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Last Updated: Tuesday, 19 December 2006, 21:50 GMT
Blair pressed on BAE bribe probe
There were fears a multi-million pounds Eurofighter deal would be lost
Tony Blair is being asked to justify the dropping of the corruption inquiry into a BAE arms deal with Saudi Arabia.

Tony Blair says the decision was made because of national security and doubts about any prosecution, rather than commercial pressure from Saudi Arabia.

But Mark Pietch of the Organisation for Economic Cooperation and Development (OECD) said he had concerns there may have been some political influence.

The Lib Dems say it risks damaging Britain's international reputation.

Lib Dem spokesman David Heath said the decision was extraordinary and open to challenge.

'Nail in coffin'

"I think a lot of people will see it as the last nail in the coffin of the so-called ethical foreign policy," he said.

The Serious Fraud Office was investigating claims that BAE Systems had paid bribes to secure an arms deal with Saudi Arabia in the 1980s. BAE has always denied the claims.

Attorney General Lord Goldsmith last week announced the inquiry was to be dropped - weeks after reports that the Saudis were threatening to pull out of a deal to buy 72 Eurofighter jets from BAE.

Obviously we want to know from the UK what exactly happened
Mark Pietch
OECD bribery group

He said the final decision was made by the Serious Fraud Office due to doubts over whether a successful prosecution could be held, and the potential damage to relations with key ally Saudi Arabia.

But the Liberal Democrats argue it was "effectively blackmail" by the Saudis and the SFO decision "came from the top".

Speaking to the BBC's World at One programme, Professor Pietch, chairman of the working group on bribery at the OECD, said a formal request for further explanation would be sent out this week.

Judicial review

He said there had been previous concerns about the UK and these had been "significantly increased" by the BAE decision.

"Obviously we want to know from the UK what exactly happened and I don't want to jump to a conclusion at the moment," he added.

The OECD convention against bribery, to which Britain signed up in 2001, rules that investigations should not be influenced by the national economic interest, or the potential effect upon relations with another state.

Lord Goldsmith
Lord Goldsmith said the decision came from the Serious Fraud Office

The Campaign Against the Arms Trade believes the government has contravened this and intends to seek a judicial review.

Spokesman Simon Hill told the BBC: "We think we have a case because we think the government has broken the law."

And the Liberal Democrats have demanded to see a National Audit Office report into the Al Yamamah contract - which they say is the only NAO report never to have been put into the public domain.

Neither BAE nor the government wanted to comment further.

'Bite the bullet'

But last week Lord Goldsmith told the BBC: "If you are faced with the reality of the situation that there's going to be massive damage - not to jobs - but to national security, our counter-terrorism capabilities, vital interests and against that you have the prospect of a case which is going to go nowhere, then I think the answer is you have to be realistic and bite the bullet."

Many of the allegations pre-date 2001, when the OECD convention was incorporated into British law - which is one of the reasons why Lord Goldsmith doubted the chances of getting a conviction.

Others believe the case is a result of a misunderstanding of the way business is done in much of the Arab world.

Labour peer Lord Gilbert, a former minister for defence procurement, said: "It's a very very difficult area, one man's bribe is another man's commission payment. You get this sort of ambiguity in the world of commerce very frequently."

Analysis of the controversy caused by the decision

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