Another Take On The BAE Saudi Arabia Arms Deal

By Said K. Aburish

12/19/06 "Information Clearing House" -- -- Not for the first time, Saudi Arabia has demonstrated that it can use its political and financial power.

By threatening to cancel a huge contract for the Eurofighter Typhoon, the Saudis have forced Tony Blair to stop the Serious Fraud Office investigation into the bribery payments to members of their royal family by British Aerospace(BAe).

The SFO (Serious Fraud Office) has been investigating the Yamama II Saudi armament contract for two years. Experts described it as the largest arms deal in history. Many suspected it carried the largest single bribe in history. Though signed in 1988 and it has so far produced £43 ($86) billion worth of business, it is expected to produce £40 ($80) billion more in spare parts and maintenance work.

The government-to-government deal signed by Prime Minister Margaret Thatcher has been controversial from the start. During the negotiations for Yamama II, Wafic Said, the man identified by many as having steered the deal towards Britain, was known to have dined with Mrs Thatcher at No. 10 Downing Street.

The controversy over the appropriateness of an alleged arms dealer’s dining with the prime minister was followed by ethical issues regarding Said’s donation of £30 million to Oxford University to build a graduate school of business.

Oxford University eventually accepted Said’s money. However a third problem arose when an American employee of Westland Helicopters, Colonel Tom Dooley, sued Westland and BAe for wrongful dismissal. Among the documents deposited by Colonel Dooley was one that alleged that Mark Thatcher was an intermediary on the deal.

Dooley settled out of court, but not before he alleged that the whole Yamama II was a phoney. According to Dooley, the size of the bribes paid vitiates Yamama’s effectiveness. In addition, the Saudis didn’t have enough pilots to fly the Tornado planes or drivers for the 1200 tanks they planned to buy. Nor could they use most of the electronic equipment they were buying

Instead of buying arms to protect their country, it was the commissions to members of the royal family and to their counterparts on the this side which mattered. As we saw when Saddam invaded Kuwait in 1990, the Saudis paid the Americans and their partners in the coalition to protect them and eject Saddam from Kuwait. Coming on top of arms deals like Yamama this means the Saudis pay for protection twice.

The bribes and commissions on Yamama II were realized in three ways. There were outright cash payments, a simple percentage of what the Saudis pay British Aerospace. Then there was the barter part of the deal. The Saudis shipped 400,000 barrels of oil to Rotterdam. The proceeds from selling the oil were remitted to BAe but not before the value of the oil was understated or the value of the military hardware was overstated. He differential was used to pay the royal agents.

The third way of realizing commission was on the offset part of the deal. By Saudi law 40 per cent of all armament contracts must be placed with Saudi companies. As there were no Saudi companies capable of making any of the hardware or providing any of the services needed, British Aerospace is supposed to have created two maintenance companies to perform this part of the work.

The only part of the maintenance companies which was Saudi was the chairman who was a member of the royal family. The 5000 mechanics and technicians who worked under him were seconded to the Saudi companies by British Aerospace. Being Saudi the companies escaped the scrutiny of the various anti-fraud laws of other countries. This in turn made it possible for the Saudi companies to realize vast commissions.

A conservative estimate of how much commission has been realized, pegging at a mere 10 per cent of the volume of Yamama II business transacted, produces the staggering sum of £4.3 billion, 10 per cent of £43 billion. However, indications are the total figure is much higher. Press reports allege £680 million worth of commission was paid on the Tornado part of the deal alone.

The investigation of Yamama II was supposed to take two more years to complete. The primary focus of the investigation was Minister of Defence and Heir Apparent Prince Sultan bin Abdel Aziz. In the language of the arms trade, Prince Sultan qualifies as a skimmer. He is more than an intermediary, he is a skimmer. He realizes a commission regardless of what company gets an armament deal. Otherwise he is in a position to stop it.

Several of the documents already unearthed by the investigation indicate Sultan was involved in the Yamama II contract. Moreover, British officials accuse him of being corrupt and unintelligent. Whether more exposure would have harmed Sultan’s chances of succeeding King Abdallah is unknown.

However, Abdallah and Sultan are feuding and do not speak to each other. Abdallah has just amended the law governing royal succession and denied Sultan the right to appoint his successor. It is within the realm of the possible that Abdallah would have used the results of the investigation to remove Sultan.

My information indicates the threats to the UK that the Eurofighter contract would be cancelled if the investigation into Yamama II continued came from the Sultan camp. However, experts believe the scale of the pay-off would have hurt the image of the whole Saudi royal family at a time when it cannot afford it. The country has suffered from a terror campaign for years and two studies claim Osama bin Laden is more popular than the royal family.

Continuing with SFO investigation of Yamama II threatened Tony Blair as much if not more than the House of Saud. His reputation was under threat on both long and short term basis. On long term basis at steak are the policies of the Bush-Blair alliance and the hard line they have taken on Iraq and the war on terror.

Islamic and anti-West forces in the Middle East are likely to accuse him of sanctioning House of Saud corruption and helping them steal the wealth of Saudi Arabia. The idea that Britain is supporting the democratic forces in the Arab world will suffer a heavy blow because realizing a commission of £4.3 billion in bribes is hardly democratic.

More immediately, Blair is likely to be hounded by the press throughout his present trip to the Middle East to promote peace. The attempt to hide behind the noise level surrounding the report on the death of princess Diana will not work. He is in the Middle East trying to solve Middle East problems and he cannot be seen as contributing – and so blatantly – to one of the problems which make the area such a mess.

Tony Blair should have surprised us. He should have told the Saudi government that he rejects their attempts to blackmail him. That would have been a worthwhile legacy. But then showing such courage and leadership pays no dividends in these days of moribund political ethics. We the electorate get what we deserve and the politicians know only to well what they can get away with. We only have ourselves to blame. However the good news is that it's not us who will have to explain to our grandchildren where it all went wrong. History will do it for us as it has so many times before. By the way, does shame travel with us for all time?