Blair feared BAE probe could hit Saudi ties

London: Tony Blair, then prime minister, demanded the cancellation of a government fraud investigation regarding BAE Systems PLC and Saudi Arabia in part because he feared it would jeopardise a lucrative Saudi arms deal, a newspaper reported on Saturday.

The Guardian printed more than 30 pages of government memos and letters it obtained from a court hearing on Friday showing comments that Blair and officials in his Cabinet had made before succeeding in persuading the government's attorney general, Lord Goldsmith, to cancel the Serious Fraud Office investigation.

In one letter to Goldsmith on December 8, 2006, Blair demanded that Goldsmith stop the investigation, The Guardian said.

Immediate risk

Blair said he was concerned about the "critical difficulty" in negotiations with Saudi Arabia over a contract for Typhoon fighters, as well as "a real and immediate risk of a collapse in UK/Saudi security, intelligence and diplomatic cooperation," the letter said.

Blair, who stepped down as Britain's prime minister this year, has taken responsibility for halting the probe by the Serious Fraud Office, saying the investigation had threatened national security interests.

He acknowledged that there were also commercial interests at stake, but said those were not behind the decision. But the documents indicate that Blair was concerned that Saudi Arabia would be angered by the investigation and cancel the Typhoon deal.

At the time, the Serious Fraud Office was investigating allegations that BAE ran a £60 million (Dh444 million) "slush fund" offering sweeteners to officials in return for lucrative contracts as part of the Al Yamamah arms deal in the 1980s.

BAE has denied the accusations. Prince Bandar Bin Sultan, former ambassador to the United States and now head of Saudi Arabia's National Security Council, has also denied the accusations.

'The dove'

Al Yamamah, meaning "the dove", was the name given to an agreement under which BAE supplied Tornado fighter jets and other military equipment to Saudi Arabia, which paid the British government with oil. The full extent of the deal was never revealed, but many commentators believe it was Britain's largest-ever export agreement.

Britain's fraud investigation was called off in December 2006, and Blair told reporters in January that "had we proceeded with this investigation it would have significantly materially damaged our relationship with Saudi Arabia, that that relationship is of vital importance for us fighting terrorism including here in this country."

Saudi Arabia subsequently signed a £4.43 billion agreement to buy 72 Eurofighter Typhoon jets from BAE. The court is considering a complaint filed by anti-corruption campaigner The Corner House challenging the legality of the government's decision to stop the SFO investigation.

A Foreign Office spokesman said yesterday that it gave the documents to the High Court to show that Blair's government believed the fraud investigation would seriously damage Britain's national security.

Blair also vetoed a BAE guilty plea for lesser graft charges saying this would "be unlikely to reduce the offence caused to the Saudis," the paper said.