Saudi Eurofighters under threat?

Saudis in threat to cut ties to Britain
David Leppard
November 20, 2006

SAUDI Arabia is threatening to suspend diplomatic ties with Britain unless Downing Street blocks an investigation into a £60 million ($148 million) “slush fund” allegedly set up for members of its royal family.
A senior Saudi diplomat in London has delivered an ultimatum to Tony Blair that unless the inquiry into an allegedly corrupt military deal is dropped, diplomatic links between Britain and Saudi Arabia will be severed, a defence source has disclosed.

The Saudis, key allies in the Middle East, have also threatened to cut intelligence co-operation over al-Qai’da.

They have repeated their threat that they will terminate payments on a military contract worth up to £40 billion that supports 10,000 British jobs.

The Saudis are furious about the Serious Fraud Office’s criminal investigation into allegations that BAE Systems, Britain’s biggest military supply company, set up the slush fund to support the extravagant lifestyle of members of the Saudi royal family.

The payments, in the form of holidays, luxury cars including a gold Rolls-Royce, rented apartments and other perks, are alleged to have been paid to ensure the Saudis continued to buy from BAE under the Al-Yamamah military supply deal.

Al-Yamamah, meaning “the dove” in Arabic, is the biggest military contract in British history and has kept BAE in business for 20 years.

British police have arrested at least five people during the course of the investigation. These include BAE’s managing director of international programs, Peter Wilson, and Tony Winship, a former company executive who oversaw two travel firms that are alleged to have been conduits for the corrupt payments. Both deny any wrongdoing.

The Saudi threat was made in September after the royal family became alarmed at the latest turn in the fraud inquiry.

Sources close to the investigation say the Saudis “hit the roof” after discovering that SFO lawyers had persuaded a magistrate in Switzerland to force disclosure about a series of confidential Swiss bank accounts.

The accounts are said to relate to substantial payments between offshore companies that may have received large sums in previously undisclosed “commissions” in relation to the huge BAE contract.

Fraud office sources say they are now trying to get more documents that will tell them who benefited from the accounts. The trail is said to lead to the Saudi capital, Riyadh.

The Saudis learned of this development only when they were contacted by the Swiss banks in the late summer.

A senior diplomat, said to be the Saudi ambassador to London Prince Mohammed bin Nawaf, is understood to have been dispatched to Downing Street, where he met Mr Blair’s chief of staff, Jonathan Powell.

The diplomat is said to have delivered a 12-page legal letter demanding a detailed explanation of why the fraud investigation was continuing.

“The Saudis are claiming in this letter that the British Government has broken its undertaking to keep details of the Al-Yamamah deal confidential,” a source said.

“They are claiming the deal is protected by sovereign national immunity, and that the British have no right to poke around in their private financial affairs.”

A defence department official said the preliminary contract to sell the first 24 of 72 promised Typhoon warplanes, better known as Eurofighters, was then suspended. That contract alone is said to be worth £11 billion and would safeguard 9000 British jobs for the next decade.

While the Saudis have temporarily reversed their decision, they made it clear they would carry out their threats unless the demands in their letter were met.

That would include severing all diplomatic and intelligence ties with Britain — withdrawing their ambassador to London, and sending home the British ambassador in Riyadh.

The Sunday Times

http://www.theaustralian.news.com.au/story/0,20867,20786006-31477,00.html