Lord Goldsmith cleared over Saudi BAE claims

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In the clear: Lord Goldsmith

The allegations reignited the controversy over Tony Blair's decision last year to cancel an inquiry into BAE's £43billion arms deal with Saudi Arabia

The Serious Fraud Office has cleared Lord Goldsmith over claims he ordered information about alleged payments to a Saudi prince to be withheld from the international anti-bribery watchdog.

The payments of more than £1bn were allegedly received by Prince Bandar bin Sultan, the former Saudi ambassador to the United States, from BAE Systems for setting up the £40 billion Al Yamamah arms deal in the 1980s with the full knowledge of the Ministry of Defence.

The Guardian reported that when the Organisation for Economic Co-operation and Development (OECD) - the world's anti-corruption watchdog - tried to look into the deal earlier this year, the details were not disclosed by British officials.

Lord Goldsmith strongly denied that he had been responsible for ordering the information to be withheld.

The Serious Fraud Office confirmed its decision in a statement. It said: "The decision as to what information should be given to the OECD about the investigation was made by the SFO.

"The information provided by the SFO was as full as possible, having regard to the need to protect national security."

The statement said that SFO director Robert Wardle also reiterated that he made the decision to discontinue the original investigation for reasons of national security and was not pressurised to do so by Lord Goldsmith.

The development comes amid claims that more than £1billion was secretly paid to a Saudi prince by the defence company BAE as part of Britain's largest-ever arms deal.

Prince Bandar of Saudi Arabia was given the cash through a series of payments, some of which were authorised by the Ministry of Defence, it was claimed.

The allegations reignited the controversy over Tony Blair's decision last year to cancel an inquiry by the Serious Fraud Office into BAE's £43billion arms deal with the oil-rich country.

Today ministers faced fresh calls for an inquiry into the deal. Liberal Democrat Treasury spokesman Vince Cable said that if ministers in either the present or previous governments were involved there should be a "major inquiry".

Claims of a multi-million pound slush fund for Saudi figures have circulated for years, but the latest allegations put the figure involved far higher than any previous estimates.

The Prime Minister said scrapping the investigation was essential to preserve Britain's fragile national security in the Middle East.

But opponents accused the Government of a whitewash, claiming there was a legitimate cause to investigate the alleged slush fund to leading Saudis as part of the Al Yamamah deal for Tornado warplanes struck two decades ago.

BBC's Panorama alleges that the money was channelled through a Washington bank to a member of the wealthy Saudi royal family, which he used as expenses for his lavish lifestyle.

Prince Bandar, who was ambassador to the U.S. for 20 years, received £30million every quarter for at least ten years - totalling £1.2billion.

The BBC claimed that MoD officials knew about some of the payments.

The allegations, to be broadcast in a programme shown next week, cast doubt on claims by successive Ministers that they knew nothing of secret payments.

It was also claimed last night that the Attorney General Lord Goldsmith, who signed off the scrapping of the Fraud Office inquiry, warned colleagues that "Government complicity" in the affair could be exposed.

Prince Bandar is known to have played a key role with Margaret Thatcher in setting up Britain's biggest-ever series of weapons deals.

Both Prince Bandar and the MoD refused to comment last night, while BAE insisted it had acted lawfully at all times.

Mr Cable called for an urgent inquiry into the disclosures. He added: "This is potentially more significant and damaging than anything previously revealed.

"It is unforgivable if the British Government has been actively conniving in under-the-counter payments to a major figure in the Saudi government.

"There must be a full parliamentary inquiry into whether the Government has deceived the public and undermined the anti-corruption legislation which it itself passed through parliament."

He added: "It increasingly looks as if the motives behind the decision to pull the SFO inquiry were less to do with UK national interests but more to do with the personal interests of one or two powerful Saudi ministers ... Tony Blair's claims that the Government has been motivated by national security considerations look increasingly hollow."

An MoD spokesman said: "The MoD is unable to comment on these allegations since to do so would involve disclosing confidential information about Al Yamamah and that would cause the damage that ending the investigation was designed to prevent."

 

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