Claims that a defence company with UK links bribed officials to secure a Saudi contract has left the UK with another potentially embarrassing dilemma

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Reports that a probe by the UK Serious Fraud Office (SFO) into bribery allegations against a defence company with British links is being delayed – and might even be stopped – while the UK government considers the political implications, have provoked outraged comment.

The investigation centres on allegations that GPT, a subsidiary of European aerospace company EADS, paid bribes to Saudi Arabian officials over a £2bn (€2.32bn) communications contract. Whistleblower Ian Foxley claims GPT sacked him after he told the fraud office the company had given Saudi officials luxury cars, jewellery and briefcases full of cash. According to the Sunday Telegraph, a crucial part of his evidence rests on claims that £11.5m was sent to offshore companies in the Cayman Islands and then to a Swiss bank account.

It is imperative that the government sticks by the international rules and ensures this investigation goes ahead’

Transparency International UK executive director Chandrashekhar Krishnan


The case is an embarrassing reminder of the SFO’s 2006 inquiry into allegations of bribery against BAE Systems involving Saudi Arabia. The UK government halted the investigation after alleged Saudi threats to cease co-operating in counter-terrorism.

Also, it is just months since the UK Bribery Act came into force, widely acknowledged to rank among the most stringent anti-corruption legislation in the world. If applied to the GPT case, the SFO would have greater freedom to decide whether to continue its probe. But the new Act only covers offences occurring after 1 July this year so the less flexible provisions of the earlier Corruption Act apply.

According to McGuireWoods partner Adam Greaves, the real catalyst for the drafting of the Bribery Act, passed in April 2010, was the embarrassment caused to the UK from blocking the BAE investigation.

Government support needed

Non-governmental anti-corruption organisation Transparency International UK is calling on the government to support a full SFO investigation into the GPT claims. The NGO says the UK’s anti-corruption record is under scrutiny by the UN, the Council of Europe and the Organisation for Economic Co-operation and Development (OECD). Under Article 5 of the OECD Anti-Bribery Convention, a state cannot allow political, economic or diplomatic considerations to interfere with the investigation of foreign bribery cases.

Transparency International UK executive director Chandrashekhar Krishnan says: “If the SFO believes it has a strong case, it is vital that it is allowed to investigate and, if necessary, prosecute without political interference. “We would expect EADS, as a leading member of the international defence industry’s own anti-corruption initiatives – such as the Common Industry Standards for Anti-Corruption and IFBEC [International Forum on Business Ethical Conduct] – to co-operate with the SFO and undertake a thorough internal investigation.

“The UK government’s decision will be closely watched by any corrupt company and government overseas looking for an excuse to continue business as usual. It is imperative that the government sticks by the international rules and ensures this investigation goes ahead.”

Greaves says: “A decision to stop the SFO’s investigation would clearly be enormously embarrassing to the UK government and damaging to the reputation of the UK as a whole on ethical standards. But, given that the UK economy is in a parlous state and the government’s own finances are dire, to investigate and prosecute alleged defences in relation to the EADS/GPT contracts could be enormously damaging to Britain’s significant business relationship with Saudi Arabia,” he says.

The US angle

While UK attorney-general Dominic Grieve considers his decision, US involvement lurks in the background. The US regulator, the Securities and Exchange Commission, is reportedly looking at evidence that suggests alleged bribes to a Cayman Island company were paid via a bank in New York for what was described as “bought in services”. The Sunday Telegraph says: “Movement of funds through the US mainland could bring the alleged wrong-doing under US jurisdiction.”

Greaves agrees that there could be a US angle to this corruption investigation. Certainly the US authorities continued to pursue BAE Systems even after the UK had dropped its own investigation.

Greaves believes that dropping the GPT probe will send the wrong message to other potential whistleblowers. Foxley’s claim for constructive dismissal case against his former employers failed. Since GPT was registered in Saudi Arabia, the case could not be heard under British law.

Blogging on the Bribery Library website, Greaves considers it likely that the intelligence-sharing agreement will be “trotted out again” by the UK attorney-general as a reason not to pursue the investigation. “British jobs and foreign faces will be saved but British justice will take another body blow,” he says.