BAE Systems paid £1 billion to Saudi prince in arms deal

BAE Systems paid £1 billion to Saudi prince in arms deal
LONDON: British arms company BAE Systems is alleged to have paid 1 billion pounds to a Saudi prince in order to secure the 43-billion-pound arms export contract, according to revelations made by the Guardian newspaper and the BBC.

The company had made regular payments to Prince Bandar bin Sultan, a former Saudi ambassador to the United States and now holding the position of secretary-general of the Saudi National Security Council, the two media organizations said in reports Thursday. British ministry of defense was aware of the payments, the reports added. The prince received quarterly payments of 30 million pounds over a period of at least 10 years, the reports alleged.

BAE Systems, however, denied any wrongdoing on its part. Prince Bandar's office in Riyadh refused to comment on the reports.

The defense ministry in a statement said it is unable to comment on these allegations since to do so would involve disclosing confidential information about Al Yamamah oil-for-arms deal between Britain and Saudi Arabia and that would cause the damage that ending the investigation was designed to prevent.

The serious fraud office in Britain had in December 2006 decided to call of an inquiry initiated into the deal, which involved supply of Tornado jets, Hawk trainer aircraft and several other defense equipment and maintenance and support services.

The Al-Yamamah arms contract was signed in 1985 by then prime minister Margaret Thatcher. BAE Systems is now trying to get a new contract to sell 72 Eurofighter jets worth at least 10 billion pounds.

The Guardian report said the details of the payments had been uncovered by the serious fraud office during the probe.

The reports said the payments were made through a U.S. bank in Washington.

BAE Systems said the Al Yamamah program is a government-to-government agreement and all payments made under such agreements were made with the express approval of both the Saudi and the U.K. governments. It added that it would observe all the confidentiality terms provided under the agreement. It also said all the information regarding the contract in its possession had been made available to the serious fraud office.

Prime minister Tony Blair Thursday defended the decision to call off the inquiry saying such an action would have wrecked the country's vital interest. He had earlier said pursuing the inquiry would have harmed national security and relations with Saudi Arabia.

Speaking to media persons at the G8 summit, the prime minister said the investigations would have damaged the national interest.