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Business News for Tuesday January 6, 2009
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UK lords to rule on BAE/Saudi arms case
Thursday April 24, 2008
Britain's Serious Fraud Office can go to the highest court of appeal over a ruling that it acted unlawfully when it abandoned a corruption inquiry involving a lucrative arms deal with Saudi Arabia, a judge decided Thursday. It will now be up to the House of Lords -- the top appeal court -- to decide whether the judiciary has the right to intervene and force the government to reopen the sensitive inquiry, which was suspended when Tony Blair was prime minister.
Lord Justice Moses, who ordered the SFO to pay all court costs, said the case raised crucial questions that could best be resolved by the House of Lords. He said that Saudi officials had made an explicit "drop it or else" threat in an effort to block the bribery investigation. "That has raised a big question on what should be the public response when a threat is issued by someone outside the control of the court and outside the jurisdiction of the United Kingdom," he said. "This is a paradigm case that goes to the way this country is governed and to its constitutional principles." He said the Saudis had "access to Number 10 Downing Street" when they made the threat, which involved an end to Saudi intelligence cooperation in Britain's global anti-terrorism campaign. A spokesman for the SFO said after the ruling that the investigation would not be reopened until the House of Lords had ruled. That might take several months or longer. The High Court decision -- which authorizes an appeal of its own ruling two weeks ago that halting the inquiry was unlawful -- drew immediate praise from Richard Stein, a lawyer representing two public interest groups that successfully challenged the Serious Fraud Office's decision to drop the inquiry. "This just confirms that the justices think it's very important," he said. "This whole case gives us a feeling that the court can stand up for the rule of law in cases of sleaze and dodgy behavior, and we're glad that somebody can." He said the decision to have the two groups' court costs paid by the Serious Fraud Office was a strong indication that the High Court justices felt it was in the public interest for the case to proceed. The case was brought by the Campaign Against Arms Trade group and by the social lobby group Corner House, and Moses thanked them Thursday for bringing the matter before the court. "Their agenda may be a million miles from what concerns this court, but they have brought up a really interesting and important point of law: how do we prosecute officials of a foreign state when that foreign state is an important strategic ally," he said. "It seems to be a classic case." The High Court had ruled on April 10 in favor of the anti-bribery campaigners, who fought to reopen the investigation into whether BAE Systems, a leading global defense and aerospace company, had a multimillion pound "slush fund" that offered illegal payments to members of the Saudi royal family in return for lucrative contracts. The government argued that the inquiry threatened anti-terrorism cooperation with the Saudis, who warned that they would end intelligence contacts if the case went forward. But the justices said it was improper for prosecutors to drop the case in the face of an explicit threat. In the April 10 ruling, the High Court sharply criticized the SFO, the British government and the Saudi royal family when it ruled that the agency's decision to halt the inquiry was unlawful. The court's judges said the fraud authorities and the government had caved in to threats made by Saudi Prince Bandar bin Sultan -- the former ambassador to the United States and now head of Saudi Arabia's National Security Council -- that Saudi Arabia would drop a multibillion pound contract for Typhoon Eurofighter jets. A £20 billion ($40 billion) deal for 72 Typhoons was signed in September 2007.
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