Feds working round UK gov in BAE slime case

Swiss banks cough, arms biz catches cold

UK-headquartered global arms behemoth BAE Systems is in the news again this morning, as reports indicate that US anti-corruption investigators are gathering evidence against the firm despite stalwart obstructionism by the British Government.

BAE has been dogged for most of its history by allegations that the company - in cooperation with joint Ministry of Defence/arms-biz sales bureau, the Defence Export Services Organisation (DESO) - used bribery to secure massive sales of combat jets and weaponry to the Saudis.

A long-running probe into the matter by the UK Serious Fraud Office (SFO) was closed down last year on the orders of the Blair government on the grounds that the investigation might "damage national security". This was taken to mean that the Saudi royal family had threatened to cease cooperating secretly with Britain on counter-terror intelligence, though in fact the government offered no details.

Cynics have suggested that in fact the decision may have had something to do with DESO and BAE's desire to secure a new sale of Eurofighter jets to the desert princes. The sale has in fact duly gone firm.

Angered at being called to heel, the bloodhounds of the SFO leaked carefully selected information from their files, detailing immense payments made to Prince Bandar - then serving as Saudi ambassador in Washington - via an American bank.

As the SFO had probably intended, the leaks produced action from the US Justice Department. BAE Systems is nowadays as much an American company as it is British, and the feds are now investigating it.

BAE and Prince Bandar do not deny the American payments, but say they were entirely legitimate and negotiated by the British government. Indeed, the money passed at times via MoD accounts operated by DESO.

DESO, while funded by the taxpayers and part of the MoD, is actually run by a seconded arms-industry exec and operates entirely under the industry's control. When speaking of "the UK arms industry", one is mainly talking about the UK operations of BAE Systems plc. This curious status may give a hint as to why successive UK governments have not cared to have DESO's dealings on their (and BAE's) behalf examined publicly, and why Gordon Brown has finally chosen to shut down the rogue bureau.

The Guardian reveals today that the Justice Department feds, frustrated by the UK's failure to release the vast amounts of evidence in the Serious Fraud Office files, have moved decisively to gather information on their own account. US agents have secured cooperation from Swiss authorities - a lot of money relating to the BAE deals is said to have moved via normally-secretive Swiss banks, and now a lot of information is going from there to the Justice Department.

The paper also reports that Peter Gardiner, who ran a travel company used by BAE to lavish gifts and luxury on various Saudis, has been secretly flown to Washington to give testimony by the feds. Gardiner has claimed of the services he provided for Saudi princes: "This is way beyond the lifestyle of most film stars... 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."

Gardiner claimed to have channelled BAE cash to Saudi notables, as well as an endless procession of five-star hotel bookings, million-pound all-expenses holidays, expensive cars and other sweeteners. On one occasion he said he had to charter a 747 cargo plane to carry a Saudi princess's shopping home.

It appears that Gardiner travelled to Washington during the summer courtesy of the feds, going via Paris so as to avoid the notice of the British government. The US agents are also said to be working closely with Swiss prosecutors.

A Guardian source "close to the Department of Justice" said "the investigators are confident they can get what they need from Switzerland. That's where all the BAE arrangements were made."

Meanwhile, Prince Bandar has hired former FBI Director Louis Freeh to act for him in the matter.

"The prince denies any impropriety and violating any statutes in the UK or the US," the former head fed told the New York Times. ®