Monday, November 20, 2006

Al Yamamah.

* BTW - does anyone have any particular insight into the BAE/Saudi/Al-Yamamah kerfuffle? simon?

There's a lot more here on Al Yammamah:
The UK-Saudi contract was finally signed on 9 February 1986 and was given the name Al Yamamah, ' the Dove'. It was now valued at £5bn, for which sum Saudi Arabia would receive 72 Tornados, 30 Hawk advanced trainers and 30 Swiss licensed Pilatus PC-9 trainers (Flight, 22.2.86). . . .

The precise terms of Al Yamamah were not disclosed, then or later. It was, nevertheless, understood that all or most of the payment would be in oil. In other words Al Yamamah was a barter deal, which would have been contrary to international trade rules if exceptions were not made for military sales.

The deal was government-to-government, with the main beneficiary, the recently privatised British Aerospace Company (BAe), in the background to the negotiations. It is evident that the UK government had pulled out all the stops to gain the contract. Whitehall let it be known that the Prime Minister had conducted a "personal sales campaign" (Jane's Defence Weekly, 21.9.85), and Michael Heseltine told the press on 26 September that "one cannot overstate the Prime Minister's contribution". The News of the World, which hailed "Maggie's Bonanza" (29.9.85) was clearly not far from the mark – though a large part was also played by British Aerospace's dedicated salesman, Dick Evans, who has since been rewarded with a knighthood and chairmanship of the company.

Not all commentators were so enthusiastic. Initial uneasiness was about the means by which the bonanza had been earned. Allegations of corruption were made within weeks of the signing of the memorandum of understanding. The Guardian published a leading article under the headline "Bribes of £600m in jets deal" on the 21st October. The previous day, Labour's front bench defence spokesman, Mr Denzil Davies, had called on the government to confirm or deny reports that it was to pay secret commissions of between £300-600m to secure the deal with Saudi Arabia. The MoD "refused to comment, although officials said negotiations were still going on" (Guardian, 21.10.85). The Guardian cited Arab sources, who alleged that the commission would be shared between two or three leading members of the royal family, two relatives by marriage of King Fahd and a business agent. . . .


Al Yamamah II came at the time of a general escalation in the Middle East arms race, involving not only the traditional suppliers such as the US, the Soviet Union, France and the UK, but relative newcomers such as China, Argentina, Brazil and North Korea. Though it was widely recognised that the increased flow of arms into the region would heighten the risk of fresh conflicts breaking out, either between Israel and the Arab states, or between the Arab states themselves, no Western government was prepared to be the first to curb such lucrative trade. . . .

Corruption is not reserved for high-profile 'one-offs' – it seems more than likely that it has played an important role in Al Yamamah from the very beginning.

It is common knowledge that large contracts cannot be won from Saudi Arabia without payments which can be described as bribes or commissions. In many Middle Eastern countries it is customary and often legal for a foreign exporter to pay commission to a local agent or sponsor. Saudi Arabia has laws governing this practice of commercial agency as do other Arab countries. However, Saudi law does not permit commission or brokerage fees on arms imports or other public sector contracts (Royal Decree No. M/14, 1977; Council of Minister's Resolution No.1275, 17.9.75). Despite this, it seems that there is a well established system of 'deal-fixing' by intermediaries who illegally collect large commission payments for their services in arranging military contracts. As Anthony Sampson, a seasoned arms trade commentator, has said, "Commissions are an essential part of the system" (Times, 12.10.94). . .

Allegations of corruption persisted and it became clear in 1994 that it was not just Saudi intermediaries who profited from the commissions system, as accusations of bribery were now directed against employees of UK companies.
The Guardian published an article in which Sir Colin Southgate, Chairman of Thorn EMI, "admitted to paying huge commissions" of 25 per cent on a £40m Saudi arms deal in which more than 40,000 fuse assemblies for Tornado bombers were ordered by the RSAF in 1990 and delivered through BAe in 1991 . . .

It was also in 1994 that scandal erupted around the former Prime Minister's son, Mark Thatcher, much of it based on allegations made by the Saudi dissident, Mohammed Khilewi (Independent, 10.10.94; Guardian, 14.10.94; Sunday Telegraph, 16.10.94). As Anthony Sampson commented at the time, "with the huge sums at stake, it would be surprising if some money did not find its way to the British side... To reward the son of the British Prime Minister - even if he gave no help - would be as natural as rewarding the King's son" (Times, 12.10.94). In October 1994 Mr Tam Dalyell, Labour MP for Linlithgow, submitted documents to officials in the House of Commons, a US intelligence report and an internal British Aircraft Corporation memo, which he claimed proved that Mark Thatcher was involved in Al Yamamah (Financial Times, 19.10.94). The all-party Public Accounts Committee, however, decided not to investigate the allegations that Mark Thatcher received commission payments of £12m from Al Yamamah as this was outside their remit of issues concerning taxpayers' money (Financial Times, 20.10.94). . . .

Ever since the first Al Yamamah agreement was concluded the media has repeatedly made allegations of corruption. In spite of all this media coverage and the many demands by politicians and the public for transparency, the government has only launched one investigation into the deals, an internal inquiry, the findings of which were suppressed. . . .

The real nature of the Arabian connection emerged as a by-product of the libel action brought by Jonathan Aitken, MP, against The Guardian newspaper and Granada TV in 1997. When the Conservatives came to power in 1979, Aitken had been a high-flying and well-connected young politician. During Mrs Thatcher's reign his political career made no headway, but his business career prospered greatly. He had made friends with a Lebanese-Saudi businessman, Mohammed Said Ayas, who was the factotum of a powerful Saudi prince, Mohammed bin Fahd, son of the future King Fahd and governor of the Eastern Province. The prince put him in charge of the London arm of his trading company Al-Bilad, and when Aitken joined TV-AM, helped him by investing in the station. Aitken was forced to resign as a director of TV-AM when it was discovered he had broken regulations by concealing the £2.1m illegal Saudi investment (Sunday Business, 1.6.97). The Sunday Business reported that when John Major appointed Aitken Minister for Defence Procurement in 1992, he would have known that Aitken had been forced to resign and also "ministerial vetting would have told him that the MP enjoyed good business relations with Saudi princes" (Sunday Business, 1.6.97). The Guardian and World in Action alleged that Aitken's business relationship with Said Ayas and Prince Mohammed continued after this appointment, and even later when Aitken became Chief Secretary to the Treasury. In particular it was claimed that in September 1993 he had a secret meeting in Paris with Ayas and Prince Mohammed, who had paid his bill at the Ritz hotel. Since this would have been a clear breach of the rules of ministerial conduct, Aitken brought an action for libel. The case collapsed when detective work by The Guardian proved that he had lied on oath about the bill, and he was subsequently imprisoned for perjury (Harding, Leigh and Pallister 1997).

The Guardian and Granada journalists were rightly jubilant over their exposure, but in insisting that Aitken was "a liar and con-man" they belittle their own achievement. The real scandal is that a man who for many years was in effect a servant of foreign royalty, was appointed to ministerial office. Moreover, Aitken was made minister in charge of the UK arms trade, of which the family of his former employer was the most important customer. It is more than likely that the UK government was well aware of Aitken's real Arabian connections and that Aitken's influence with Prince Mohammed, and indirectly with his father the king, was instrumental, if not decisive, in saving the Al Yamamah contract in January 1993.

The argument of public service has been put about by Aitken and his friends, and there are suggestions that he was a long-time MI6 'asset' who, at the time of his trial, was president of 'Le Cercle', a far-right grouping of intelligence people and parliamentarians. Perhaps fearing that if he is seen as a promoter of the arms trade Aitken's misdeeds would gain a patriotic aura, The Guardian dismisses these suggestions, saying that 'Le Cercle' is not influential and that Aitken's Paris visit was private and unauthorised. In doing this, however, The Guardian leaves unchallenged the central premise that the arms trade is in the national interest. The paper failed to use the Aitken trial as an opportunity to question the very basis of the UK's arms trade, the culture of which attracts and creates the 'Aitkens' of the business: The Guardian prosecuted the symptom and not the cause.
it all sounds depressingly familiar.

3 comments:

Don said...

I've kinda been following the developments on it (shocking, I know :P ) but haven't gotten too far into it yet.

Al Yamamah is one of the largest arms sales agreements outside US or Russian trade circles, directing a lot of hardware to the Saudis. Ironically (for reasons suggested a couple of grafs down), its roots can be traced to pressure from the Teh Lobby on Congress not to sell too much high-tech US hardware to to those pesky Arabs, leaving the door open for other nations' dealers of death & destruction to clean up.

Curiously, though, while the bulk of it seems to be aircraft built by multinational groups, I'm a little skeptical at the sudden sharp focus on the UK. Granting that BAe's probably got the biggest marketing apparatus of the involved companies, and arguably is the dominant partner in Eurofighter, DASA of Germany, Alenia of Italy and CASA of Spain are/were also participating members of the consortia: CASA on Eurofighter, Alenia (a FinnMecc company) and DASA on Eurofighter and Panavia (makers of the strike and interceptor versions of the Tornado). Where everyone has a direct hand in construction and eventual distribution of the aircraft, I'd be curious to know what, if any, similar 'arrangements' were set up in those other nations.

I don't however think it's reaching to wonder if the sudden attention on BAe/UK wasn't a little suspicious in and of itself. The 120 Tornados (plus 100 trainers and other arms) bought were US hardware not purchased. With the announcement in August of the sale of 72 Eurofighters (possibly up to 100), plus talks on upgrades to the RSAF's Tornado fleet and the purchase of new trainers, Boeing (looking to sell F-15s and Super Hornets) and especially LockheedMartin (busily trying to market horrendously expensive F-22s and F-35s) couldn't have been too impressed. Ditto the Pentagon: the more Raptors and/or Lightning IIs that get built, the lower the unit price, the more they could conceivably buy and the more marketable it becomes elsewhere.

Y'know, Ike mighta had a point...

lukery said...

thnx

Y'know, Ike mighta had a point...
sibel too (link)

Simon said...

There's not much I can add to the above, other to say that all of this has slipped below the waves and out of the general public consciousness. The whole affair was overtaken by the 'Arms to Iraq' imbroglio under Maggie's rule, after she left office John Major took over and commissioned the Scott Report (the Report of the Inquiry into the Export of Defence Equipment and Dual-Use Goods to Iraq and Related Prosecutions), which took four years to report and left the Government hanging by a thread after a 'fixed' debate and a vote which cleared the Government of any wrongdoing which they won by the slenderest possible margin 320 votes to 319.