The Story So Far . . .
Background to the legal challenge

On 19 April 2007, The Corner House and Campaign Against Arms Trade (CAAT) filed papers at the High Court in a judicial review against the UK Government's decision in December 2006 to terminate an investigation by the Serious Fraud Office into alleged corruption by BAE Systems in recent Al Yamamah arms contracts with Saudi Arabia. (The Serious Fraud Office is a UK government department that investigates and prosecutes complex fraud.) The judicial review will now be held on 14-15 February in the High Court in London.

Here’s a timeline of developments during this legal challenge.

14 December 2006: Corruption investigation dropped
18 December 2006: Beginnings of a legal challenge
23 February 2007: Spying delays court case
19 April 2007: Full application lodged . . .
29 May 2007: . . . and refused . . .
. . . but the proceedings continued
June 2007: New allegations
9 July 2007: UK Government is prepared to break international law . . .
25 June 2007: . . . while US Government picks up where UK left off
23 September 2007: You Cannot Be [So] Serious!
9 November 2007: Permission granted to bring judicial review in a landmark ruling
21 December 2007: Blair urged end to BAE-Saudi corruption investigation
17 January 2008: Judge orders further documents to be released
4 February 2008: Another key ruling over public access to documents
14-15 February 2008: Judicial Review Hearing
 

14 December 2006: Corruption investigation dropped

Since the 1980s, the UK has supplied Tornado fighter and ground attack aircraft and associated products and support services to the Kingdom of Saudi Arabia under a series of very high-value arms deals known as "Al Yamamah" ("The Dove"). The aircraft sold to Saudi Arabia under the Al Yamamah deals are all manufactured by BAE, the UK’s largest arms manufacturer. It is the UK’s largest-ever export agreement from which BAE has earned £43 billion.

In 2004, the Serious Fraud Office (SFO) initiated an investigation into alleged bribery and false accounting by BAE in relation to the Al Yamamah deals, including corruption offences since March 2002, when bribery of foreign officials became a crime in the UK.

In November and December 2006, it was widely reported that the Government of Saudi Arabia had threatened to suspend diplomatic ties with the UK and cancel a further proposed order for 72 Eurofighter Typhoon aircraft if the SFO investigation was not halted.

On 14 December 2006, the SFO announced that it was ending its investigation into these bribery allegations. The reason given was that continuing the investigation might lead to Saudi Arabia withdrawing diplomatic cooperation with the UK on security and intelligence.

The decision was widely criticized by parliamentarians, non-governmental organizations internationally, and by leading financial fund managers, who stated that it could compromise London’s standing as a financial centre.

18 December 2006: Beginnings of a legal challenge

On 18 December 2006, four days after the SFO announcement, The Corner House and Campaign Against Arms Trade wrote to the UK Government arguing that the SFO’s decision was unlawful and should be reversed.

The legal challenge centred on the UK’s obligations under the Organisation for Economic Co-operation and Development (OECD) Anti-bribery Convention, which Britain signed in 1997.

Article 5 of the Convention expressly forbids the termination of corruption investigations on grounds other than the merits of the case. Signatory governments specifically undertake NOT to be influenced by the potential effect [of an investigation] upon relations with another State . . . .

But the SFO stated that their decision was based on the grounds that continuing the corruption investigation would damage relations with Saudi Arabia and hence the UK’s national security.

The OECD itself expressed "serious concerns" over the SFO decision. In March 2007, its Working Group on Bribery announced that it would be carrying out an in-depth review of the UK’s implementation of the Anti-bribery Convention.

23 February 2007: Spying delays court case

Following our December 2006 letter, and the failure of the Government to restore the investigation, on 23 February 2007, The Corner House and CAAT began an application for a judicial review -- a court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body. However, the full application was delayed because it was discovered in January 2007 that an email from CAAT containing confidential and privileged legal advice about the judicial review from the groups' solicitors had been obtained by BAE.

CAAT went to court in January 2007 to require BAE Systems to identify the source of the leak, arguing that the judicial review proceedings could be severely prejudiced if BAE had access to CAAT’s (and The Corner House’s) confidential legal advice.

BAE was thus forced to reveal that it has been paying £2,500 per month to LigneDeux Associates, the business vehicle of Paul Mercer -- a private investigator with right-wing links -- who monitored and passed information about CAAT to BAE's Director of Security, Mike McGinty. Paul Mercer denied that he had misappropriated the confidential email, alleging that he had received it anonymously through the post. Mr Mercer has now given binding lifelong undertakings to the court not to misuse confidential information belonging to CAAT again and to inform CAAT if any such material comes into his possession. Any breach of those undertakings could lead to his committal to prison for contempt of court.

CAAT subsequently obtained further material suggesting that BAE had been involved in unlawful acts of spying to a greater extent than the company originally implied. CAAT is therefore continuing to pursue, through the Court process, answers to the questions of how confidential information came into the hands of BAE.

19 April 2007: Full application lodged . . .

On 19 April 2007, CAAT and The Corner House were able finally to lodge their full grounds for their application for a judicial review. Accompanying the application were two witness statements from each group:

• The 'witness statement' [pdf] from Campaign Against Arms Trade provided detailed background on the Al-Yamamah arms deals between the UK and Saudi Arabia from the 1980s to 2006; and the December 2006 decision to end the SFO investigation into alleged corruption in these deals;
• The 'witness statement' [pdf] from The Corner House outlined the nexus between corruption and bribery, and international trade, economic investment, terrorism and national security; and provided background on legislative and other steps to combat corruption.

29 May 2007: . . . and refused . . .

On 29 May 2007, a High Court Judge considered the papers filed by lawyers for CAAT and The Corner House and the Government's response (see below) to these papers -- and made a preliminary decision refusing to grant permission for a full judicial review hearing.

. . . but the proceedings continued

The Corner House and CAAT thus took the next step in the proceedings, which was to request a formal hearing before a Judge so as to argue why the case should proceed. That hearing was scheduled for 9 November 2007.

June 2007: New allegations

In the meantime, separate revelations came to light in June 2007, via the BBC's Panorama television programme and in The Guardian newspaper that the UK Government itself may be implicated in the corrupt activities that the Serious Fraud Office was investigating.

Panorama's principal allegation is that BAE, with approval of the UK's Ministry of Defence, made payments worth hundreds of millions of pounds over two decades to bank accounts under the personal control of Prince Bandar bin Sultan, the son of Prince Sultan bin Abdul Aziz who has been the Saudi Defence Minister since 1962. The documentary suggests that some of the payments were for the personal expenditure of Prince Bandar bin Sultan.

The allegations raise further concerns about the shelving of the SFO investigation. They suggest that, since 1985, successive British governments under Prime Ministers Margaret Thatcher, John Major and Tony Blair have used Ministry of Defence bank accounts to facilitate corrupt payments to a foreign official. These allegations are more serious than the widely-reported ones of a £60 million "slush fund" run by BAE for the personal benefit of Saudi royals, because they suggest the active involvement and complicity of the UK government.

9 July 2007: UK Government is prepared to break international law . . .

The Government refused to sanction public disclosure of its response to our judicial review proceedings. So activist and comedian Mark Thomas applied to the High Court for the document to be released, which the High Court initially refused on 18 June 2007 but a few weeks later, on 9 July 2007, allowed.

In its response [pdf 9mb] the Government denies any breach of the OECD Anti-Bribery Convention -- but declares that it would have taken the decision to terminate the SFO investigation anyway regardless of any violation of international law. According to the Government, compliance with the Convention was not . . . a critical or decisive matter in making the decision.

The Corner House and CAAT have written to the OECD to draw its attention to the UK Government's willingness to break the OECD Anti-bribery Convention, which is binding on signatories -- despite the Government specifically confirming to the OECD in 2005 that none of the considerations prohibited by Article 5 would be taken into account as public interest factors not to prosecute and despite it stating in January 2007 that the UK had complied with the Convention in deciding to terminate the SFO's BAE-Saudi inquiry.

In effect, the Government has been spinning one story to the OECD and another to the UK courts.

The Government claims that continuation of the SFO inquiry would have endangered "British lives on British streets". Yet revelations in The Guardian newspaper and by BBC's Panorama television programme strongly suggest that the source of these security fears was Prince Bandar -- the very person whose receipt of funds from BAE was being investigated by the Serious Fraud Office. The OECD Anti-bribery Convention has no exemption for national security. The UK Government’s arguments are widely seen as threatening to undermine the Convention.

25 June 2007: . . . while US Government picks up where UK left off

On 25 June 2007, BAE acknowledged that the US Department of Justice has decided to investigate the company’s compliance with US anti-corruption laws, particularly the 1977 Foreign Corrupt Practices Act. Over 30 years, the US has had a strong record on corruption prosecutions.

23 September 2007: You Cannot Be [So] Serious!

On 23 September 2007, activist comedian Mark Thomas organised a comedy benefit night at London's Apollo Theatre. A line-up of Britain's top comedians took part in "A Seriously Funny Attempt to Get The UK's Serious Fraud Office In The Dock!" in front of a packed house of 3,500 people.

The aim of the event was to raise public awareness of the decision to drop the SFO investigation and to support our legal challenge.

The evening's programme, designed as a "secret file" dossier [pdf] was given to all those who attended. It provided concise background information not only on the comedians but also on BAE and its arms sales to Saudi Arabia and other countries; the UK arms trade; national security; and corruption. The evening raised some £40,000, a clear indication of the strong public interest in getting the Serious Fraud Office investigation re-opened.

9 November 2007: Permission granted to bring judicial review in a landmark ruling

On 9 November 2007, at an oral hearing in the High Court, two judges, Lord Justice Moses sitting with Mr Justice Irwin, granted us permission to bring a full judicial review hearing against the decision by the Director of the Serious Fraud Office to terminate the SFO investigation.

Lord Justice Moses said that the issue "cries out for a public hearing" because it involves "matters of concern and public importance". He stressed that the issue was closely concerned with the UK's legal system that "judges have to protect".

Lord Justice Moses concluded "it is in everyone's interest that a full hearing take place." Within minutes of the Judges' decision, the news was being broadcast on radio, television and the web around the world, from 'The Hindu' to the 'Houston Chronicle'.

21 December 2007: Blair urged end to BAE-Saudi corruption investigation

On 21 December 2007, a further court hearing was held to prepare for the Judicial Review in which Lord Justice Moses gave 'directions' to all parties (CAAT, The Corner House and The Director of the Serious Fraud Office) as to how their evidence, grounds and defence should be presented.

At this "Directions Hearing", the Director of the Serious Fraud Office, Robert Wardle (the defendant in the judicial review) made public for the first time his evidence as to why he had decided to drop the BAE-Saudi investigation. The documents include:

• a witness statement from the Director of the Serious Fraud Office; and:
• nine typed-up letters (rather than originals) with various words and sentences blacked out or omitted between the Prime Minister and/or Cabinet Office (the government department supporting the Prime Minister) and the Attorney General (which superintends the Director of the Serious Fraud Office) dating from December 2005 to December 2006.

The SFO Director's witness statement indicates that from 2005 onwards he and the Attorney General repeatedly rejected requests to terminate the SFO investigation. He insisted until just before he made his decision to terminate the investigation that, on balance, "the public interest in investigating possible corruption by a major arms company" (para. 43) was best served by continuing the investigation.

His decision on 14th December 2006 to drop the investigation into BAE's Saudi arms deals appears to have been prompted by a 'Personal Minute' (one of the nine released letters) sent by then Prime Minister Tony Blair on 8th December 2006 to then Attorney General Lord Goldsmith and by meetings with the UK Ambassador to Saudi Arabia in November and December 2006. No documents have been released, however, about the Ambassador's representations to Wardle, nor about the Saudi representations to the UK government.

Blair wrote in his "Personal Minute" about the "real and immediate risk of a collapse in UK/Saudi security, intelligence and diplomatic cooperation". He also stressed his concern about "the critical difficulty presented to the negotiations over the Typhoon contract", (the further proposed but unsigned deal for the sale of 72 Eurofighter Typhoon aircraft from BAE to Saudi Arabia).

Blair's "Minute" was followed a few days' later with a meeting between the Prime Minister and the Attorney General on 11 December 2006, apparently at the Prime Minister’s request. A record of this meeting, written the following day, 12 December 2006, states that the Prime Minister had said This was the clearest case for intervention in the public interest he had seen.

Yet Goldsmith told Blair at this meeting his concerns that halting the investigation on the grounds of the Saudi claims to withdraw cooperation with the UK "would send a bad message about the credibility of the law in this area, and look like giving in to threats".

17 January 2008: Judge orders further documents to be released

The Directions Hearing was adjourned until 17th January 2008, when Lord Justice Moses ordered the SFO Director to disclose letters from BAE Systems to the Government requesting that the investigation be halted. Lord Justice Moses also ordered the SFO Director to disclose the government's reply.

4 February 2008: Another key ruling over public access to judicial review documents

Back in June 2007, the Government had refused to sanction public disclosure of its response to our judicial review proceedings (see above), arguing that judicial review documents should remain secret.

Three national newspapers, the Financial Times, The Times and The Guardian, were therefore denied access to the various documents relating to our legal challenge – and thus brought a legal challenge of their own.

Their challenge focused on new rules the government had introduced back in October 2006 designed to give greater public access to documents filed during court cases in the interests of "open justice". The rules allow public access to any statement of case filed during court proceedings, even if a hearing has not yet taken place. Statements of case include the particulars of a claim and any defence. The rules cover most court-based litigation, from high profile employment disputes to large corporate claims (unless one of the parties has applied for and obtained permission to restrict disclosure of its documents).

When refusing to disclose the government's defence to our judicial review claim, the Ministry of Justice had argued that judicial review proceedings (in which a court assesses the legality of government policies or scrutinises the conduct of public authorities) were not covered by the new regulations, and had thus refused to disclose the government's defence to our judicial review claim.

The three newspapers thus challenged this exemption, arguing that keeping judicial review documents secret gives the government and public authorities more confidentiality than that available to those bringing private civil lawsuits.

On 4 February 2008 in the High Court, the media organisations won a key ruling allowing public access to court documents the government wants to keep secret. Mr Justice Collins said the government’s attempts to block disclosure of documents related to judicial review proceedings were illogical’’ and lacked any sound justification. He rejected the government's position that judicial review proceedings were not covered by the new October 2006 regulations, saying that the government’s stance was strange and possibly unjust. He said that cases examining the legality of government conduct would frequently have a much greater impact on ordinary citizens than private disputes.

The ruling should enable fairer checks on the government, ensuring that what government ministers say in public matches the arguments they may be running in a legal review of their conduct. It also means that public authorities are now subject to the same level of scrutiny as everyone else.

14-15 February 2008: Judicial Review Hearing

At the two-day hearing in the High Court before Lord Justice Moses and Mr Justice Sullivan, CAAT and The Corner House’s lawyers will argue that the SFO Director's decision to discontinue the BAE-Saudi investigation was unlawful for six overlapping reasons.

We claim that the decision contravenes the OECD Anti-bribery Convention and that the Director of the Serious Fraud Office, in allowing threats/blackmail to influence his decision, did not uphold the "rule of law". Our lawyers will also argue that Tony Blair's advice was tainted by improper considerations and was an unlawful interference with the independence of prosecutors under UK and international law.

The six overlapping grounds on which we are bringing the judicial review can be summarised as follows:

• OECD Anti-bribery Convention The decision to discontinue the BAE-Saudi corruption investigation was based on considerations of potential damage to the UK's relations with Saudi Arabia, in particular, damage to UK/Saudi security, intelligence and diplomatic cooperation. This is unlawful because it contravenes Article 5 of the OECD's Anti-bribery Convention, which prevents signatories from terminating an investigation because of "the potential effect [of an investigation] upon relations with another State".
• Saudi Arabia's international legal obligations to combat terrorism The UK effectively colluded with Saudi Arabia in breaching Saudi Arabia’s international legal obligations to cooperate and share information on terrorist activities, and thereby colluded in committing an internationally wrongful act.
• Acting on tainted advice from government ministers Government ministers (including the Prime Minister) took into account the risk of the UK not being able to sell Typhoon aircraft, and other commercial, economic and diplomatic matters when they gave advice to the SFO Director on the public interest aspects of the investigation. This was despite being told by the Attorney General that Article 5 of the OECD Anti-bribery Convention forbids such considerations from being taken into account. The ministerial advice was therefore tainted.
• Damaging national security by discontinuing the investigation The SFO Director is under a legal obligation to take a balanced view of the public interest issues arising from an investigation. But neither the Director nor government ministers assessed or took into account the harm to the UK's national security of discontinuing the investigation.
• Government ministers expressed a view on what decision an independent prosecutor (the Director of the Serious Fraud Office) should take. The SFO Director and Attorney General requested views from government Ministers on the public interest aspects of pursuing the investigation. The rules for these consultations between the judiciary and the executive forbid Ministers from giving a view on whether a prosecution should proceed or not. But the Prime Minister expressed a clear view that the public interest would best be served by intervening to halt the investigation. This is unlawful.
• Blackmail, threats and the 'rule of law' It is unlawful for an independent prosecutor to permit threats or blackmail to influence his/her decision to discontinue a criminal investigation or prosecution. To do so is to surrender the rule of law.

The "rule of law" is a fundamental principle in Britain’s unwritten constitution. It holds that the best way of protecting people's rights from the arbitrary exercise of power is to apply and uphold legal rules impartially. Doing so requires an independent judiciary (prosecutors, judges, magistrates, courts) that acts "without fear, favour or prejudice", according to the Attorney General.

Any action that undermines the impartial application and upholding of the law – such as interference with the courts, judges, prosecutors, juries or witnesses; decisions that courts cannot review; placing individuals or entities above the law – undermines the rule of law.

Applying the rule of law means that a government's authority is legitimately exercised only in accordance with written, publicly disclosed laws that are adopted and enforced according to established procedural steps (or due process).

The rule of law involves a clear separation of powers between the Executive (government), the Legislature (Parliament) and the Judiciary. The Executive is responsible for the day-to-day management of the state; the Legislature creates, amends and ratifies laws; and the Judiciary interprets the law on a case-by-case basis.

[13 February 2008]