Business Day

British Judge Questions Halt to Arms Fraud Inquiry

By JULIA WERDIGIER

LONDON — A British High Court judge raised new questions Thursday about why the government ordered the Serious Fraud Office to stop investigating claims of corruption related to a 1990s arms deal with Saudi Arabia that was brokered by BAE Systems, the biggest British weapons maker.

The office abruptly canceled its inquiry last year after Tony Blair, the prime minister at the time, said the investigation would threaten thousands of British jobs and affect diplomatic and intelligence ties with Saudi Arabia.

Mr. Blair said an investigation would not “have led anywhere, except to the complete wreckage of a vital strategic relationship for our country.” BAE has repeatedly denied wrongdoing.

At a judicial review Thursday, the Campaign Against Arms Trade and the Corner House, a social justice advocacy group, said the government acted unlawfully in December 2006 when it told the fraud office to stop looking into allegations that BAE paid bribes to Saudi Arabian officials in exchange for arms deals.

Dinah Rose, a lawyer representing the two groups, said new documents showed that BAE Systems wrote to the attorney general confidentially, urging him to halt the investigation for commercial and diplomatic reasons.

The high court judge, Justice Alan Moses, said the government should have sought other ways to minimize risks to diplomatic ties or national security.

“What really puzzles me is why weren’t the Saudis told, ‘Hang on, this is just an investigation, and there may not even be any evidence?’  ” he said.

Justice Moses said he saw no evidence so far that the government did anything but “just roll over” by dropping the inquiry.

Lawyers representing the government will present their case on Friday. Watchdog groups and lawmakers have urged the government to restart the investigation.

British news media reported last year that more than $2 billion ended up in bank accounts in Washington controlled by Prince Bandar bin Sultan of Saudi Arabia and that the BAE payments were linked to an arms deal negotiated in 1985 and then worth £43 billion (about $85 billion). Prince Bandar has denied accepting “improper secret commissions.”