BAE faces fresh claims of Saudi arms bribery

ALLEGATIONS that BAE Systems, the UK’s global arms group, paid millions of pounds in bribes to secure the huge Al Yamamah defence contracts with Saudi Arabia in the 1990s, resurfaced last night in a BBC2 documentary.

In series of interviews with former BAE executives and contractors, The Money Programme broadcast what it said was evidence that the defence giant operated a "slush fund" that made 60 million in corrupt payments to Saudi officials, including providing prostitutes, Rolls-Royces and ski-ing holidays.

Steven Mogford, now the chief operating officer of BAE, was named as the man behind the bribery operation, authorising the payments with the words "OK to pay" scrawled across bogus invoices.

The Money Programme also alleged he gave orders to suppress an internal investigation into the slush fund.

It alleged the fund was run for Prince Turki bin Nasser, a leading member of Saudi Arabia’s ruling royal family, who for almost 20 years was responsible for the Saudi end of Al-Yamamah contracts, the biggest arms sale in British history, worth 50 billion in orders to BAE. The payments were made through a private travel agency, Travellers World, and listed on a monthly invoice to BAE.

Peter Gardiner, who ran Travellers World, told the BBC

that, on BAE’s instructions, he would lay on a stream of five-star hotels, chartered aircraft, luxury limousines, personal security and exotic holidays.

"This was way beyond the lifestyle of most film stars," Gardiner said. After Prince Turki’s wife and her entourage went on a shopping expedition, Gardiner said, "there was quite an accumulation of items and the only way to get them back to Saudi Arabia was to charter a 747 freighter - a Jumbo".

BAE’s chief internal investigator, Martin Bromley, alleged on the programme that he had uncovered the slush fund but that Mogford had instructed him to stop his investigation.

At the time, Mogford reported directly to BAE’s then chief executive, Sir Richard Evans. Bromley told the BBC: "I don’t believe that Steve Mogford would’ve made a decision of that type without approval from Sir Richard."

In May 2004, following a series of press reports alleging a BAE slush fund, Sir Richard appeared before parliament’s defence select committee and said: "I can certainly assure you that we are not in the business of making payments to members of any government."

Mike Hancock, the Liberal Democrat MP and a member of the defence committee, said last night: "At the very minimum the defence select committee should summon him [Sir Richard] back ... and clearly establish what the current position is and what historically the position was."

BAE last night described the allegations as "ill-informed and wrong". It said: "BAE Systems can state categorically that there is not now and there has never been in existence ... a ‘slush fund’.

"BAE Systems operates in accordance with the laws of the United Kingdom and all other countries in which it operates."

The Serious Fraud Office and Ministry of Defence police are conducting a joint inquiry into the activities of the firm.