Wednesday. 22 October 2014

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SFO launches criminal probe into deal with Saudi national guard

Serious Fraud Office steps up investigation into contract following disclosures by Exaro

Britain’s Serious Fraud Office is stepping up its investigation into a defence contractor embroiled in allegations of bribery in Saudi Arabia.

Fraud investigators are assessing whether to carry out raids to seize documents and which people to interview under caution.

It follows a series of revelations by Exaro about payments linked to the deal totalling just over £14.5 million transferred by the company to two secretive companies in the Cayman Islands.

GPT Special Project Management is the prime contractor on a huge contract to overhaul the communications systems of the Saudi national guard. GPT is a British subsidiary of EADS, the European defence giant, and the latest 10-year phase of the ‘Sangcom project’ is reportedly worth £2 billion.

The director of the Serious Fraud Office has decided to open a criminal investigation into allegations concerning GPT

Serious Fraud Office statement

A former programme director for the Sangcom project, Ian Foxley, had passed to the Serious Fraud Office (SFO) a dossier of material setting out the bribery allegations.

As a result of Foxley’s material, the SFO started a preliminary investigation into the case last year. It is understood that it allowed EADS to carry out an internal investigation into the allegations.

Eddie Fisher, who was Foxley’s predecessor as programme director, told Exaro today: “I feel very positive about this announcement.

“Sometimes, these things take time, but I am glad that we are now moving forward and we can bring the people who are responsible for all of this to account.”

The SFO came under parliamentary pressure over whether it was launching a full investigation following Exaro’s disclosure.

Only two days ago, Exaro named two Saudi military chiefs who were allegedly gifted luxury cars by the contractor.

Days later, David Green, SFO director, decided to elevate the case formally to a criminal investigation. In a statement, the SFO said: “The director of the Serious Fraud Office has decided to open a criminal investigation into allegations concerning GPT and aspects of the conduct of their business in the Kingdom of Saudi Arabia.”

With a full criminal investigation, the SFO can request GPT staff working in Saudi Arabia to return to the UK to be interviewed. If they decline, the SFO can issue a warrant for their arrest.

An EADS spokesman said: “We have been informed by the Serious Fraud Office that it has begun a formal investigation in connection with aspects of the business of GPT Special Project Management Ltd in Saudi Arabia, which is a local subsidiary of the EADS group conducting business exclusively for the UK MoD.”

“We shall continue to fully and constructively engage with the SFO. But, in view of the investigation, we shall not be commenting further.”

The case will revive memories of the ‘Al Yamamah’ deal, in which bribes were allegedly paid to Saudi royals to secure defence sales. Tony Blair’s Labour government forced the SFO to halt an investigation into that case in 2006.

Richard Alderman told Exaro before his departure as SFO director in April that the UK’s reputation around the world suffered great and lasting damage from that “very regrettable and very unfortunate” decision.

The prime contractor in Al Yamamah, as in the Sangcom project, denied any wrongdoing. In both deals, the UK and Saudi Arabia agreed government-to-government contracts. The Ministry of Defence (MoD) oversees both.

MoD officials knew about the offshore payments, which continued for at least another 19 months after they warned that the ministry was unlikely to approve them in future.

And a document pre-dating the start of the Sangcom project in the 1970’s showed that top MoD officials approved payments of “agency fees” to help clinch the deal.

Following the SFO’s announcement, an MoD spokeswoman said: “We insist on the highest possible standards of propriety in all contracts. We therefore take these allegations of misconduct very seriously and are looking at them carefully.

“It would not be appropriate to comment on this specific contract further at this time as it is subject to an ongoing SFO investigation.”

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