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Serious Fraud Office Investigation

May I first express my thanks to you, Mr. Deputy Speaker, for allowing me to make a statement on this matter at this time? This statement relates to the investigation by the Serious Fraud Office into BAe Systems plc, and concerns payments made in relation to the al-Yamamah programme with Saudi Arabia. This afternoon, the SFO announced that it was discontinuing the investigation. Its statement reads as follows:"““The Director of the Serious Fraud Office has decided to discontinue the investigation into the affairs of BAe Systems pc 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.””" Given the intense interest in this issue, and its market sensitivity, the Attorney-General decided to inform Parliament of the decision this afternoon, and to give a further brief explanation. The SFO has divided its investigation of these matters into three periods. The first period, which has been termed phase 1, runs from the mid-1980s to the date that the Anti-Terrorism, Crime and Security Act 2001 came into force. That Act extended the existing law of corruption to the bribery of overseas officials. The view of the SFO in relation to those payments is that no prosecution should be brought before the coming into force of the new Act. That is a view with which the Attorney-General concurs. The other phases concern the period after the new Act came into force. Phase 2 covers payments made about the time of the termination of the arrangements under which payments had previously been made by BAe. Phase 3 covers a longer period in which, at the moment, there is little hard evidence that payments were made. In the SFO’s view, there is no guarantee that the investigation would lead to prosecution, and there are real issues to be determined. In order to complete the investigation, significant further inquiries would be necessary that, in the SFO’s judgment, would last a further 18 months. Accordingly, the SFO has concluded that, in those circumstances, the potential damage to the public interest that such a further period of investigation would cause is such that it should discontinue the investigation now. The Attorney-General agrees that there are considerable uncertainties that a prosecution could be brought. Indeed, his own view goes somewhat further: having carefully examined the present evidence, he considers that there are obstacles to a successful prosecution so that it is likely that it would not, in the end, go ahead. As for the public-interest considerations, there is a strong public interest in upholding and enforcing the criminal law, in particular against the international corruption that Parliament specifically legislated to prohibit in 2001. In addition, and as is normal practice in any sensitive case, the Attorney General has obtained the views of the Prime Minister and the Foreign and Defence Secretaries as to the public-interest considerations raised by the investigation. They have expressed the clear view that continuation of the investigation would cause serious damage to UK-Saudi security, intelligence and diplomatic co-operation, which is likely to have seriously negative consequences for the UK public interest in terms of both national security and our highest-priority foreign policy objectives in the middle east. The heads of our security and intelligence agencies and Her Majesty’s ambassador to Saudi Arabia share that assessment. Article 5 of the Organisation for Economic Co-operation and Development convention on combating bribery of foreign public officials in international business transactions precludes the Attorney-General and the SFO from taking into account considerations of the national economic interest or the potential effect on relations with another state—and they have not done so. Hon. Members will understand that further public comment about the case must inevitably be limited in order to avoid causing unfairness to individuals who have been the subject of investigation or any damage to the wider public interest. It is also appropriate that I should add that the company and individuals involved deny any wrongdoing.