BAE probed on £60m Saudi slush fund

[emad]

From The Sunday Times
Snip
David Leppard and Robert Winnett



BRITAIN’S biggest defence company has been accused by a whistleblower of operating a £60m “slush fund” to channel “bribes” to members of Saudi Arabia’s royal family. BAE Systems now faces a criminal investigation over allegations that it used Peter Gardiner, a reputable travel agent from St Albans, Hertfordshire, to lavish its Saudi clients with gifts and luxury holidays.

Gardiner has given details of the payments in interviews with the Serious Fraud Office (SFO). Speaking publicly for the first time, he told The Sunday Times that he had spent £60m on BAE’s behalf. “It was an enormous amount of money. It’s more a question of what we didn’t spend it on than what we did,” said Gardiner.

The slush fund — spent by Gardiner over 13 years from 1989 and 2002 — provided a £170,000 Rolls-Royce, other luxury cars, London apartments, private air travel and accommodation in five-star hotels in Hawaii, Los Angeles, Paris and New York. Under separate arrangements, middlemen also arranged prostitutes for some dignitaries.

The largesse was extended to Saudi officials and members of the country’s large royal family who controlled the kingdom’s arms procurement, the chief source of BAE’s income over the past 18 years.

From:
http://www.timesonline.co.uk/newspaper/0,,2761-1190953,00.html

Edit:
As previously on DU:
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=532251

[seemslikeadream]

1. From eek-- Wed Sep-03-03

eek (833 posts) Wed Sep-03-03 10:34 AM
Original message
BAE wins £1bn Hawk contract


from the Guardian


BAE wins £1bn Hawk contract

Wednesday September 3, 2003
BAE Systems, Britain's biggest weapons maker, today clinched a contentious £1bn order to supply Hawk training aircraft to India, in a contract for which Tony Blair personally lobbied.
The deal, in negotiation for more than a decade, has sparked much political contention in Britain.
(snip)
Critics have argued that the sale lays the British government open to charges of hypocrisy, as it was pushing for a big arms deal at the same time as playing peacemaker between India and Pakistan over the disputed territory of Kashmir.
ales to India and Pakistan, despite political tension between the two regional rivals.
(snip)

more:
http://www.guardian.co.uk/armstrade/story/0,10674,10348...


shockingly, a little searching will get you all sortsa purty dots to connect.
For starters:
Carlyle
Boeing
and amusingly, Segueway!

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=95125

[seemslikeadream]

2. 400 boxes of documents --- from Traveller’s World

Although such hospitality is considered routine in some Third World countries, it is a criminal offence for British companies to pay bribes to overseas officials. Fraud investigators are also concerned about the way the payments were described in the company’s accounts.
The SFO is now studying Gardiner’s statement, together with the contents of nearly 400 boxes of documents that he has volunteered from Traveller’s World, his company.

Last week Gardiner said his company had acted entirely properly. He approached the SFO in March and has been helping them and the police uncover full details of the slush fund since then. The possibility of a criminal investigation into BAE marks a new low for the defence company, once the darling of new Labour. It has fallen out of favour after being accused of massive overspending on a series of Ministry of Defence contracts.

Gardiner’s evidence spans much of the period of the Al-Yamamah arms deal, Britain’s biggest export contract. It resulted in the sale of more than £20 billion worth of aircraft, such as Tornado and Hawk jets, and other military equipment to the oil-rich state.

Whitehall officials said last week they were shocked by the scale of the alleged slush fund. The government is determined to show that all cases of alleged corruption will be fully investigated, but the case is highly sensitive.
more
http://www.timesonline.co.uk/newspaper/0,,2761-1190953,...

[emad]

3. Addendum:

UK arms firm's £60m Saudi slush fund



Police inquiry into arms firm's £60m slush fund

David Leigh and Rob Evans
Tuesday May 4, 2004
The Guardian


<snip>

Files have been seized by Ministry of Defence police alleging corruption on a massive scale by Britain's biggest arms firm, BAE Systems. Payments totalling more than £60m to prominent Saudis are listed, a far greater amount than has been previously alleged.
MoD fraud squad detectives investigating allegations of bribery of a civil servant have seized 386 boxes of "slush fund" accounts.

Most explosively, the documents detail £17m in benefits and cash allegedly paid by BAE, which is chaired by Sir Dick Evans, to the key Saudi politician in charge of British arms purchases, Prince Turki bin Nasser. He is recorded under the codename "PB", alleged to mean "principal beneficiary".

BAE is trying to secure another £1.5bn of arms deals from the Saudi regime, following the sale of planes, missiles and warships worth £50bn to them over the past 15 years.

The documents list by name every Saudi official alleged to have received benefits from BAE in recent years. These include a number of military attaches at Saudi Arabia's London embassy, recorded as being provided with luxury London houses at BAE's expense.
<snip>

More:

http://www.guardian.co.uk/armstrade/story/0,10674,12090...


From:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=104&topic_id=1525678


EDIT: wonder if any BAE accounts were held at Riggs Bank in the US or overseas offices??????

EDIT 2:
BAE offers 'Saudi danger money'

BAE Systems is offering its staff in Saudi Arabia an extra £1,000 a month in an attempt to stop the exodus of staff, one employee has told BBC News Online. The indefinite monthly payment follows a one-off payment of £4,500 in December after housing compounds were bombed in May 2003, killing 35 people.

The security situation has deteriorated since then. Earlier this month al-Qaeda militants beheaded an American engineer they had been holding hostage.

The British-owned defence firm made the £1,000 cash offer in an e-mail to each of its 2,400 staff in Saudi Arabia, describing it as an "emergency security payment", the employee said.

The employee said that people have been on edge since the housing compounds came under fire in May 2003 but that employees were encouraged to stay on the payroll to get the lump-sum offer in December.

From:
http://news.bbc.co.uk/1/hi/business/3837407.stm

Includes replies to:
"Are you an expatriate working in Saudi Arabia? Are you pondering to leave or is the security situation still under control? And how is your company persuading you to stay? Tell us your experiences.At the request of our readers in Saudi Arabia e-mailing us their stories, all names have been withheld"

[seemslikeadream]

4. US war system reaps $2bn for BAE

David Gow
Saturday July 19, 2003
The Guardian

BAE Systems, Britain's biggest defence manufacturer, yesterday secured its place at the heart of the Pentagon's visionary new electronic warfare programme, with a contract from Boeing worth up to $2bn.


It is seen by the Pentagon as capable of delivering a precise firepower that will dwarf the "shock and awe" seen in Iraq this year.
BAE's selection, along with Lockheed Martin, Northrop Grumman and Raytheon, America's biggest defence contractors, buttresses its ambition to become a substantial US military supplier.

The company, at loggerheads with the British government, has made no secret of its ultimate plans for merger with the big US players such as Boeing or Lockheed, though talk of an imminent deal is too premature.

The highly classified work of BAE's two US units, one of them acquired from Lockheed and both run by US citizens, will be kept secret from the company's main British businesses under US laws, which forbid such technology transfer - a restriction that Tony Blair asked to be lifted in his Washington visit this week.



Jack Dromey, chief defence industry negotiator at the TGWU, said the plans would mean the end of a £70m project, known as Red Dragon, to build a repair facility in the centre of a new aviation park at RAF St Athans, near Cardiff.
more
http://www.guardian.co.uk/military/story/0,11816,1001427,00.html



BAE Systems enters agreement with Carlyle Group


BAE Systems North America has reached agreement with The Carlyle Group, Washington, D.C., to spin out its Imaging Sensors business located at Milpitas, Calif.
Imaging Sensors was previously part of BAE Systems Reconnaissance and Surveillance Systems of Syosset, N.Y. In the transaction, BAE Systems provided the assets of Imaging Sensors to form a new company, Fairchild Imaging, Inc. Closing of the agreement occurred April 6, 2001.
The core competencies of the new company, Fairchild Imaging, are in charged coupled device development and fabrication and electronic imaging systems. This company pioneered the development of CCD imaging technologies and has continued to innovate in a number of commercial product areas serving medical, dental and industrial surveillance markets. It currently employs 123 people.
"Fairchild Imaging is an excellent business. This transaction is part of our continuing strategic alignment to our aerospace core competencies, and provides Fairchild Imaging with great opportunity for future investment growth and success in its new commercial markets as well," said Mark Ronald, president and CEO, BAE Systems North America.
Under the terms of the transaction, BAE Systems North America retains an equity interest in Fairchild Imaging. The new company will continue to provide CCD products to the Reconnaissance and Surveillance Systems business within BAE Systems North America. Financial terms were not disclosed.
http://www.aerotechnews.com/starc/2001/042701/BAE_Carly...

UK: MoD official took BAE gifts
David Leigh and Rob Evans
Tuesday April 6, 2004
The Guardian
<snip>
A slush fund run by Britain's biggest arms firm, BAE Systems, has been providing free holidays to a low-paid civil servant at the Ministry of Defence, according to allegations made to the Guardian.

The information has been passed to the Serious Fraud Office, which is planning to interview a key witness today.
<snip>

<snip>
The firm, which uses a battery of methods to persuade Britain and regimes all over the world to buy its weapons, has frequently been at the centre of corruption allegations abroad. The Guardian disclosed this year that since Labour legislated against bribery of foreign public officials, BAE has secretly shifted its files of payments to agents and foreign politicians into a vault in Geneva. BAE is also alleged to be using Swiss banks and offshore companies in the British Virgin Islands to conceal its transactions.

The Guardian also disclosed allegations that BAE has been operating a £20m slush fund to provide prostitutes, yachts and free trips for Saudis. This fund, according to the documents, also appears to have been used to finance the free holidays for Mr Porter. BAE has refused to respond to all these allegations, other than to make a generalised denial of wrongdoing.
<snip>

More:http://www.guardian.co.uk/military/story/0,11816,118678...