UK: Law lords: fraud office right to end bribery investigation in BAE case

The House of Lords yesterday ruled that the Serious Fraud Office
acted lawfully when it halted its investigation into bribery
allegations relating to an arms deal between Saudi Arabia and BAE
Systems.

Led by Lord Bingham, the members of Britain's equivalent
of the supreme court overturned what had been an earlier landmark
judgment by two of their high court colleagues, Lord Justice Moses and
Lord Justice Sullivan.

Moses and Sullivan had previously
condemned the enforced closedown of the SFO investigation into the
bribery allegations as a betrayal of the rule of law.

The law
lords contradicted them. They said the courts should stand aside, and
had no power to interfere with the decision to shut down the
investigation in the face of Saudi threats of retaliation.

The
SFO was investigating allegations that BAE - one of the world's largest
arms makers - ran a £60m "slush fund" and offered sweeteners to
officials from Saudi Arabia in return for lucrative contracts.

Yesterday's
ruling led to a chorus of condemnation from anti-corruption
campiagners, and from Nick Clegg, leader of the Liberal Democrats, who
characterised the judgment as a blackmailer's charter.

He said:
"This ruling is a legal licence for international blackmail. The rule
of law in Britain now seems to depend on the whims of foreign
governments.

"If the government is to restore its tarnished
global reputation there must be an independent inquiry into its role in
dropping the decision to prosecute."

Yesterday's ruling said the
then head of the SFO, Robert Wardle, had been entitled to call off the
investigation after being told that lives were allegedly at stake.

Sir
Sherard Cowper-Cowles, the ambassador to Riyadh, had repeatedly claimed
to him that "British lives on British streets" were at risk, and that
the Saudis were, in effect, willing to see UK citizens murdered by
terrorists if they did not get their way.

Lord Bingham said: "The
director [of the SFO] was confronted by an ugly and obviously unwelcome
threat." He had to weigh up competing public interests.

Although
yesterday's action was nominally about Wardle's behaviour, the judgment
detailed evidence of a year of relentless pressure he had come under to
drop his investigation, allegedly from Prince Bandar of Saudi Arabia,
from BAE itself, from Sir Kevin Tebbit, the permanent secretary at the
defence ministry, from Lord Goldsmith, the attorney general, and from
the then prime minister, Tony Blair.

Lord Bingham, describing Wardle as "courageous", said: "The director's decision was one he was lawfully entitled to make.

"It
may indeed be doubted whether a responsible decision-maker could, on
the facts before the director, have decided otherwise."

Lady
Hale said: "He resisted the extreme pressure under which he was put for
as long as he could ... a lesser person might have taken the easy way
out and agreed with the attorney general that it would be difficult on
the evidence to prove every element of the offence.

"But he did
not ... although I would wish that the world were a better place where
honest and conscientious public servants were not put in impossible
situations like this, I agree that his decision was lawful."

The
former head of the SFO yesterday spoke of his personal relief and
delight at the finding. "I'm extremely pleased they have recognised the
difficult position I was in, and I'm obviously pleased they said nice
things about me," he said.

Wardle added that a modernised
corruption law, which is being called for by many reformers, would not
have solved his problems. "It would have made little difference in the
BAE case," he said. "The decision was about the balance of public
interest."

Wardle refused at the time to go along with a claim by Goldsmith that the evidence was too weak for a prosecution.

This
stance forced ministers to admit that the case was being dropped solely
because of Saudi threats, including a threat to cancel a lucrative new
contract to buy Typhoon warplanes from BAE.

Sue Hawley, of
anti-corruption campaigners Corner House, one of two groups which
brought the court case challenging the government, said last night: "It
is a very disappointing and very conservative judgment.

"If the
courts are not prepared to hold the government to account, who will do
that job? As Moses and Sullivan's judgment most powerfully put it: 'The
rule of law is nothing if it fails to constrain overweening power'."

Symon
Hill, of the Campaign Against the Arms Trade, said: "Throughout this
case we have been overwhelmed with support from people in all walks of
life. There has been a sharp rise in opposition to BAE's influence in
the corridors of power. Fewer people are now taken in by exaggerated
claims about British jobs dependent on the arms trade."

Lawrence
Cockcroft, UK chairman of Transparency International, said: "The hope
that our courts might rescue the credibility of the government's duty
to fight corruption has evaporated."

He hoped that the
government would now abandon its plan to give politicians the statutory
power to shut down criminal inquiries like BAE on grounds of alleged
"national security".

• 106 Money & Politics
• 176 War Profiteers Site
• 185 Corruption
• 208 Regulation