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Last Updated: Tuesday, 5 October, 2004, 12:39 GMT 13:39 UK
BBC lifts the lid on secret BAE slush fund
By Michael Robinson
BBC Money Programme

US dollars being counted
The Saudi embassy says it is shocked to hear allegations of corrupt practice
With exclusive interviews with three former insiders, BBC Two's flagship business series The Money Programme reveals a secret 60m slush fund used by the UK's leading arms maker, BAE Systems, to grease the wheels of the biggest arms deals in British history.

Prince Turki bin Nasser, a leading member of Saudi Arabia's ruling royal family, was the principal beneficiary of BAE's millions.

For almost 20 years, he was responsible for overseeing the Saudi side of the massive al-Yamamah arms deals, worth billions of pounds to BAE.

While BAE, formerly known as British Aerospace, consistently refuses to acknowledge the existence of their slush fund, in the programme Bribing for Britain? one of the men who lavished luxury on Prince Turki for more than a decade, Peter Gardiner, speaks out for the first time about what he did.

Luxury

Mr Gardiner started working with BAE in 1988. The small travel agency he owned soon became a major conduit for BAE's money, channelling over 7m a year.

Cunningham
Mr Cunningham: "I was inundated by everyone who was of any standing in the embassy."

Mr Gardiner's job was to lavish luxury on Prince Turki.

On BAE's instructions, he reveals the seemingly endless stream of 5-star hotels, chartered aircraft, luxury limousines, personal security and exotic holidays he would provide for Prince Turki and his entourage.

The Prince's family also benefited royally from BAE's bounty.

Peter Gardiner gave some of the highlights: Prince Turki's wife got a 170,000 Rolls-Royce as a birthday present.

She and her entourage had a chartered Boeing 747 cargo plane laid on to fly home their shopping.

The Prince's son enjoyed a 99,000 skiing trip in Colorado for himself and his friends while the Prince's daughter got a video of her wedding costing almost 200,000.

All paid for by BAE.

Film stars

A three-month summer holiday Mr Gardiner organised for the prince and his family in 2001 cost BAE 2m.

Gardiner
Mr Gardiner: "This is way beyond the life style of most film stars"

"This is way beyond the life style of most film stars," Mr Gardiner tells The Money Programme.

"Film stars were quite often around at the large hotels that we were visiting, but they wouldn't be living in this level of affluence."

Cash

Mr Gardiner was also instructed to provide money; sometimes in cash, sometimes as bank transfers to pay off credit card bills.

The bank transfers, Mr Gardiner recalls, averaged $100,000.

"We didn't actually ask any questions about it," Mr Gardiner says. "We were told to remit the payment and we did so."

Big items or small, the pattern was the same: whatever Prince Turki wanted, Prince Turki got.

And BAE paid.

Councillor

Another insider, Edward Cunningham, also speaking on television for the first time, says he was instructed to look after more junior Saudis officials for BAE.

I wasn't happy about it because I felt that they were probably going to sort of shove it under the carpet
Martin Bromley
Internal BAE investigator

Cunningham found himself laying on lavish helpings of London nightlife, settling gambling bills and arranging prostitutes for young Saudi pilots visiting London on al-Yamamah business.

"Some of them came from the area where I lived," Mr Cunningham told the programme, "which was very embarrassing for me as I was a Labour councillor in that area."

For officials at the Saudi embassy, Mr Cunningham says he offered canteens of gold or silver cutlery which retailed at 1,000 apiece.

"I was inundated by everyone who was of any standing in the embassy," Mr Cunningham said.

"They all wanted gold. They wouldn't take the silver ones."

Visitors

The programme also describes how BAE disguised where their slush fund money was going with the help of Tony Winship, a retired Royal Air Force wing commander and long-standing friend of Prince Turki.

Cunningham
Mr Cunningham: "They all wanted gold. They wouldn't take the silver."
Every month, the wing commander would replace the detailed records documenting the slush fund spending with a single-page invoice.

For August 1995, for example, the invoice simply reads: "Accommodation services and Support for Overseas visitors" with a total charged of "987,365", giving no clue as to what the money had actually been spent on.

Mr Gardiner says the wing commander did this because "he wanted to keep it very private, very secret, he didn't want prying eyes looking at any of these transactions".

Enquiry

The Money Programme has identified Steve Mogford as the BAE executive who authorised a series of these slush fund invoices.

Mr Mogford is now a director of BAE and chief operating officer of the company.

In the last four months of 1995 alone, the programme reveals, he signed off slush fund invoices worth over 3m.

Mr Mogford is also identified as the BAE executive who met Martin Bromley, an internal BAE investigator, in 1996 and ordered him to stop an enquiry he was then conducting into the slush fund.

Shock

Speaking exclusively to The Money Programme, Mr Bromley says: "I wasn't happy about it because I felt that they were probably going to sort of shove it under the carpet."

"I was a bit shell-shocked when I came out of the meeting, I have to say."

Mr Mogford refused to be interviewed for the programme, as did BAE.

Wing Commander Winship is not answering questions either, nor is his friend Prince Turki bin Nasser.

In a statement, the Saudi Arabian embassy told The Money Programme that they were shocked to hear about these allegations of corrupt practice, adding, that "fraudulent behaviour of any kind is not condoned by the Saudi government or embassy in any way".

In February 2002, the UK Parliament toughened up the law on bribery and corruption, outlawing payments to foreign government officials.

With government investigators now probing the slush fund operation with the help of Peter Gardiner's extensive records, it may get more difficult for BAE to go on avoiding the question: Were they, in fact, "Bribing for Britain"?


In response to the allegations made by the Money Programme, BAE Systems gave the BBC the following statement:

"BAE Systems is disappointed and surprised that the BBC's Money Programme and other media are repeating nine-year-old allegations that are ill-informed and wrong. The facts are that the Al Yamamah contract, which is the subject of these allegations, is a contract between the governments of the United Kingdom and the Kingdom of Saudi Arabia.

"BAE Systems can state categorically that there is not now and there has never been in existence what the media refers to as a 'slush fund'. Neither has BAE Systems or any of its officers or employees been involved in false accounting.

"BAE Systems operates in accordance with the laws of the United Kingdom and all other countries in which it operates."

Bribing for Britain? was broadcast on BBC Two on Tuesday 5 October at 21.50.


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