For the record

This site was set up to detail the judicial review of the decision to end the SFO investigation into BAE-Saudi arms deals.

Now the judicial review has finished, the site will be left online for the record. It is frozen as of February 2009.

For further information about corruption, visit The Corner House, or about BAE and the UK Government's arms dealing, visit CAAT.

Timeline of the legal challenge

2. Judicial Review & directions hearings

21 December 2007: Blair urged end to investigation
17 January 2008: Judge orders release of further documents
4 February 2008: Another ruling over access to documents
14-15 February 2008: Judicial Review Hearing
 

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" 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, or 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.

These letters were made public on 14 February 2008 at the judicial review hearing itself (see below), along with other letters, memos, notes and emails sent from November 2005 to December 2006 from and/or to BAE, Allen & Overy (BAE's solicitors), the Attorney General's office and the Serious Fraud Office.

They reveal that BAE wrote to the Attorney General in November 2005 on a "strictly private and confidential" basis urging him to halt the SFO investigation on commercial and diplomatic grounds. BAE's "Memorandum for Attorney General" set out "the reasons why the Company considers it not to be in the public interest for the SFO investigation . . . to continue." It argues that the continued investigation would "adversely and seriously affect relations between the UK and Saudi Arabia" and would jeopardise the multibillion-pound sale of Typhoon aircraft.

This Memorandum triggered the consultation within government departments on the "public interest" aspects of the investigation, even though it had been sent by BAE itself – the very subject of that criminal investigation. The normal procedure, moreover, is to assess the public interest aspects of a potential prosecution after a completed investigation has revealed whether there is enough evidence for a prosecution or not.

These BAE letters were written one year after the SFO began its investigation in response to an SFO order for BAE to disclose its payments to agents and consultants involved in the Saudi arms deals.

BAE expressed concern in the released Memorandum that the Saudis would view disclosure of documents to the SFO as a breach of confidentiality and trust (although it admitted that similar information about "the names of consultants engaged by the Company and the amounts paid to them" had previously been provided to the Inland Revenue, apparently without any adverse commercial or diplomatic consequences").

Nowhere did BAE mention the issue of 'national security'.

Another released document indicates that even the representations subsequently made by government departments to the SFO on the public interest aspects of the investigation were made at BAE's instigation. According to the notes that SFO Director, Robert Wardle, made of his telephone conversation on 7 December 2005 with BAE's Legal Director, Michael Lester, BAE said it "would make further representations to the Ministry [of Defence] for them to make representations to us [the Serious Fraud Office]" as to why the investigation should be halted.

The documents also indicated that the day before the SFO Director's decision was announced, the Attorney General said that he was "committed to supporting it [the investigation] provided it was viable, whatever the outcome might be" and "was extremely unhappy at the implications of dropping it now".

 

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

The judicial review hearing in the High Court before Lord Justice Moses and Mr Justice Sullivan lasted two days. James Lewis of Legal Business magazine set the scene and described the atmosphere in his April 2008 article, "Walk the line":

"During an unseasonably warm week in February, the Royal Courts of Justice on the Strand [in London] became the focal points of an unprecedented level of media and public attention. Each morning, queues to enter the High Court through the airport-like security snaked out of the doors and onto the street. Celebrity trials involving the McCartney's multimillionaire-pound divorce and Mohamed Al Fayed's ever more bizarre attacks on the British establishment were in full flow.

"But on Thursday and Friday of that week, it was the public gallery of court number one that was full to overflowing. Members of the public and the press rubbed shoulders – almost literally – with whistleblowers and legal advisers, activists and campaigners, all eager to witness the next twist in the long-running BAE saga. . . .

"The first day of the hearings before Moses LJ and Sullivan J began at ten o'clock. Already, the sign on the entrance said 'Court full', but all comers continued to cram into the back of the courtroom. As a result, the whistleblower – who alleged as long ago as 2004 that BAE operates a slush fund to keep members of the Saudi royal family, including Prince Bandar [the son of Prince Sultan bin Abdul Aziz who has been the Saudi Defence Minister since 1962] sweet – was positioned shoulder-to-shoulder with [Arnondo] Chakrabati [solicitor from Allen & Overy advising BAE Systems] . . .

"The remarkable levels of interest are perhaps unsurprising, given what's at stake. There's been much focus on the implications of the case for the investigation and prosecution of corruption by UK authorities, which lies at the heart of the matter. . . .

"If this wasn't enough to capture the imagination, also in play are issues of fundamental concern such as international law obligations, the separation of powers between the legislature, executive and judiciary, and particularly important for every practising lawyer, the notion that the rule of law is fundamental and not optional."

CAAT and The Corner House lawyers argued on the first day that the SFO Director's decision to discontinue the BAE-Saudi investigation was unlawful for six overlapping reasons [1] (for further details, see our 'skeleton argument'). They claimed that the SFO Director's decision to discontinue the BAE-Saudi investigation contravened the OECD Anti-bribery Convention. They contended that the Director of the Serious Fraud Office, in allowing threats and blackmail to influence his decision – in this case, threats made by members of the Saudi Royal family that Saudi Arabia would cancel a proposed order for Eurofighter Typhoon aircraft and would withdraw security and intelligence co-operation – did not uphold the "rule of law". Our lawyers also pointed out that the threats were made by the alleged beneficiaries of the corrupt payments under investigation by the SFO, and were apparently made following BAE's discovery that the SFO was about to obtain access to details of various Swiss bank accounts.

Our lawyers also argued that Prime Minister 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 "rule of law" is a fundamental principle in the UK’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.

Lord Justice Moses said that he was surprised that the Government did not seem to consider alternative solutions in the face of such threats or had not tried to persuade the Saudis to withdraw their threats. He found it difficult to understand, he said, why the British Government did not explain to the Saudis -- "a friendly and intelligent people" -- that politicians could not interfere in a criminal prosecution. "Nobody said you can't talk to us like that . . . As far as we know, we have seen nothing that suggests that anybody did anything other than just roll over. Moses added: "If that happened in our jurisdiction [the UK], they would have been guilty of a criminal offence" of perverting the course of justice. He also said that the SFO Director, Robert Wardle, might have felt as if "a gun had been held" to his head to scrap the investigation.

Moses stressed, however, that there was no issue with the decision if there was a threat of "imminent harm". If it was less than that, however, "any villain" might be able to take advantage of the situation.

Lawyers for the Director of the Serious Fraud Office put
their case towards the end of the first day and on the second day.

Philip Sales QC said the Government had "no other choice" but to stop the investigation as the Saudis were threatening to stop passing on intelligence about terrorists. Lord Justice Moses said the Saudi threat was to "stop the investigation or else", and asked how it was "any different from any villain coming along and saying, 'unless I stop this prosecution I am going to end up with 25 years in prison. I am going to do my utmost to do it'. "

Sales replied that Saudi Arabia was not the villain as it was not the subject of the criminal investigation, to which Moses responded: "No, they were not the villain; they were just protecting the villain."

Sales submitted that the Government was unable and powerless to counter the Saudi threats to withdraw co-operation on security issues unless the SFO scrapped its investigation. He said that it was simply "a fact of life" that the UK did not have the power to force Saudi Arabia, as another sovereign state, to reconsider its position. It could not just "magic away" the threats.

The SFO lawyers argued that the threats were so "grave" that the Director of the Serious Fraud Office had no option but to shut down his investigation. The judges repeatedly questioned these assertions. Lord Justice Moses said:

"[W]hat you are saying is the law is powerless to protect our own sovereignty . . . I think your answer to my question is, yes, it is powerless. There is nothing any lawyer or court can do to protect one of the essential features of sovereignty, which is control over one's own domestic criminal law system . . . If one takes at face value your submissions . . . effectively you are saying, 'nothing can be done. It is out of our control . . . It is a foreign powerful state and there is nothing we could do'. "

Sales replied:

"Correct . . . We, the United Kingdom cannot compel the Saudi Arabian Government to adopt a different stance and so that most certainly is the position . . . It may be a matter for regret that the United Kingdom does not have the power to ensure that other states, big, small, medium-sized do not do precisely what we want them to do but it is a fact of life . . . The world does not work in that way . . . "

Although the SFO Director and the Attorney General had stated publicly in December 2006 that they had taken into account the Convention’s Article 5, they dropped this façade during the judicial review. The SFO Director stated categorically to the courts in his first witness statement that he would have taken the same decision regardless of the UK’s obligations under the Convention. He asserted that his understanding of Article 5 "was not a critical or decisive matter for me". Sales also argued that the SFO Director had no legal duty to abide by Article 5 because it had not been incorporated into UK law, and that the Government was entitled to ignore the OECD Anti-bribery Convention anyway when the UK's security was in jeopardy.

Moses responded: "It is no good just waving the flag of national security. If [its use] is so wide, it undermines the treaty." Any government could stop bribery prosecutions on the grounds of national security, added Mr Justice Sullivan. If this was the case, Sullivan pointed out that "it effectively drives a coach and horses through Article 5 [of the OECD Anti-bribery Convention]".

Sullivan also intervened to emphasise Moses's point that the reasons given for the SFO Director's decision "just do not stack up", that although Sales had said the UK's national security had been the only issue considered, the evidence released to the court clearly showed that other issues had also been taken into account:

"[There is] someone saying I did not take account of the potential effect on relations with another state and I have a file full of documents that make it absolutely clear beyond any doubt that that is exactly what was done . . . [Y]ou do not need . . . a room full of international lawyers to tell you, you just need a basic command of English and reading the documents and anyone can see that that is what they were taking into account. [Y]et there is this bland statement 'we did not take that into account'."

BAE has consistently denied any wrongdoing. The Financial Times noted that "The company said [the judicial review case] was between two campaign groups and the SFO over the decision to drop the inquiry. 'We played no part in that decision,' BAE said." Yet BAE paid top barrister Claire Montgomery QC to sit in the row of barristers during the hearing, even though she said nothing but carried out a "watching brief". As Lord Justice Moses said at the beginning of the judicial review hearing: "Nice work if you can get it."

 

 

Note 1. The six grounds on which CAAT and The Corner House brought 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.