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The World

Ex-Saudi envoy named in British scandal

An aerospace company reportedly placed up to $2 billion into accounts held by a key ally of the Bush administration.

June 08, 2007|Kim Murphy | Times Staff Writer

LONDON — Prince Bandar bin Sultan, the powerful former Saudi ambassador to the U.S. who has been one of the Bush administration's strongest allies in the Middle East, was publicly linked to a widening British corruption scandal Thursday with reports that a British aerospace company secretly transferred up to $2 billion into bank accounts at the Saudi Embassy in Washington.

The new allegations point a finger directly at Bandar, the son of the Saudi crown prince and a man who has been a key ally for President Bush and his father, as well as a frequent contact of Vice President Dick Cheney. For years, the prince has been considered the most important go-between in the close and often secretive relationship between the U.S. and the royal family.

According to reports by the BBC and London's Guardian newspaper, documents show that BAE Systems made cash transfers to Bandar every three months for 10 years or more, drawn from a confidential account to which British government departments had access.

The alleged payments grew out of a 20-year, $86-billion oil-for-arms deal under which Britain supplied Saudi Arabia with 120 Tornado warplanes, Hawk training jets and other military equipment. The deal, known as Yamamah ("dove" in Arabic), was Britain's largest export contract.

A former BAE official has said the company made legal payments to "agents" beginning in the 1980s. But the news reports said that money was funneled to Bandar, with some of the cash going to fund the prince's private Airbus. The money reportedly was described as fees for marketing services.

"Hundreds of thousands and millions of dollars were involved," U.S. bank investigator David Caruso told the BBC. He confirmed his account in a brief interview with the Los Angeles Times. "There wasn't a distinction between the accounts of the embassy, or official government accounts as we would call them, and the accounts of the royal family," he said.

The reports suggested for the first time that Britain's Ministry of Defense had authorized the secret payments, and they also left open the possibility that payments occurred after 2001, when Britain made it illegal to bribe foreign officials.

The Yamamah contract already was the center of a government investigation. But in December, that three-year probe was halted in the interests of Britain's "national and international security" with the approval of Prime Minister Tony Blair. The new allegations reignited controversy over that decision.

The Serious Fraud Office's decision to close its probe led to charges that Britain was attempting to shore up its negotiations to sell a $20-billion new fleet of Eurofighter Typhoon jets to the desert kingdom.

But British officials said their real fear was losing Saudi Arabia's cooperation in the war on terrorism. Atty. Gen. Peter Goldsmith told Parliament the heads of Britain's security and intelligence agencies, as well as the nation's ambassador in Riyadh, the Saudi capital, had warned that the investigation could seriously damage relations.

Blair, whose final weeks as prime minister threaten to be shadowed by talk of slush funds and coverups, again defended the decision to call off the probe.

"This investigation, if it had gone ahead, would have involved the most serious allegations and investigations being made into the Saudi royal family," Blair told reporters Thursday in Germany, where he was attending the Group of 8 summit.

"My job is to give advice as to whether that is a sensible thing in circumstances where I don't believe the investigations would have led anywhere except to the complete wreckage of a vital, strategic relationship for our country in terms of fighting terrorism," he said.

But in London there were calls for reopening the inquiry.

"What's new about these revelations are several things. First of all, it's the sheer scale of the payments: It may well be a billion pounds being paid to this one prince," Vincent Cable, a Liberal Democratic member of Parliament who earlier had identified Bandar as a possible target of the probe, said in an interview.

"Secondly, this is the first time [Bandar] has been fingered in quite such a direct and clear way," he said. "The other key point, what's really new about all this and very alarming, is that it does appear that the British government was first of all aware of these payments, and very complicit in them, and moreover, they were made until very recently."

The Ministry of Defense said it could not comment on the reports "as to do so would involve confidential information about al-Yamamah, and that would cause the damage that ending the investigation was designed to prevent."

BAE spokeswoman Lisa Hillary-Tee said in a statement that the company had already handed all information on the contract in its possession to the Serious Fraud Office. "After an exhaustive investigation, it was concluded, over and above the interests of national security, that there was and is no case to answer," she said.

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