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Corruption

rose to call attention to the responsibilities of the Attorney-General, other members of the Government and the Serious Fraud Office for compliance with the United Kingdom’s treaty obligations and the rule of law regarding the alleged bribery and corruption of foreign officials; and to move for Papers. The noble Baroness said: My Lords, I begin this important debate with a short, true story. I apologise in advance to the House for being likely to consult my notes more frequently than I usually do, because it is also a very complicated story. On 14 December last year, the noble and learned Lord the Attorney-General came to this House just before it rose for the weekend to report the decision of the Serious Fraud Office to discontinue its investigations into BAE Systems Plc, concerning payments made in relation to the Al Yamamah contract with Saudi Arabia. He said that, "““it has been necessary to balance the need to maintain the rule of law against the wider public interest””.—[Official Report, 14/12/06; col. 1715.]" He told the House that the Prime Minister, the Foreign Secretary and the Defence Secretary had been consulted. Continuation of the investigation, in their view, would cause serious damage to UK-Saudi security, intelligence and diplomatic co-operation. I quote him again: "““The heads of our security and intelligence agencies andHer Majesty’s ambassador to Saudi Arabia share that assessment””." The Serious Fraud Office believed also that there was no guarantee that its investigation, which would need to continue for a further 18 months, would lead to prosecution. The Solicitor-General said that it had decided that, "““the potential damage to the public interest which such a further period of investigation would cause is such that it should discontinue that investigation now””.—[Official Report, Commons,14/12/06; col. 1119-20.]" The Attorney-General agreed, and indeed thought that the obstacles to a successful prosecution were such that, "““it is likely that it would not in the end go ahead””.—[Official Report, 14/12/06; col. 1712.]" In today’s Guardian, it is alleged that the Attorney-General was satisfied that the evidence was sufficient for a prosecution but was overridden, unconstitutionally, by the Prime Minister. In a long interview yesterday with the Financial Times, the Attorney-General reiterated that the decision was made by the Serious Fraud Office independently of his views. In December 1998, the United Kingdom Government had ratified the OECD Convention on Bribery, a key weapon in the global battle against corruption. The OECD recognised that corruption was not a one-way street, that those who offered bribes were as guilty of corruption as those who received them. Thirty-six countries, including all 30 members of the OECD, had agreed to the treaty. Under Article 5, signatories vowed that the investigation and prosecution of a foreign official would not be influenced by, "““considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved””." It was unprecedented—or not unprecedented, but unusual—for the chairman of the OECD’s working group on bribery to write to a member Government but, shortly before Christmas, Professor Mark Pieth, the Swiss chairman of the group, did indeed write to ask for an explanation of the Attorney-General’s decision. The OECD had already criticised the United Kingdom for lax implementation of the bribery convention. Its March 2005 report pointed out that not even one individual or company had been indicted or tried for bribery of a foreign official by the United Kingdom since the convention had been ratified. That contrasts with a number of such prosecutions brought to bear in France, one of the major competitors of the United Kingdom for defence contracts. Furthermore, resources made available by the Government for investigation of potential bribery cases were based on an explicit expectation that ““few”” foreign bribery cases would be investigated. The OECD examiners also urged the UK authorities to amend the code for Crown prosecutors to bring it in line with Article 5 of the convention. Nearly two years later that has still not been done. Professor Pieth, whose recent letter has not been made public, was concerned that the Attorney-General’s decision in the BAE case was in breach of Article 5 and could undermine the effectivenessof the 1997 convention. He went further, raising doubts about the dual role of the Attorney-General. He said: "““The only explanation for dropping the case has been that there’s been very strong political pressure””." In his interview yesterday with the Financial Times, the Attorney-General stoutly denied that there was any breach of the OECD convention. In that he was clearly at odds with the chairman of the working group on bribery of the OECD. There were some strange anomalies in the Attorney-General’s original Statement to the House. He said that the security and intelligence services shared the assessment of the three Ministers consulted, one of whom was the Prime Minister. But in his letter to the OECD, he referred only to the ““benefit of their advice””, without disclosing exactly what that advice was. The Daily Telegraph reported on 19 January that John Scarlett, head of MI6, had refused to endorse the Government’s national security reasons for dropping the investigation. Although this was denied, no reference was made in the Attorney-General’s letter to the OECD to any such endorsement. Crucially, as far as we know, neither M15 nor M16 was ever asked for a risk assessment of the threat to national security mentioned by the Attorney-General and the Prime Minister. Did the Serious Fraud Office (SFO) decide to drop the investigation? On 18 January, in reply to a question from my noble friend Lord Garden, the Attorney-General declared: "““I repeat that it was the director’s decision, not mine””.—[Official Report, 18/1/07; col. 778.]" Maybe that was formally true, but the SFO had been vigorously pursuing the investigation for months. It had learned that BAE had two agencies to handle payments to foreign officials: Poseidon for Saudi Arabian officials and Red Diamond, based in Geneva, for other countries’ officials. Arrangements were made by a reputable British bank for the payments to go to personal Swiss or American bank accounts. In September 2006, the SFO was granted access to the Swiss accounts for intelligence purposes only. The decision led to a hail of protests to No. 10 and the Attorney-General, from Saudi interests and from BAE. The payments, it was alleged, had been going on for many years, ever since the original Al Yamamah contract was signed in 1988, and the amounts were far from trivial. Indeed, that contract had led to an investigation by the National Audit Office, which reported in 1992. The Public Accounts Committee agreed not to publish its findings. On 16 January, the working group on bribery met in Geneva. Feeling ran high among the members about the calling off of the SFO investigation, especially among the American and French representatives, the main competitors for defence contracts with the United Kingdom. The other signatories of the convention expressed their serious concern about the Attorney-General’s decision, which was unusual for a body that works by consensus—and rightly so. For the argument from national security threatens to destroy the OECD’s bribery convention by giving every member state a ready excuse for waiving its requirements. If the UK was genuinely concerned about national security, the responsible way to address such concerns would have been for the company to go to the Serious Fraud Office and disclose precisely what had taken place, to pay the criminal penalties and help to identify the perceived security threats. The public interest in the rule of law would have been sustained and the public interest in national security protected. None of this happened. What are the consequences of all this? First, the weakening of the battle against corruption, not just in the OECD area but in all those developing countries that we have been addressing in lofty tones about good governance. The double standards are glaring. Secondly, in an industry widely thought to pay huge bribes, where some companies have been working hard to improve their reputation, the Attorney-General’s announcement has done great damage. Thirdly, there are repercussions on the standards of our own Civil Service. It is hard to believe that senior officials at the Ministry of Defence and indeed at the Foreign and Commonwealth Office were not aware of what was going on. I give them the benefit of the doubt, but with considerable doubt. As for the role of the noble and learned Lord the Attorney-General, I leave that to my noble and learned friends to pursue. I beg to move for Papers.