MP’s letter in National Archives names two apparent partners in Simec International
By David Pallister | 30 October 2012
New evidence has shed some light on the mysterious offshore company at the centre of bribery allegations surrounding a massive Saudi military-communications deal.
Exaro has established that the offshore company was a key party to another huge contract with the same customer – the Saudi national guard.
The other contract was being lined up to “look after the medical requirements of the national guard,” and its potential was of “an unparalleled scale”, according to a document obtained by Exaro.
GPT Special Project Management, the British contractor overhauling the Saudi national guard’s communications systems under the ‘Sangcom project’, transferred more than £14.5 million to two secretive companies registered in the Cayman Islands.
The vast majority of those transfers went to Simec International in Cayman, according to a schedule drawn up by the contractor’s then financial controller.
The Ministry of Defence (MoD) oversees the contract. The latest 10-year phase alone of the government-to-government deal is reportedly worth £2 billion.
Meanwhile, Exaro has established that Simec has been “struck off” the company register in Cayman.
Last week, Exaro exposed confidential e-mails that detail how the contractor’s financial controller blew the whistle internally on the suspicious payments that he believed were bribes.
The roots of the Sangcom project – and the medical contract – go back more than 30 years, when Prince, now King, Abdullah was commander of the national guard.
And Simec International was being lined up for what government officials 36 years ago called “agency fees” of three per cent before the Sangcom deal was even agreed, according to a memo written by Sir Lester Suffield, then head of the MoD’s Defence Sales Organisation.
Such fees – totalling 15 per cent of the initial contract worth £150 million – were to be shared among three agencies, Suffield wrote in his memo to the MoD’s then permanent secretary, Sir Frank Cooper.
Suffield said that he did not consider the fees “exceptionally large in terms of the per-centage charged in Saudi Arabia for the sort of service being offered, but in absolute terms the sums being offered are very large, and, in future, as defence projects become even more ambitious, the agency fees demanded will, unless some restraint is applied, become enormous.”
He recommended approving “agency fees” of 10 per cent and allowing the prime contractor to increase profits to meet them.
That memo, published by Exaro in June, was discovered by Nicholas Gilby, a researcher for Campaign Against Arms Trade, who is writing a book on the history of corruption in the defence industry.
Gilby has since unearthed, from the National Archives, a further reference to Simec. It comes from a letter written in May 1980 by the late Julian Amery, as a Conservative MP, to Lord Carrington, then foreign secretary, about the medical contract with the Saudi national guard.
The letter apparently names two key partners in Simec.
Simec was working with International Hospitals Group (IHG) to negotiate the medical contract. But the partners at Simec were worried that the deal would collapse, according to the letter, and they were seeking ministers’ help. IHG is a privately-owned company based in Gerrards Cross, Buckinghamshire, and provides health-care services.
In the end, the contract was agreed, and work on it began in 1981.
IHG went on to build and manage two hospitals for the Saudi national guard with the assistance of 20 Royal Engineers and a medical advisory team, known as Sangmed, attached to the British military mission to the country.
Two senior members of IHG staff said that they had no recollection of the name Simec.
“We did not negotiate the contract,” said Witney King, founder and managing director of IHG. “It was an MoD contract, and we were sub-contractors. I have no recollection of Simec.”
Brian McGibbon, director of IHG, who joined the group in 1988, said: “I could not shed any light on any of that,” adding, “It was a long time ago, and the project was finished in 1993.”