The US government has asked for full cooperation with its investigation into Saudi-BAE arms deals from the British Home Office, and Whitehall is considering its response. The US Department of Justice has asked officials to hand over all documents related to BAE's payments to Saudi royals.
BAE Systems is now under federal investigation after British SFO prosecutors - frustrated, no doubt, by their muzzling at the hands of the Blair government - recently leaked important Washington-related files on BAE bribery.
If the UK government complies fully with the US Department of Justice request, embarrassing revelations can be expected. Those familiar with the long-running saga of the al-Yamamah arms deals will be aware that, essentially, there is no doubt that huge payments have been made to the Saudi royal family. Substantial portions of the oil credits used ostensibly to pay for British equipment such as the Tornado F3 fighter were actually converted into cash in overseas bank accounts.
That doesn't actually mean that anything illegal occurred. In a country like Saudi Arabia, which is essentially the personal property of the al-Saud family, distinguishing between the royal family's personal bank accounts and the national treasury is a difficult thing to do.
Nonetheless, to Western eyes this kind of business resembles corruption on a colossal scale: and according to BAE the business was all sanctioned - and to a large extent carried out - by the British government, in particular by Ministry of Defence officials at the Defence Export Services Organisation, or DESO; a taxpayer-funded sales bureau for the UK arms trade. Funnily enough, it has been announced recently that the always rather malodorous DESO is to be closed down.
It has been strongly suggested in recent months that the British government's push to suppress the al-Yamamah stink is primarily driven by the Saudis' desire for privacy. For sure, the Saudi royals would probably prefer that the way they handle their country's oil revenue not be publicly explored. It was said at the time of the SFO probe being cancelled that valuable terror intel might be lost if the House al-Saud became miffed with Blighty, and that ongoing negotiations to sell them Eurofighters* might founder.
Even so, it could be that in fact the British government would be rather more embarrassed in this matter than the Saudis, who have never shown themselves very sensitive to international opinion. If the details of DESO's dealings with the Saudis become public, that will probably be annoying for the Saudis: but it would be excruciatingly embarrassing for Blair and Thatcher's administrations.
Still, turning down the Americans' request for information could be even worse - and tremendously difficult to justify, given the terror-spookery stance already adopted. Tony Blair said that the SFO had to be reined in because otherwise British citizens could die in terror attacks which Saudi intel might have forestalled. Blighty is far more dependent on American intelligence, however. Upsetting the Americans to save BAE business and MoD face would surely endanger a lot more UK lives than upsetting the Saudis. ®
*This last being a deal perhaps more open to criticism than al-Yamamah. It's one thing to rook the Muslim-extremist Saudi oligarchy out of billions in exchange for rubbish like the Tornado F3: it's quite another to give them apparently cutting-edge gear like Eurofighter.
More from the Guardian here.