Saudi Reportedly Got $2 Billion for British Arms Deal

By Kevin Sullivan
Washington Post Foreign Service
Friday, June 8, 2007

LONDON, June 7 -- Prince Bandar bin Sultan, a member of Saudi Arabia's royal family and the kingdom's former ambassador to the United States, pocketed about $2 billion in secret payments as part of an $80 billion arms deal between Britain and Saudi Arabia that was first signed in 1985, British media reported Thursday.

The reports revived questions about the British government's decision in December to drop a fraud investigation into the deal, which has been plagued by allegations of bribes and secret slush funds for almost two decades.

In remarks Thursday, Prime Minister Tony Blair did not comment directly on the reports made on the BBC and in the Guardian newspaper. But he repeated his frequent defense of the decision to drop the investigation on national security grounds.

"This investigation, if it had gone ahead, would have involved the most serious allegations in investigations being made into the Saudi royal family," Blair said at a meeting of the Group of Eight nations in Germany.

He added, "My job is to give advice as to whether that is a sensible thing in circumstances where I don't believe the investigation incidentally would have led anywhere except to the complete wreckage of a vital strategic relationship for our country. . . . Quite apart from the fact that we would have lost thousands, thousands of British jobs."

Bandar declined to comment, according to the news outlets. A spokesman for BAE Systems, the arms manufacturer involved, denied any wrongdoing and told the Guardian that the company had "acted in accordance with the relevant contracts." BAE Systems is Europe's largest defense contractor, with annual sales of more than $22 billion, according to the company's Web site.

The contract, signed when Margaret Thatcher was prime minister, provided for the sale of 120 fighter jets and other military equipment to Saudi Arabia over more than 20 years. Saudi Arabia paid the British government in oil. Bandar helped negotiate the deal, known as al-Yamamah, which means "the dove" in Arabic.

According to the British news reports, BAE funneled secret payments into an account in Washington controlled by Bandar, who reportedly received at least 120 million pounds, or about $240 million at current exchange rates, every year for at least 10 years.

Bandar, who left Washington in 2005 after 22 years as ambassador and now serves as Saudi Arabia's national security adviser, reportedly used part of the money to operate his private Airbus aircraft.

Britain's Defense Ministry was aware of and authorized the secret payments to Bandar despite repeated government denials that any such "commissions" had been paid, according to the reports. A ministry spokesman on Thursday declined to comment on the allegations because that "would involve disclosing confidential information about al-Yamamah and that would cause the damage that ending the investigation was designed to prevent."

The secret payments were reportedly discovered during an investigation by the government's Serious Fraud Office. British officials shut down that probe in December, citing national security concerns.

In January, Blair said that pursuing the investigation would have been "devastating for our relationship with an important country with whom we cooperate closely on terrorism, on security, on the Middle East peace process and a host of other issues."

Both the Paris-based Organization for Economic Cooperation and Development and the U.S. government protested the decision.

On Thursday, Jack Straw, a top Labor Party member of Parliament and a former foreign secretary, said the government's prime concern in the case was maintaining security cooperation with Saudi Arabia at a time of increasing threats from Islamic extremists.

"There are some difficult choices to be made here, but we face a very serious terrorist threat in this county," Straw said in Parliament. "We vitally need cooperation, as we have received from, amongst others, Saudi Arabia, and the prime minister was absolutely right in not seeking to jeopardize that."

But Roger Berry, a Labor Party member who chairs a parliamentary committee that reviews arms deals, called for the reports to be "properly investigated."

"It's bad for British business, apart from anything else, if allegations of bribery popping around aren't investigated," Berry told BBC radio.

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