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Al Yamamah - Wikipedia, the free encyclopedia

Al Yamamah

From Wikipedia, the free encyclopedia

For the historical district in central Saudi Arabia, see Al-Yamama.

Al Yamamah (Arabic: اليمامة The Dove‎) is the name of a series of a record arms sales by the United Kingdom to Saudi Arabia, which have been paid for by the delivery of up to 600,000 barrels of oil per day to the UK government.[1] The prime contractor has been BAE Systems and its predecessor British Aerospace.

The first sales occurred in September 1985 and the most recent contract for 72 Eurofighter Typhoon multirole fighters was signed in August 2006.

Mike Turner, the CEO of BAE Systems, said in August 2005 that BAE and its predecessor had earned £43 billion in twenty years from the contracts and that it could earn £40 billion more.[2] It is Britain's largest ever export agreement, and employs some 5,000 people in Saudi Arabia.[3]

Contents

[edit] Background

The UK was already a major supplier of arms to Saudi Arabia prior to Al Yamamah. In 1964 The British Aircraft Corporation conducted demonstration flights of their Lightning in Riyadh and in 1965 Saudi Arabia signed a letter of intent for the supply of Lightning and Strikemaster aircraft as well as Thunderbird surface to air missiles. The main contract was signed in 1966 for 40 Lightnings and 25 Strikemasters (eventually raised to 40). In 1973 the Saudi government signed an agreement with the British government which specified BAC as the contractor for all parts of the defence system (AEI was previously contracted to supply the radar equipment and Airwork Services provided servicing and training). Overall spending by the RSAF was over £1 billion GBP. [4]

In the 1970s United States defence contractors won major contracts, including 114 Northrop F-5s. In 1981 the RSAF ordered 46 F-15Cs and 16 F-15Ds, followed in 1982 by the purchase of 5 E-3A AWACS aircraft. Partly due to pro-Israeli sentiment in the U.S. Congress, which would have either blocked a deal or insisted on usage restrictions for exported aircraft, Saudi Arabia turned to the UK for further arms purchases.[5]

[edit] Summary

Although the full extent of the deal has never been fully clarified, it has been described as "the biggest [U.K.] sale of anything to anyone".[citation needed] At a minimum, it is believed to involve the supply and support of 96 Panavia Tornado ground attack aircraft, 24 Air Defence Variants (ADVs), 50 BAE Hawk and 50 Pilatus PC-9 aircraft, specialised naval vessels, and various infrastructure works. The initial Memorandum of Understanding committed the UK to purchasing the obsolete Lightning and Strikemaster aircraft, along with associated equipment and spare parts.[6]

The UK government’s prime contractor for the project is BAE Systems. BAE has approximately 4,000 employees working directly with the Royal Saudi Air Force (also see Military of Saudi Arabia).

The success of the initial contract has been attributed to Prime Minister Margaret Thatcher, who lobbied hard on behalf of British industry. A Ministry of Defence briefing paper for Thatcher detailed her involvement in the negotations:[7]

Since early 1984, intensive efforts have been made to sell Tornado and Hawk to the Saudis. When, in the Autumn of 1984, they seemed to be leaning towards French Mirage fighters, Mr Heseltine paid an urgent visit to Saudi Arabia, carrying a letter from the Prime Minister to King Fahd. In December 1984 the Prime Minister started a series of important negotiations by meeting Prince Bandar, the son of Prince Sultan. The Prime Minister met the King in Riyahd in April this year and in August the King wrote to her stating his decision to buy 48 Tornado IDS and 30 Hawk.

There were no conditions relating to security sector reform or human rights included in the contracts.[8]

[edit] Stages

[edit] Al Yamamah I

Deliveries began in 1989, comprising

  • 48 Panavia Tornado Interdictor Strike (IDS)s
    • 28 GR1 Standard
    • 6 GR1A Reconnaissance Standard
    • 14 Dual Control Trainers
  • 24 Panavia Tornado Air Defence Variant, equivalent to RAF Tornado F3 standard
  • JP233 Runway Denial Munition
  • Sea Eagle Anti Ship Missile
  • ALARM Anti-Radar Missile

[edit] Al Yamamah II

Deliveries early 1990s - 1998

  • 48 Panavia Tornado IDSs

[edit] Eurofighter Typhoon (al-Salam)

In December 2005 the governments of the UK and Saudi Arabia signed an "Understanding Document" which involved the sale of Typhoon aircraft to replace RSAF Tornados and other aircraft. Although no details were released, reports suggested the deal involved the supply of 72 aircraft. On 18 August 2006 a contract was signed for 72 aircraft. The aircraft cost approximately £4.43 billion, and the full weapons system is expected to cost approximately £10 billion. [9] The fact that the deal mirrors the conditions of the previous Al Yamamah contracts suggests that it is in effect Al Yamamah III (i.e. BAE the contractor, secrecy over contract details and payment in oil via the UK government).

[edit] Tornado upgrade

In February 2006 Air Forces Monthly suggested that the eventual Eurofighter order may reach 100 and the deal could include the upgrade of the RSAF's Tornado IDS aircraft, likely similar to the RAF's Tornado GR4 standard. In an editorial the magazine also raises the prospect of a requirement for a new lead-in fighter trainer to replace the earlier generation of Hawk 65/65As and to provide adequate training for transition of pilots to the advanced Typhoon. [10]BAE System's 2005 Interim Report noted that three RSAF Tornado IDSs arrived at their Warton facility for design evaluation tests with the ultimate aim being "to improve serviceability, address obsolescence, and enhance and sustain the capability of the aircraft". On 10 September 2006 BAE won a £2.5bn (€3.7bn, $4.6bn) contract for the upgrade of 80 RSAF Tornado IDSs. [11]

[edit] Al Yamamah timeline

  • 1984-07-11 — The Financial Times reports Saudi Arabian "interest" in the Panavia Tornado. Export had become a possibility after West Germany lifted its objections to exports outside of NATO.[12]
  • November 1984 - January 1985 — Reports emerge that France may win the Saudi contract for new fighters with the Dassault Mirage.
  • 1985-09-16 — Saudi Arabia agrees "in principle" to Tornado, Hawk and missile deal.[13]
  • 1985-09-26 — The defence ministers of the UK and Saudi Arabia sign a Memorandum of Understanding in London for 48 Tornado IDSs, 24 Tornado ADVs, 30 Hawk training aircraft, 30 Pilatus PC-9 trainers, a range of weapons, radar, spares and a pilot-training programme.[14]
  • 1987-08-11 — First aircraft delivered, two Hawks at BAe's Dunsfold facility.[15]
  • 1988-07-03 - Second stage (Al Yamamah II) signed in Bermuda by the defence ministers of the UK and Saudi Arabia.[16]

[edit] Export Credit Guarantees

Contracts between BAE Systems and the Saudi government have been underwritten by the Export Credits Guarantee Department, a tax-payer funded insurance system. Guarantees on a contract worth up to £2.7billion were signed by the government on 1 September 2003.[17] In December 2004, the Commons trade committee chairman, Martin O'Neill, accused the government of being foolish for concealing a £1billion guarantee they have given to BAE Systems.[18]

[edit] Corruption allegations

There have been numerous allegations that the Al Yamamah contracts were a result of bribes ("douceurs") to members of the Saudi royal family and government officials. Some allegations suggested that the former prime minister's son Mark Thatcher may have been involved, however he has strongly denied receiving payments or exploiting his mother's connections in his business dealings.[19] The UK National Audit Office investigated the contracts and has so far never released its conclusions - the only NAO report ever to be withheld. The BBC's Newsnight observed that it is ironic that the once classified report analysing the construction of MI5's Thames House and MI6's Vauxhall Cross headquarters has been released, but the Al Yamamah report is still deemed too sensitive.

[edit] Serious Fraud Office investigation

The Serious Fraud Office conducted an investigation into a series of corruption allegations that had been reported in the press since September 2003 in relation to the Al Yamamah deals. The UK government discontinued the investigation on 14 December 2006 on grounds of the public interest.[20]

[edit] The allegations

In February 2001, the solicitor of a former BAE Systems employee, Edward Cunningham, notified Serious Fraud Office of the evidence that his client was holding. The SFO wrote a letter to Kevin Tebbit at the MoD who notified the Chairman of BAE Systems[21] but not the Secretary of Defence.[22] No further action was taken until after the letter was leaked to The Guardian in September 2003.[23]

In October 2004, the BBC's Money Programme broadcast an in-depth story, including allegations in interviews with Edward Cunningham and another former insider, about the way BAE Systems alleged to have paid bribes to Prince Turki bin Nasser and ran a secret £60 million slush fund in relation to the Al Yamamah deal.[24] Most of the money was alleged to have been spent through a front company called Robert Lee International Limited. The SFO was also investigating BAE's relationship with Travellers World Limited.[25] There also exists an internal five page report from 1996 detailing the fraud allegations.

[edit] The start of the investigation

The Serious Fraud Office was reported to be considering opening an investigation in to an alleged £20 million slush fund on 12 September 2003, the day after The Guardian had published the story.[26]

In November 2004 they made two arrests as part of an investigation into the allegations.[27] BAE Systems stated that they welcomed the investigation and "believe[d] that it would put these matters to rest once and for all."[28]

In late 2005, BAE refused to comply with compulsory production notices for details of its secret offshore payments to the Middle East.[29]

The terms of the investigation was for a prosecution under Part 12 of the Anti-terrorism, Crime and Security Act 2001.

[edit] 1992 NAO report

In July 2006, Sir John Bourn, the head of the National Audit Office, refused to release a copy to the investigators of an unpublished report into the contract that had been drawn up in 1992.[30]

The MP Harry Cohen said, "This does look like a serious conflict of interest. Sir John did a lot of work at the MoD on Al Yamamah and here we now have the NAO covering up this report."[30] In early 2002 he had proposed an Early Day Motion noting "that there have been... allegations made of large commission payments made to individuals in Saudi Arabia as part of... Al Yamamah... [and] that Osama bin Laden and the Al-Qaeda network have received substantial funds from individuals in Saudi Arabia."[31]

Official statements about the contents of the report go no further than to state that the then chairman of the Public Accounts Committee, now Lord Sheldon, considered the report in private in February 1992, and said: "I did an investigation and I find no evidence that the MOD made improper payments. I have found no evidence of fraud or corruption. The deal... complied with Treasury approval and the rules of Government accounting."[32]

[edit] Threats by the Saudi government

At the end of November 2006, when the long-running investigation was threatening to go on for two more years in order to probe Swiss bank accounts,[33] BAE Systems were negotiating a further multi-billion pound sale of Eurofighter Typhoons to the Saudi government. According to the BBC the contract was worth £6billion with 5,000 people directly employed in the manufacture of the Eurofighter, for which there are other customers,[34] while other reports put the value at £10billion with 50,000 jobs at stake.[35]

On 1 December The Daily Telegraph ran a front page headline suggesting that Saudi Arabia had given the UK ten days to suspend the Serious Fraud Office investigation into BAE/Saudi Arabian transactions or they would take the deal to France,[35] but this threat was played down in other quarters. A French official had said "the situation was complex and difficult... and there was no indication to suggest the Saudis planned to drop the Eurofighter." This analysis was confirmed by Andrew Brookes, an analyst at the International Institute for Strategic Studies, who said "there could be an element here of trying to scare the SFO off. Will it mean they do not buy the Eurofighter? I doubt it."[36]

There were reports of a systematic PR campaign operated by Tim Bell through newspaper scare stories, letters from business owners and MPs in whose constituencies the factories were located to get the case closed.[29]

[edit] Investigation discontinued

On 14 December 2006, the Attorney General Lord Goldsmith announced that the investigation was being discontinued. The 15-strong team had been ordered to turn in their files two days before.[29] The statement in the House of Lords read:

The Director of the Serious Fraud Office has decided to discontinue the investigation into the affairs of BAE Systems plc as far as they relate to the Al Yamamah defence contract. This decision has been taken following representations that have been made both to the Attorney General and the Director concerning the need to safeguard national and international security. It has been necessary to balance the need to maintain the rule of law against the wider public interest. No weight has been given to commercial interests or to the national economic interest.[37]

The Prime Minister justified the decision by saying:

Our relationship with Saudi Arabia is vitally important for our country in terms of counter-terrorism, in terms of the broader Middle East, in terms of helping in respect of Israel and Palestine. That strategic interest comes first.[38]

Jonathan Aitken, a former Tory government minister and convicted perjurer, who was connected with the deals in the 1980s, said that even if the allegations against BAE were true, it was correct to end the investigation in order to maintain good relations with Saudi Arabia.[39]

Mark Pieth, director of anti-fraud section at the OECD, on behalf of the United States, Japan, France, Sweden, Switzerland and Greece, addressed a formal complaint letter before Christmas 2006 to the Foreign Office, seeking explanation as to why the investigation had been discontinued.[40] As of January 2007, OECD was conducting an inquiry into whether Britain violated the OECD Anti-Bribery Convention.[citation needed] Transparency International and Labour MP Roger Berry, chairman of the Commons Quadripartite Committee, urged the government to reopen the corruption investigation. [41]

In a newspaper interview, Robert Wardle, head of the Serious Fraud Office, acknowledged that the decision to terminate the investigation may have damaged "the reputation of the UK as a place which is determined to stamp out corruption".[42]

[edit] BBC Panorama

In June 2007 the BBC's investigative programme Panorama alleged that BAE Systems "..paid hundreds of millions of pounds to the ex-Saudi ambassador to the US, Prince Bandar bin Sultan."[43]

[edit] U.S. Department of Justice investigation

On 26 June 2007 BAE announced that the United States Department of Justice had launched its own investigation into Al Yamamah. It was looking into allegations that a U.S. bank had been used to funnel payments to Prince Bandar.[44]

[edit] Judicial Review

On 9 November 2007 the High Court of Justice in London granted a request for judicial review of the decision to drop the SFO investigation. The judges said that "matters of concern and public importance" had been raised and the challenge "cries out for a hearing". The hearing began in February 2008 before two High Court judges, Lord Justice Moses and Lord Justice Sullivan. It is reported that Lord Justice Moses insisted on seeing privately the full version of government documents in the case.[45] On 10 April they issued their judgement. Rejecting the arguments of the British government, they ruled the decision to drop the SFO investigation had been unlawful, and revealed that the Saudi Prince Bandar had been the man who had directly pressured the British Prime Minister's Office to drop it. Making the point that 'the government's response' (to Saudi threats) 'has failed to recognise that the threat uttered was not simply directed at this country's commercial, diplomatic and security interests; it was aimed at its legal system', the judges vehemently rejected the idea that 'the law is powerless to resist the specific, and, as it turns out, successful attempt by a foreign government to pervert the course of justice. The court must, it is argued, accept that whilst the threats and their consequences are "a matter of regret", they are a "part of life". So bleak a picture of the impotence of the law invites dismay, if not outrage.' Noting that the government had made no attempt to convince the Saudis 'that their threat was futile' and 'that the courts would strive to protect the rule of law', the judges also commented that 'too ready a submission may give rise to the suspicion that the threat was not the real grounds for the decision at all; rather it was a useful pretext. It is obvious, in the present case, that the decision to halt the investigation suited the objectives of the executive. Stopping the investigation avoided uncomfortable consequences, both commercial and diplomatic'..[46]

[edit] See also

[edit] References

  1. ^ "Arms sales fuel BAe's profits", BBC News, 1999-02-25. Retrieved on 2006-08-19. 
  2. ^ O’Connell, Dominic. "BAE cashes in on £40bn Arab jet deal", The Sunday Times, News International, 2006-08-20. Retrieved on 2006-08-22. 
  3. ^ Welcome to Project AY. BAE Systems. Retrieved on 2006-12-18.
  4. ^ Gardner, Charles [1981]. British Aircraft Corporation. A history by Charles Gardner. B.T. Batsford Ltd, 224-249. ISBN 0-7134-3815-0. 
  5. ^ Bloom, Bridget; Johns, Richard. "A deal in a different dimension; The UK-Saudi arms sale", Financial Times, The Financial Times, 1986-02-19, p. 16. Retrieved on 2007-02-26. 
  6. ^ Memorandum of Undestaning for the provision of equipment and services for the Royal Saudi Air Force (PDF) (September 1985). Retrieved on 2006-11-02.
  7. ^ Mottram, R (1985-09-25). Briefing for the Prime Minister's meeting with Prince Sultan (PDF). Retrieved on 2006-11-02.
  8. ^ Adam Ingram (18 November 2003). Defence - Saudi Arabia. Hansard.
  9. ^ "BAE confirms £5bn Eurofighter sale to Saudi Arabia", The Times, 2006-08-19. Retrieved on 2006-08-19. 
  10. ^ "Saudi Arabia Signs Typhoon Deal", Air Forces Monthly, February 2006, pp. 4-5. Retrieved on 2006-08-22. 
  11. ^ Steiner, Rupert. "BAE clinches new £2.5bn Tornado deal with Saudis", The Business, 2006-09-10. Retrieved on 2006-09-12. 
  12. ^ "Saudi Arabia considers Tornado fighter deal", Financial Times, The Financial Times Limited, 1984-07-11, p. 6. Retrieved on 2006-12-16. 
  13. ^ Fairhill, David. "Saudis agree 'in principle' to 3 billion pound plane deal: Israelis angered by Tornado sale 'arms race escalation'", Financial Times, The Financial Times Limited, 1985-09-16. Retrieved on 2006-12-16. 
  14. ^ Taylor, Michael J.H. (2001). Flight International World Aircraft & Systems Directory, 3rd Edition, United Kingdom: Reed Business Information, 189-190. ISBN 061701289X. 
  15. ^ Donne, Michael. "BAe Hands Over First Part Of Saudi Aircraft Order", Financial Times, The Financial Times Limited, 1987-08-12, p. 6. Retrieved on 2006-12-16. 
  16. ^ Fairhill, David. "Britain signs 6 billion pounds Saudi arms contract", The Guardian, Guardian Newspapers Limited, 1988-07-09. Retrieved on 2006-12-18. 
  17. ^ Rob Evans; David Leigh. "Millions risked on BAE contract", The Guardian, 27 November 2003. Retrieved on 2006-12-16. 
  18. ^ David Leigh; Rob Evans. "£1bn BAE guarantee 'foolish', says MP", The Guardian, 15 December 2004. Retrieved on 2006-12-16. 
  19. ^ Submission from the Campaign Against Arms Trade to the International Development Committee's Inquiry into corruption. Campaign Against Arms Trade (September 2000). Retrieved on 2006-08-19.
  20. ^ "Timeline: BAE corruption probe", BBC News, 15 December 2006. Retrieved on 2006-12-15. 
  21. ^ Adam Ingram (17 November 2003). Defence - Saudi Arabia. Hansard. Retrieved on 2006-12-15.
  22. ^ Geoff Hoon (25 May 2004). Al Yamamah Contracts. Hansard. Retrieved on 2006-12-15.
  23. ^ David Leigh; Rob Evans. "MoD chief in fraud cover-up row", The Guardian, 13 October 2003. Retrieved on 2006-12-15. 
  24. ^ Michael Robinson. "BBC lifts the lid on secret BAE slush fund", BBC Money Programme, 4 October 2004. Retrieved on 2006-12-15. 
  25. ^ "BAE subject of fraud investigation", The Herald, Scottish Media Newspapers Limited, 2004-11-18, p. 23. Retrieved on 2006-12-17. 
  26. ^ David Leigh. "Fraud Office looks again at BAE", The Guardian, 12 September 2003. Retrieved on 2006-12-16. 
  27. ^ "SFO to investigate BAE contracts", BBC News, 3 November 2006. Retrieved on 2006-12-15. 
  28. ^ "BAE included in SFO investigation", BBC News, 17 November 2006. Retrieved on 2006-12-15. 
  29. ^ a b c David Leigh; Rob Evans. "Brutal politics lesson for corruption investigators", The Guardian, 16 December 2006. Retrieved on 2006-12-16. 
  30. ^ a b Leigh, David; Evans, Rob. "Parliamentary auditor hampers police inquiry into arms deal", The Guardian, Guardian Newspapers Ltd., 2006-07-25. Retrieved on 2006-08-12. 
  31. ^ Harry Cohen (7 February 2002). Business of the House. Retrieved on 2006-12-15.
  32. ^ Alan Williams (13 February 2002). Public Accounts Commission - Al-Yamamah Arms Agreement. Hansard. Retrieved on 2006-12-15.
  33. ^ "Defence firms fear Saudi fall-out", 4 December 2006. Retrieved on 2006-12-15. 
  34. ^ "Unions confirm BAE job loss fears", 29 November 2006. Retrieved on 2006-12-15. 
  35. ^ a b Hope, Christopher. "Halt inquiry or we cancel Eurofighters", The Daily Telegraph, Telegraph Media Group Limited, 2006-12-01. Retrieved on 2006-12-01. 
  36. ^ Bowell, James; Fidler Stephen; Hollinger, Peggy; Khalaf, Roula; Peel, Michael. "BAE investors take flight at potential loss of Eurofighter deal.", Financial Times, The Financial Times Limited, 2006-11-28, p. 3. Retrieved on 2006-12-01. 
  37. ^ Lord Goldsmith (15 December 2006). BAE Systems: Al Yamamah Contract. Hansard. Retrieved on 2006-12-15.
  38. ^ "Blair defends Saudi probe ruling", BBC News, 15 December 2006. Retrieved on 2006-12-15. 
  39. ^ "Criticism of ditched Saudi probe", BBC News, 15 December 2006. Retrieved on 2006-12-15. 
  40. ^ OECD (14 March 2007). OECD decision to re-open investigation. OECD. Retrieved on 2007-04-27.
  41. ^ "Watchdog chief warns Saudi arms probe 'must be re-opened'", Evening Standard, 17 January 2007. 
  42. ^ Pfeifer, Sylvia; Helen Power. "'I like shooting things'", Daily Telegraph, 2007-07-15. 
  43. ^ Saudi prince 'received arms cash', BBC, 7 June 2007
  44. ^ Associated Press. "BAE says U.S. is investigating dealings with Saudi Arabia", International Herald Tribune, 2007-06-26. 
  45. ^ 'Cash, contracts and crown princes', The Guardian, 11-04-08, p. 7
  46. ^ "No-one is entitled to interfere with the course of our justice", The Guardian, 2008-04-11, pp. p. 6. Retrieved on 2008-04-11. 

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