WASHINGTON — Former FBI Director Louis J. Freeh says $2 billion that flowed from a British arms manufacturer to U.S. bank accounts controlled by Prince Bandar bin Sultan, then Saudi ambassador to the U.S., was not a bribe, but was instead part of a complex barter involving the exchange of Saudi oil for British fighter jets.
The transfer of funds to accounts at Riggs Bank in Washington, D.C., has come under scrutiny as the Justice Department continues an international corruption investigation involving British arms manufacturer BAE Systems. Freeh, who is now a lawyer and consultant for Bandar, made his comments to the Public Broadcasting Service for a "Frontline" documentary to be broadcast this evening. Bandar is now a national security advisor to the Saudi king. He has denied any wrongdoing, as have other Saudi officials.
Freeh said that a 1985 treaty between Britain and Saudi Arabia allowed the trade of oil for weapons. BAE signed an $86-billion contract with the Saudis under the provisions of the treaty, and the funds that flowed between Britain and the Bandar-controlled bank accounts in the U.S. may have come from the sale of Saudi oil under the terms of the contract. As part of the deal, BAE also supplied an Airbus 340 plane, which for years has been used by Bandar.
U.S. government officials said the investigation was being conducted under the Foreign Corrupt Practices Act, which has jurisdiction over business executives making bribes but not the government officials receiving them. As a result, someone like Bandar would not be the target of the Department's investigation, but his role helping to manage the Riggs Bank accounts has made him central to the inquiry.
Bandar was among the longest-running Saudi ambassadors to the United States, serving from 1983 to 2005.
In a statement issued to The Times, Freeh's consulting firm, Freeh Group International, dismissed the bribery allegations, saying that "not only have both these reckless allegations not been proved in any court or fair factual forum, but neither has been the subject of any charge or official government accusation."
Freeh was FBI director from 1993 to 2001 and became known for his tough approach to white-collar crime and terrorism.
BAE confirmed that it is the subject of ongoing investigations, saying in a statement:
