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BAE Systems: Al Yamamah Contract

Volume 688: debated on Thursday 18 January 2007

asked Her Majesty’s Government:

Whether discussions with the intelligence services concluded that national security would be in jeopardy if the Serious Fraud Office were allowed to continue its investigations into BAE Systems.

My Lords, yes. All relevant agencies were clear about the crucial importance of UK-Saudi co-operation in the fight against terrorism and the damage to UK interests—and, potentially, UK lives—if that co-operation were withdrawn. Having been advised of the risk to national security if the SFO investigation continued, the director of the SFO concluded that it was not a risk that could properly be taken in the public interest. I repeat that it was the director’s decision, not mine. I have written more fully to the noble Lord today about the reasons for the director’s decision and the Government’s continued commitment to tackling international corruption. If he agrees, I will place a copy of that letter in the Library of the House.

My Lords, I am most grateful to the noble and learned Lord the Attorney-General for his Answer and this morning’s correspondence. I would be delighted if it were placed in the Library. In that correspondence he includes the note to the OECD. Paragraph 9 explains how the head of the SFO made the decision because the views of the Prime Minister, the Foreign Secretary and the Defence Secretary were conveyed to him. How were they conveyed? By letter or in a face-to-face meeting? Will the noble and learned Lord publish either the correspondence or the minutes of those meetings?

My Lords, there were no face-to-face meetings between the Prime Minister and the director of the SFO, although I had direct communications with the Prime Minister, which I passed on to the director of the SFO. The director of the SFO met, on more than one occasion, our ambassador to Saudi Arabia, who was in a position to brief him directly on the threats and consequences. So far as the documents are concerned, I will not commit to publishing them at the moment. That matter needs consideration.

My Lords, everybody knows that you cannot do business in these countries without bribery and corruption. The problem is not whether everybody knows that but that nobody seems to be able to prove it. What advice are Ministers prepared to give to British companies that want to export to the relevant countries, but cannot get through without bribing the relevant people? Are we to give up all these markets on the grounds of being holier than thou or do we just still keep our heads in the sand and pretend that nothing wrong is happening?

My Lords, I will not accept the premise of the noble Lord’s question for two reasons. As Members of the House may recall, when I made my Statement on this on 14 December I said something about my views about whether this was a particular case that could have been proved in any event. I do not accept the premise of the question. It is very important to make it clear that dropping this case—which was not an entirely comfortable decision, as I said in my letter to the noble Lord—does not mean that we are backing off in any way from our commitment to tackling international corruption. On the contrary, I am clear that we should redouble our efforts. I have told the director of the SFO that he should vigorously pursue current investigations, including a number of other cases against BAE. We need to do all that we can to make sure that he has the resources in order to do so.

My Lords, may I, with the greatest respect to the noble and learned Lord, question his last statement? When he gave his Statement to the House on 14 December he said quite clearly that the heads of the security and intelligence departments shared his assessment that there would be grave damage to the relationship between this country and Saudi Arabia in respect of security and intelligence operations. In his subsequent letter to the OECD, which had questioned that statement, the remarks were very much downplayed to refer only to the benefit of advice from the heads of the security and intelligence agencies, given to him and the Prime Minister. This is, of course, a somewhat different wording. Will he, first, explain the discrepancy between those two phrases and whether they were affected by the decision of Mr Scarlett not to sign any document—as we understand it—conceding that he had taken that position? Secondly, does he agree that security and intelligence assessments by highly trained and expert people should never be changed or exaggerated for political purposes?

My Lords, of course I agree with the last statement. Let me be clear about this: the reports earlier this week that there were no national security considerations behind the decision to hold the SFO inquiry were wholly wrong, as the SIS itself said. I said in my Statement—it was not my assessment—that it was the clear view of the Prime Minister and other Ministers that continuation of the SFO investigation would cause serious damage to UK-Saudi co-operation and that that was likely to have serious negative consequences for UK interests and, potentially, UK lives. Indeed, the Prime Minister subsequently talked about the consequences as being “devastating”.

The SIS has made it clear publicly that it shares the concerns of others within government over the possible consequences for the public interest of the SFO investigation. Naturally, it did not say that the Saudis would be bound to withdraw co-operation, but certainly no one disagreed with the overall assessment that the Saudi threats were real. Before the SFO decision was taken, I discussed the matter with the head of the SIS, whose view was that the Saudis might withdraw their co-operation if the SFO investigation continued and that they could decide to do so at any time.

My Lords, will the Minister confirm that, especially in view of recent history, it is understandable that the heads of the intelligence services should be somewhat reticent in what they say publicly on issues of this kind? Does he agree that it is incumbent on us all to be realistic and to accept that, in the fight against terrorism, we need all the allies we can get, and that, in the Middle East in particular, we need to co-operate with people such as the Saudi Arabians? That has to be the first priority of any Government in protecting their citizens, and it is somewhat unrealistic to expect intelligence agency heads to make public statements on one side or the other.

My Lords, I agree with the substance of what my noble friend has said. As I said in the letter to the noble Lord, Lord Garden, the judgment was that UK co-operation with Saudi Arabia in the counterterrorism field was crucial. Saudi Arabia is a source of valuable streams of intelligence on al-Qaeda and, if Saudi Arabia were to withdraw that co-operation, the UK would be deprived of a key partner in our global counterterrorism strategy. Saudi also plays a key role in Middle East issues, and this Government have taken the view that those have a real effect on international tension and therefore a real effect on national security at home.