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02 Sep 2008

Britain yields to bribery and corruption

The UK's decision not to pursue an investigation into arms sales to Saudi Arabia is a black mark against economic transparency and judicial freedom in the country.

By Kathrin Betz for ISN

By halting a high-profile corruption investigation, the UK has demonstrated that it is not willing to hold itself to the same lofty standards by which it judges others.

Overturning a High Court judgment, the UK House of Lords in late July ruled that the decision by the Serious Fraud Office (SFO) to halt an investigation into alleged corruption for reasons of public safety was legitimate. The corruption allegations were related to the UK's arms exports to Saudi Arabia under the multibillion dollar Al Yamamah contract (see Dominic Moran, Expose BAE-Saudi dirty dealsfor ISN Security Watch).

The SFO launched its investigation into corruption allegations against BAE Systems, the main contractor under Al Yamamah, in July 2004.

Just as the SFO was about to gain access to Swiss bank accounts that would have provided evidence in the case in the fall of 2006, Saudi authorities threatened to withdraw their counterterrorism cooperation with the UK. They also threatened to cease cooperating with the UK on strategic objectives in the Middle East and to end negotiations for the purchase of 72 Eurofighter Typhoon aircraft if the investigation was not halted.

According to UK ambassador to Saudi Arabia, Sir Sherard Cowper-Coles, "British lives on British streets were at risk" due to the BAE investigation. In December 2006, SFO Director Robert Wardle discontinued the investigation.

Two UK-based public interest groups, the Campaign Against Arms Trade and The Corner House, subsequently filed the judicial review case on which the Law Lords were to rule in late July.

Since 1998, the UK has been party to the OECD Anti-Bribery Convention, a binding multilateral treaty to fight corruption. The July ruling shows that the UK failed to fully incorporate the OECD Anti-Bribery Convention into domestic law. Read in context with recent legislative developments, this raises doubts about the UK's efficiency in fighting corruption and raises questions as to what extent national security considerations should be taken into account during corruption investigations.

Article 5 of the Anti-Bribery Convention - not incorporated into UK law - prohibits investigations from being "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."

Currently, the OECD Anti-Bribery Convention doesn't have teeth in UK domestic proceedings, undermining efforts to tackle corruption within the framework of the OECD.

Now is the time for the UK Parliament to react and adopt adequate legislation in cooperation with the OECD Working Group on Bribery, which is currently reviewing the UK's record.

Instead, the UK Parliament is discussing is a draft Constitutional Renewal Bill, which would give the Attorney General the power to halt SFO investigations if deemed necessary for reasons of national security.

Some experts are now asking what is left of the rule of law and economic transparency if corruption investigators cave in to political pressure.

Any bill allowing an independent judiciary the freedom not to investigate alleged corruption because of national security concerns is very likely to be abused. It is extremely difficult for investigators to prove or rebut national security arguments because they always involve subjective opinions and classified intelligence. There is a risk that such arguments are used to hide real motives, which are more often than not of an economic nature. In the BAE case, some observers doubted the seriousness, if not the very existence, of the Saudi threats.

It also means that the judiciary loses its integrity and becomes susceptible to blackmail from foreign governments.

According to the OECD, the Anti-Bribery Convention was "born out of the conviction that bribery of foreign government officials in international business transactions is a serious threat to the development and preservation of democratic institutions. Not only does it undermine economic development, it also distorts international competition by seriously misdirecting resources."

As such, any exercise of influence, including under the guise of national security, by political bodies on the judiciary must be viewed as incompatible with the purpose of the treaty.

The backing which the SFO received through the Law Lords' judgment means that the investigation will not be reopened. That means the Saudi-BAE corruption case will remain unsolved.

Three years ago, the final report of the Commission for Africa was published. Tony Blair established and chaired that Commission, of which Gordon Brown was also a part. About the OECD Anti-Bribery Convention, the report says: "[T]he persistence of [corruption] suggests that [corruption conventions] are not always being efficiently enforced. It is time the international community turned words into action."

With every new fact that comes to light in the BAE-Saudi case, the allegations will continue and the UK will have missed its chance to take a strong stance against corruption. It will also become entangled in its own anti-corruption hypocrisy.


Kathrin Betz has a masters in history from the University of Zurich.

The views and opinions expressed herein are those of the author only, not the International Relations and Security Network (ISN).

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