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Unveiled after 30 years: the hidden report on UK-Saudi arms deal corruption

An unpublished official investigation into suspected corruption within a major UK-Saudi arms agreement has been uncovered in a public archive, concluding a 30-year quest by activists for the contentious report to be made public.

The Guardian Newspaper has reported it’s believed to be the sole instance where the National Audit Office (NAO) of Britain conducted an inquiry that was extensively suppressed, permitting only two members of Parliament to review its findings.

For years, the report’s concealment, along with related documents in 1992, has been a significant issue for anti-corruption advocates, with members of the Labour and Liberal Democrat parties supporting parliamentary motions on multiple occasions to demand its disclosure. This was amidst suspicions that it contained incriminating proof of bribery within the infamous al-Yamamah arms deal.

Documents now reveal that the report’s publication was effectively prohibited following pressure from the Ministry of Defence’s (MoD) highest-ranking official, who contended that releasing the report would upset the Saudis and jeopardize numerous British jobs.

Sir Michael Quinlan, the then MoD permanent secretary, is also implicated in misleading Parliament during inquiries into the deal by falsely asserting that no commissions were paid with public money and by omitting to mention his department’s role in secretive, regular payments to a Saudi prince.

This revelation comes in the wake of a Guardian probe into the MoD’s longstanding involvement in corruption and covert payments to high-ranking Saudis to secure defense contracts for the UK spanning decades. It’s alleged that payments to top Saudis continued until as late as 2017.

The al-Yamamah deal, worth £40 billion, initially for the supply of 120 Tornado aircraft, Hawk fighter jets, and other military gear, was settled in 1985 between Margaret Thatcher’s government and the Saudi defense minister, Prince Bandar bin Sultan. The UK MoD managed the deal in a formal agreement with the Saudi government, with BAE Systems, Britain’s largest arms company, as the primary contractor.

Bribery allegations involving the Saudi royal family and the deal surfaced almost immediately. In 1992, the NAO undertook an examination of the contract. Such investigations are typically reviewed in public sessions by the Public Accounts Committee (PAC) of the House of Commons. However, the MoD convinced Robert Sheldon, the PAC chair at the time, to conduct the session in secrecy and subsequently suppress the report.

Quinlan privately argued that exposing the report to the public would endanger thousands of British jobs and possibly lead to the Saudis cancelling future arms agreements with the UK. He maintained that the Saudis were highly sensitive about the deal, claiming that the concept of open government was foreign to them.

Only ten copies of the report (seen here) were printed, and Sheldon, along with his deputy, were the only MPs permitted to read it or to question Quinlan about its contents in a confidential hearing.

In this private session, they inquired about the rumors of bribery, to which Quinlan responded by assuring there was no basis to suggest that commission payments, often a euphemism for bribes, were made using public funds.

Following this, Sheldon announced he found no evidence of corruption or improper payments by the MoD. However, it has since been revealed that the MoD was aware of, and authorized, commission payments to Prince Bandar, contradicting Quinlan’s assurances.

An MoD memorandum exposed during a recent criminal trial showed that in 1988, the MoD’s arms sales head had helped establish a system for regular payments to Bandar, who was instrumental in negotiating the al-Yamamah deal.

These payments reportedly persisted until at least 2007, with more than £1 billion allegedly received by Bandar through this arrangement.

Although the NAO concluded there was no corruption, it noted instances of the MoD financing “items requested by Saudi Arabia” with the al-Yamamah budget, including a car and chauffeur service costing £88,000 for Saudi official use.

The documents, including the report, were found in Sheldon’s personal archive, which he donated to the London School of Economics before his death in 2020.

BAE has stated all payments were made with the express approval of the UK government and were confidential, affirming its commitment to ethical business practices and a zero-tolerance stance on corruption.

The MoD has refrained from commenting on whether Quinlan misled Sheldon and his committee, stating that the payments were made upon Saudi government authorisation under government-to-government arrangements, and remained the property of the Saudi government, dismissing the notion that the payments were corrupt as speculation.