The high court ruled last Thursday that the government broke the law when it instructed the Serious Fraud Office to drop its investigation into alleged bribery in arms deals between BAE Systems and Saudi Arabia.
This SFO investigation began in 2004, even though the first phase of the so-called "Al-Yamamah" deal dates way back to 1985, struck for BAe by the Thatcher government. Over the years, Saudi Prince Bandar allegedly received payments worth 1bn from British Aerospace to secure contracts to supply aircraft and arms. The SFO was just about to unravel some Swiss bank accounts, when Blair's attorney general, Lord Goldsmith, suddenly terminated the SFO's investigation in December 2006, on the grounds of "national security".
In fact Blair and Goldsmith claimed that Saudi Arabia would stop giving Britain information on terrorism if the investigation continued ... but, more importantly, that it might also break its contract to buy 72 new Eurofighter Typhoon jets worth 20bn to BAE Systems!
So, what will be the consequence of last week's judgement? In fact Brown is proving just as anxious as Blair to protect BAE's profits. His ministers have said they will now have to legislate to give the attorney general statutory powers to shut down future investigations on "national security grounds" to bypass the judiciary! In the meantime, the SFO, which is currently pursuing allegations of bribery by BAE in six other countries, might be asked to "reconsider" its decision...
One might wonder why BAE, one of the largest arms companies in the world, has to bribe anyone. It has been the main British beneficiary of the wars in Iraq and Afghanistan. Last year, its sales rose by 2bn to 17.5bn and its underlying profits rose over 20% to 1.48bn. It has been acquiring US companies and has recently had multi-million pound orders for upgrades to armoured and mine-resistant vehicles. But apparently that is still not enough. It is now lobbying the MOD not to cut defence spending. And it will probably get its way.