Al-Yamamah: The Saudi-UK Arms Deal

VIEW: Al Yamamah —Farrukh Saleem
Daily Times, September 19, 2007

It is said that there is no business like the arms business. And, no one does the arms business the way the Saudis do it

What would you do if — for no rhyme or reason — your bank account at the National Bank of Pakistan was credited an amount of Rs50 million a day, every day for the following seven years? For beginners, you would have an equivalent of $2 billion at the end of the seven-year period. To be sure, it isn’t going to happen unless you are a Saudi prince.

Al Yamamah — the ‘dove of peace’ — is Britain’s “biggest sale of anything to anyone”. It is said that there is no business like the arms business. And, no one does the arms business the way the Saudis do it. Between 1985 and 2006, BAE Systems earned a colossal £43 billion by selling Tornado twin-engine fighters, Typhoon multi-role strike fighter aircraft, anti-ship missiles, anti-radar missiles and Runway Denial Munition to the Saudi government (BAE Systems was formed by the merger of British Aerospace and Marconi Electric and is now the world’s third largest defence contractor).

The buyer: the Royal Saudi Air Force. Form of Payment: 600,000 barrels of oil per day, every day to the UK government for twenty years.

On February 7, 2002, MP Harry Cohen during a debate at the House of Commons spoke about credible allegations that large commission payments were made to individuals in Saudi Arabia as a part of the Al Yamamah deal.

In June 2007, BBC’s ‘Panorama’ alleged that “BAE Systems paid hundreds of millions of pounds to the ex-Saudi ambassador to the US, Prince Bandar bin Sultan.”

Prince Bandar is a son of Crown Prince Sultan bin Abdul Aziz, the Deputy Prime Minister of Saudi Arabia. Prince Bandar “categorically” denied Panorama’s allegations.

On June 26, 2007, The Associated Press reported that the US Department of Justice has begun an investigation of BAE Systems’ “compliance with anti-corruption laws including the company’s business concerning the Kingdom of Saudi Arabia”. BAE Systems immediately denied any wrongdoing.

Britain’s Serious Fraud Office (SFO) has been conducting a full-scale criminal investigation into BAE Systems and its alleged slush fund designed to bribe Saudi officials. On November 19, 2006, Saudi Arabia threatened to suspend diplomatic ties with the UK unless Downing Street blocks the SFO investigation. On December 1, 2006, Saudi Arabia gave Britain 10 days to drop the SFO investigation. On December 14, 2006, the UK Government ordered an end to that investigation claiming “...need to safeguard national and international security”.

In March 2007, The Organisation for Economic Co-operation and Development (OECD) officially rebuked the Serious Fraud Office for dropping the BAE investigation (as the UK is a signatory to OECD’s Anti-Bribery Convention).

Neighbouring countries are observing the recent arms build up by Saudi Arabia, with both UK and US supplied weapons systems, very closely. While Saudi Arabia considers itself a key player in the Middle East and it is understandable that it is attempting to affirm that status by acquiring hard power, these expensive arms deals — and the bending and breaking of rules and regulations that has facilitated them — cast a dark cloud over the matter.

Dr Farrukh Saleem is an Islamabad-based economist and analyst

Also See: BAE's Saudi Slush Fund..., Daily Mail, UK