Lords Rule Fraud Office 'Acted Lawfully' On BAE Deal

The House of Lords has ruled that the Serious Fraud Office (SFO) acted lawfully when it halted a corruption enquiry into arms deals with Saudi Arabia.

The decision overturns an earlier verdict when the court criticised the British and Saudi governments in April saying that the SFO acted unlawfully.

The SFO dropped its inquiry into the deal, thought to be worth £43 billion, which also accused BAE - Europe's biggest defence company - of illegal payments to Saudi officials.

There were fears it would compromise national security as Government officials said that the Saudi government threatened to withdraw cooperation on security matters.

The Law Lords reversed their previous decision voting 5-0 in favour of the SFO appeal.

Lord Bingham said the SFO Director Robert Wardle was "confronted by an ugly and obviously unwelcome threat" while Lord Rodger said that the fraud office had "no option but to discontinue the investigation because of the potential threat to national and international security".

The SFO said in a statement: "The Serious Fraud Office welcomes the House of Lords decision to allow the appeal against the judgement of the Administrative Court.

"This means that the SFO's former Director, Robert Wardle, acted lawfully in discontinuing an investigation into alleged bribery and corruption surrounding the BAE contract to supply Tornados to the government of Saudi Arabia (The "Al Yamamah" contract).

"As a result of this legal ruling the current Director, Richard Alderman, has concluded that the investigation into the Al-Yamamah arms deal remains discontinued."

The decision has not been welcomed by campaign group Justice however.

Director of Human Rights Policy, Eric Metcalfe commented that "it's a sad day for the rule of law when a senior prosecutor bows to threats from a foreign government" and "our most senior judges will do nothing to stop it".

Nicholas Hildyard of pressure group, The Corner House said: "The unscrupulous who have friends in high places overseas willing to make such threats now have a 'Get Out of Jail Free' card - and there is nothing the public can do to hold the government to account if it abuses its national security powers."

The al-Yamamah deal with the Saudi government was first signed in 1985 but ran into the 1990's.

The deal involved BAE selling Tornado and Hawk jets, other weapons and long-running maintenance and training contracts.

In December 2006, the Attorney General of the time, Lord Goldsmith announced that the SFO was suspending its inquiry into the deal.

The SFO's investigations into some of BAE's non Saudi activities will continue.

See: High Court Reprimand SFO

(DS)