July 30, 2008

UK House of Lords says rule of law must come second in bribery case

Nearly two years ago the UK's Serious Fraud Office dropped a criminal investigation into the British arms company, BAE systems, which was accused of running a £ 60 million slush fund to Saudi officials who had authorised a £42 billion arms deal. The Attorney General was Lord Goldsmith. The BBC at the time reported that a further arms deal was under threat, with the possibility Saudi Arabia would buy planes from France rather than the UK if it continued to be embarrassed by the investigation. In addition, the BBC reported:

---extract from BBC report of 15 December 2006
Lord Goldsmith said that both Mr Blair and Defence Secretary Des Browne had argued that carrying on the investigation would harm intelligence and diplomatic co-operation with Saudi Arabia, in turn damaging the UK's national security.
---extract ends

You could look on £60 million in 'commissions' as a small price to pay to secure British jobs, or you could look on it as the corrupting influence of the arms trade. What is certain, is that the rich club of nations, the OECD, which is for a rules-based system of trade, has a treaty against bribary which the UK has signed. It said after the investigation was dropped that it would take "appropriate action" against the UK. See:

At that time, the then leader of the Liberal Democrats commented: "The next time British ministers go into Africa and take to task the governments of developing countries on the ground that they are not dealing sufficiently harshly with corruption they will get this decision thrown back in their faces."

However, there were British citizens who thought the government should be held to account and they won a case at the High Court, which ruled the Serious Fraud Office was wrong to halt the investigation. That ruling has now been overturned by the House of Lords. Here is the press release from the campaigners:

---Cornerhouse/CAAT press release 30 July 2008
Serious Fraud Office WIN appeal in BAE-Saudi case as public outrage continues.

The House of Lords, the UK's highest court, has this morning OVERTURNED the High Court's ruling of April 2008 that the Director of the Serious Fraud Office (SFO) acted unlawfully when, acting on government advice, he terminated in December 2006 a corruption investigation into BAE Systems' arms deals with Saudi Arabia after lobbying by BAE and a threat from Saudi Arabia to withdraw diplomatic and intelligence co-operation.

The High Court ruling was in response to a judicial review brought by the Campaign Against Arms Trade (CAAT) and The Corner House.

Today, the law lords described the threat made by Saudi Arabia as 'ugly and obviously unwelcome'.

Baroness Hale said that she would have liked to have been able to say that it was wrong to stop the investigation as it was 'extremely distasteful that an independent public official should feel himself obliged to give way to threats of any sort.'

But she felt she had to agree that the SFO Director's decision was lawful because of the breadth of the Director's discretion.

In response to the Lords' judgments, Nicholas Hildyard of The Corner House said:

''Now we know where we are. Under UK law, a supposedly independent prosecutor can do nothing to resist a threat made by someone abroad if the UK government claims that the threat endangers national security.

''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. Parliament needs urgently to plug this gaping hole in the law and in the constitutional checks and balances dealing with national security.

''With the law as it is, a government can simply invoke 'national security' to drive a coach and horses through international anti-bribery legislation, as the UK government has done, to stop corruption investigations.''

Symon Hill of CAAT said:

''BAE and the government will be quickly disappointed if they think that this ruling will bring an end to public criticism. Throughout this case we have been overwhelmed with support from people in all walks of life.

''There has been a sharp rise in opposition to BAE's influence in the corridors of power. Fewer people are now taken in by exaggerated claims about British jobs dependent on Saudi arms deals. The government has been judged in the court of public opinion. The public know that Britain will be a better place when BAE is no longer calling the shots.''

The law lords judgment confirms that the UK is in flagrant breach of its duty to implement and give force to the OECD Anti-Bribery Convention.

In practice, the UK Government now has a green light to use an undefined and broad concept of 'national security' to cover themselves when taking potentially unlawful decisions.

The SFO, BAE and the Government might think that, with today's judgments from the law lords, it's now all over. Far from it! The real challenges have only just begun.

Both CAAT and The Corner House are calling on all those who are alarmed at the gaping holes in the law revealed by the House of Lords' judgments today to join us in:

--Pressing for changes to the law to ensure that our prosecutors can remain independent and are empowered to resist threats from abroad.

--Ensuring that national security advice can be scrutinised by the courts and by parliament so that the Government cannot arbitrarily invoke national security - without effective checks and balances - to trump the rule of law.

--Opposing the clauses in the draft Constitutional Renewal Bill that would prevent a judicial review like ours from ever being taken in the future and that would give the Government 'carte blanche' to invoke national security to stop a fraud investigation or criminal prosecution without effective checks and balances.

--Insisting that the Government fulfil its international obligations to cooperate with requests for assistance from the US and Swiss authorities in their investigations into BAE's dealings with Saudi Arabia.

--Pressing the OECD to clarify the circumstances under which national security concerns can legitimately be invoked to exempt signatories from fulfilling their obligations under the OECD Anti-Bribery Convention.

--Pressing the Serious Fraud Office to re-open its investigation into BAE's dealings with Saudi Arabia given that circumstances have changed since the investigation was dropped in December 2006. Much of the information that Saudi Arabia was apparently concerned to keep out of the public domain is now public knowledge.

--Exposing the preferential access of arms companies, such as BAE, to the Government, and campaigning to end public subsidies to the arms industry.

CAAT and The Corner House are obviously disappointed -- but we're not despondent! The judicial review process has increased public awareness of corruption, arms trade, national security and the rule of law; it has now clarified the law; and key documents have been released into the public domain that would not otherwise have seen the light of day.

As we reflect further on the implications of today's judgments, we'll keep you posted . . .

Many thanks for all your support and best wishes from all at The Corner House

CornerHouse/CAAT statement in response to House of Lords judgments:

Opinions of the Lords of Appeal:

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