Sam PF's Journal - Arms and the bribe
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01:31 am
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Arms and the bribe
Amidst all the unutterably depressing nature of most world events right now, one story I have been following with a certain amount of hope, and a great deal of schadenfreude is the ongoing investigation by the Serious Fraud Office into the GPB20bn series of Al Yamamah arms deals between the UK and Saudi Arabia through the 1980s and 1990s, including Tornado fighters and a whole range of other equipment, principally from BAE Systems, Europe's largest arms company. Information with links to more, here.
There were allegations of massive bribery and corruption involving the deals right from the start, with suggested figures of 15% of the sales price going as "commissions" to Saudi agents with links to the royal family, to whom the commissons are then channeled in return for the deal. A National Audit Office report was produced but, uniquely, never published. Basically, the Saudis have no actual use for most of this stuff - BAE actually run the Saudi air force, because they don't have the domestic technical capability to absorb the technology. The only reason the Saudi royal family is interested in buying it is as a great way of diverting state funds into their own pockets via the commissions paid by the arms companies as part of the deal.
But recently, a lot of evidence has come out that bribery is not an isolated occurrence, but a ubiquitous feature of the international arms trade, without which few major sales are made. Transparency International researcher Joe Roeber has produced an excellent account of why this is so and how it all works. Since then, my friend Nick Gilby, a volunteer at Campaign Against Arms Trade, has been spending most of his spare time trawling through the National Records Office at Kew, digging up copious evidence of past corruption. A good report of a lot of the historic stuff here. The material he's found also includes considerable stuff on Saudi, which made it to BBC Newsnight earlier in the year. Some former ministers involved in the deals said in response, pretty much, "Yes of course we paid bribes, how else were we going to get the business?
Most recently, he dug up a secret telegram supporting claims of corruption in the Al Yamamah deals, showing that there was a sudden 32% - GBP600m increase - in the price of a batch of Tornados in 1985 which the Saudis accepted without a blink. The Government had placed it in the National Records Office by mistake, and have now withdrawn it - but too late.
We heard more about all this last weekend at the CAAT National Gathering. I said that Nick should avoid sushi bars for the moment.
Now, we can't really claim credit for the Serious Fraud Office investigation that has been going on for a few years into the Al Yamamah deals, but it does all fit rather nicely together. This seems to have been bearing considerable fruit, uncovering considerable evidence of bribery. What's more, this actually relates to events after the 2001 act came into force that, for the first time, made it illegal for a UK individual or company to bribe foreign officials. (Yes, that's right, up till then it was perfectly legal. In fact, until a few years before, bribes were tax deductible as a business expense.) It sounds distinctly possible that certain people might be feeling a hand on their collar in the not too distant future.
Which is all rather inconvenient, because we've just signed last year an Al Yamamah 3 deal to sell 72 Eurofighters - a Cold War white elephant if ever there was one - to Saudi Arabia for GBP6 billion. And now - and this is where it gets really funny - the Saudis are threatenting to pull out unless the SFO investigation is called off. And even better, it looks like if BAE does lose the deal, it will go to the French instead. (Of course it is not a good thing at all that the French will bribe the Saudis into buying a whole load of arms. It's just amusing to think of the looks on the faces of the government ministers and arms company chiefs.)
The Telegraph has come up with the ludicrous figure of 50,000 British jobs at stake if the deal falls through. In fact, research commissioned by Eurofighter themselves shows that 72 Eurofighters would support, through direct and indirect employment combined, about 11,000 jobs across Europe. Eurofighter is a collaborative project, and Britain would get about 4,400 of those. (We make the wings, principally.) I believe Nick was going to be on Newsnight tonight explaining this. In any case, the jobs issue is a considerable red herring - vast government R&D expendture and subsidies goes into the arms business, which absorbs a ridiculous proportion of our scientists and engineers. According to Scientists for Global Responsibility, 30% of UK public R&D is funded by the MoD. (See their report Soldiers in the Laboratory.) Directing these resources elsewhere would create more jobs, as well as being socially useful. For example, just maybe they could fund more research into how to stop global environmental catastrophe due to climate change? Just a thought. In any event, despite the propoganda that suggests that arms manufacture is crucial to the UK economy, it is actually pretty insignificant in the overall picture. research conducted at the University of York, commissioned by the MoD, shows that the economic effects of cutting UK arms exports in half would be barely noticeable, and that in the long run more jobs would be created than lost, albeit at lower salaries in most cases. Other research, by the Oxford Research Group, is even less favourable to the arms industry.
Perhaps the most amusing thing of all is to see various comments on the stories from people who would probably otherwise be right there with the law and order brigade saying how we can't let petty little things like bribery and a SFO investigation stand in the way of British jobs. Especially if the French are going to benefit. Political correctness gone mad! Someone even described arms manufacture as Britain's "only manufacturing success story". If our ability to bribe corrupt theocratic dictators into buying state-of-the-art white elephants counts as a 'success story', then we really are scraping the bottom of the barrel.
Some more info on action that can be taken to oppose all this (the corruption and arms deals, not the investigation) here.
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Thanks for bringing this to the public eye - an e-mail has winged its way to the desk of my MP.
(We make the wings, principally.)Actually it appears that BAE make the fuselage (Wiki link) (well the front and rear sectoins, but of course the middle was made in Germany) What amuses me about this is that the construction was given to private companies split on the basis of how much their governments were procuring (eh? why are we gifting a contract to BAE? Should we not tender it to get best price?) Also that this means that the left wing was made in Italy, and the right in Spain. Has there ever been an arms deal that did not involve bribery? It always seems some dodgy backroom shenanigans have been involved at some point. I am at least vaguely pleased that this stuff comes out in the UK and we do something about it. I fear the French would just accept that is how stuff works in politics.
![[User Picture]](http://p-userpic.livejournal.com/15266220/948446) | | From: | ![[info]](http://p-stat.livejournal.com/img/userinfo.gif) smhwpf |
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| Date: | December 2nd, 2006 11:32 pm (UTC) |
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Ah right, thanks for that. Will correct at some point.
I am at least vaguely pleased that this stuff comes out in the UK and we do something about it. I fear the French would just accept that is how stuff works in politics.
I think this is exactly the attitude in Britain, for those at the top. One of the things Nick dug up was this letter in the 70s from a diplomat in Venezuela to his superior in the FO, expressing concern about the bribery involved in getting an arms sale. The FO guy replied along the lines of "So what exactly is your problem? That's how all of this works."
What's happened recently is: firstly there was an OECD directive on corruption, which meant all western governments had to implement a law against bribery. The UK did that (as presumably did France), but then there was the question of implementation. (This is the other bit of story I didn't get into the post.) In particular, the ECGD which provides subsidised insurance for major capital exports, especially arms, had to come up with a set of guidelines. Initially there was quite a tough set, which would require the companies to provide lists of their agents - these agents being the chief conduits of bribes, so if they had to reveal that their agents included, for example, members of the President's close family, that could be highly embarrasing. So BAE, Rolls Royce and the CBI lobbied hard against this, and the government watered them down to make them toothless.
But then, a couple of guys at the Cornerhouse Foundation, working out of a tiny office in Dorset, noticed this and took the government to court, and won a judicial review that ordered the government to review the guidelines and have a proper consultation this time. The resulting guidelines are a lot stronger. So I think that threw a lot of light on stuff, and may have been one of the factors behind the SFO thing - along with people like CAAT, and the fact that Al Yamamah is just so utterly huge. But I think in terms of the government's attitude, there's no real difference between us and the French or anyone else.
I am not really talking about the government's attitude, rather the people's reaction to politicians attitude - in the UK an politician at least has to pretend it is not happening, but in France I fear that it would be politically survivable to defend the above happenings, saying that's how it works and we are doing this for the French people.
Thanks for writing this; I'd probably not have read anything about it, otherwise. |
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