Michael Paterson refuses to sign off millions of pounds of mysterious payments
High up on the 20th floor of a shimmering office tower in Saudi Arabia, a British accountant was at breaking point.
He was the financial controller of a British defence contractor. And he found himself at the centre of a massive deal between the UK’s Ministry of Defence (MoD) and Saudi Arabia’s national guard.
“My life is hanging on the resistance of Philippe Troyas to accept my being harmed” – Michael Paterson, former financial controller, GPT Special Project Management
Ever since he refused to sign off millions of pounds of mysterious payments to two secretive offshore companies, Michael Paterson was under crushing pressure. The chartered accountant was convinced: they were huge bribes for senior Saudi figures.
At his company’s office in the swish al-Faisaliah tower that soars 267 metres high from the centre of Riyadh, Saudi Arabia’s capital, colleagues had shunned him for months.
Paterson sent increasingly despairing e-mails to a confidant some 3,000 miles away in Stevenage in Hertfordshire, England.
He could take it no more. One Monday morning in October 2010, he tried to settle himself at his desk to write one more desperate e-mail to his friend.
He began typing. “Peter,” he wrote, “One more for you.”
Attached to the e-mail was an audio file of a telephone conversation between himself and Philippe Troyas, a French compliance officer at the contractor’s parent company.
“My life is hanging on the resistance of Philippe Troyas to accept my being harmed,” Paterson typed.
He wanted to make clear what exactly he meant by “harmed”. On the keyboard, he punched out a single word in brackets: “killed”.
Exaro has drawn on a cache of internal company e-mails, and interviews with former colleagues of Paterson, to reveal what led him to his desperate state that October morning.
In his e-mails, Paterson never makes clear who, specifically, threatened him. But he was living in a highly-charged atmosphere. And he feared for his life.
In the murky, cash-driven world of arms dealers and Saudi fixers, bribery is business as normal. Paterson saw Troyas as his best hope of protection.
The e-mails are at the centre of a criminal investigation being carried out by the Serious Fraud Office (SFO) into bribery allegations. Exaro reveals their explosive contents, redacting some details for legal reasons.
Paterson, as he told colleagues, joined GPT Special Project Management in Riyadh in 2003 as financial controller. The British-registered company is the MoD’s prime contractor on the Sangcom project, a huge rolling programme to overhaul the Saudi national guard’s communications systems.
Just seven years earlier, Paterson graduated from Robert Gordon university in Aberdeen with a degree in accounting and finance. After joining the Institute of Chartered Accountants of Scotland, he spent four years as a consultant at two accountancy giants, KPMG then Ernst & Young.
He describes his specialisms as financial control and taxation. At GPT, he was responsible for “full management” of its finances.
The company’s highly-sensitive work on the Sangcom project was carried out under a series of agreements shrouded in secrecy between the UK and Saudi governments. Each agreement was termed a “letter of offer and assistance” (LOA).
Paterson’s troubles began in early 2007 after GPT was sold by Ericsson, the Swedish telecoms company, to EADS, the European defence giant whose ‘merger’ talks with the UK’s BAE Systems collapsed two weeks ago.
Former colleagues say that in 2007 GPT was nearly half way through “LOA3”, the third phase of the Sangcom project lasting 10 years and worth £326 million. The company was hoping for a fourth, even more lucrative phase.
Within months of GPT’s takeover, Paterson was on a collision course with its new management.
According to Paterson, his forthright, new boss instructs him to issue payments to Simec International, a company registered in the Cayman Islands.
Paterson refuses, saying that Simec was not a supplier on the project.
His boss drafts in a senior colleague from another EADS company, and they sign off payments themselves, according to a schedule drawn up later by Paterson.
In July 2007, they approve four payments to Simec for invoices totalling just under £2.2 million. The money is routed through a branch of HSBC bank in New York’s Broadway.
The boss hopes to persuade Paterson to come round to making more payments to the mysterious Simec.
But Paterson and the EADS executive clash angrily…
Additional research by Alex Varley-Winter.