Page last updated at 15:36 GMT, Friday, 8 June 2007 16:36 UK

Goldsmith denies BAE cash claim

Lord Goldsmith
Lord Goldsmith denies concealing details of the payments

The attorney general has denied claims he concealed from an international anti-bribery watchdog the existence of secret payments to a Saudi prince.

The Guardian claims that Lord Goldsmith hid details from the OECD of payments from BAE Systems to ex-Saudi ambassador to the US, Prince Bandar bin Sultan.

Lord Goldsmith told the BBC the claims were "absolutely untrue".

The prince negotiated a 40bn arms deal between the UK and Saudi Arabia. He and BAE deny any wrongdoing.

Prince Bandar "categorically" denied receiving any improper payments and BAE said it had acted lawfully at all times.

'Strategic relationship'

The payments to the prince, which were made with the knowledge of the Ministry of Defence, were discovered during a Serious Fraud Office (SFO) investigation.

These are matters you need to put to the Ministry of Defence, not to me
Lord Goldsmith

The SFO inquiry into the Al Yamamah deal was stopped in December 2006 and the OECD subsequently launched its own investigation.

Asked about the payments, Lord Goldsmith told BBC News: "I am not going into the detail of the individual allegations.

"The reason is that the Ministry of Defence, which is the responsible department, regard the United Kingdom as being bound by confidentiality provisions.

"It is not for me to break those - still less, as the Ministry of Defence say, if going into detail about certain matters would cause the very risk to national security which caused the director of the Serious Fraud Office to bring this investigation to an end."

Prince Bandar bin Sultan
Prince Bandar was Saudi ambassador to the US for 20 years

The Guardian issued a statement following Lord Goldsmith's rejection of the allegations, in which it said there was "no dispute" that the payments were concealed from the OECD when they requested explanations for the dropping of the SFO inquiry.

It remains unclear whether the payments to the prince were actually illegal - a point which depends in part on whether they continued after 2001, when the UK made bribery of foreign officials an offence.

On Thursday Prime Minister Tony Blair declined to comment on the payments.

But he said that if the SFO investigation into BAE had not been dropped, it would have led to "the complete wreckage of a vital strategic relationship and the loss of thousands of British jobs".

Lord Goldsmith refused to comment on whether any further investigations would be held into the deal.

"These are matters you need to put to the Ministry of Defence, not to me," he told the BBC.

An investigation by the BBC's Panorama programme, due to be broadcast on Monday, revealed that BAE Systems, the UK's biggest arms manufacturer, paid hundreds of millions of pounds to the prince over a decade.

It found that up to 120m a year was sent by BAE Systems from the UK into two Saudi embassy accounts in Washington.

Private plane

Panorama established that these accounts were actually a conduit to Prince Bandar for his role in the 1985 deal to sell more than 100 warplanes to Saudi Arabia.

The purpose of one of the accounts was to pay the expenses of the prince's private Airbus.

Panorama reporter Jane Corbin explained that the payments were Saudi public money, channelled through BAE and the MoD, back to the Prince.

The SFO had been trying to establish whether they were illegal when the investigation was stopped, she added.

The SFO's inquiry is thought to have angered Saudi Arabia, to the point that there was a risk BAE could lose a contract to sell the new Typhoon fighter to Riyadh.

Lord Goldsmith said the reasons for the investigation being halted had been made clear.

"The director of the Serious Fraud Office who made that decision has made those absolutely plain.

"His reasons were because of the serious risk to national security on the advice of those whose job it is to care about the interests of people in this country and their lives."

Prince Bandar, who is the son of the Saudi defence minister, served for 20 years as US ambassador and is now head of the country's national security council.

Panorama will be broadcast on Monday 11 June on BBC One at 2030 BST

SEE ALSO
Q&A: The BAE-Saudi allegations
07 Jun 07 |  Business

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