Swiss and the US. These predictions proved accurate.

Bandar's payments were published in the Guardian and Switzerland
subsequently launched a money-laundering inquiry into the Saudi arms
deal. The US department of justice has launched its own investigation
under the foreign corrupt practices act into the British money
received in the US by Bandar while he was ambassador to
Washington.

Prince Bandar
yesterday did not contest a US court order preventing him from taking
the proceeds of property sales out of the country. The order will stay
in place until a lawsuit brought by a group of BAE shareholders is
decided. The group alleges that BAE made £1bn of "illegal bribe
payments" to Bandar while claiming to be a "highly ethical,
law-abiding corporation".