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Exaro News Archive MoD knew of Cayman payments in Saudi defence deal

MoD knew of Cayman payments in Saudi defence deal

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MoD knew of Cayman payments in Saudi defence deal

Exposed: Ministry of Defence officials raised concern, but failed to stop transfers

By Frederika WhiteheadMark WattsGuy Eaton and Susan Cooke | 18 May 2012

MoD knew of Cayman payments in Saudi defence deal“My concerns have increased since the local MoD team in Saudi advised payments to the Cayman Islands company are unlikely to be approved when next reviewed by the MoD in the UK” – Internal GPT e-mail

UK Ministry of Defence officials knew about secret offshore payments linked to a £2 billion defence contract with Saudi Arabia.

Exaro reveals how the officials, working on the project in Saudi Arabia, warned the prime contractor on the deal that the Ministry of Defence (MoD) was unlikely to approve future payments to two mysterious Cayman Islands companies.

Exaro has established that, despite this warning by UK government staff, the secret payments continued for at least another 19 months.

GPT Special Project Management, a British subsidiary of EADS, Europe’s biggest defence company, is the prime contractor to supply communications equipment to the Saudi Arabian national guard in the latest 10-year phase of a programme reportedly worth £2 billion. The MoD runs the government-to-government contract, overseeing all payments in the project.

Exaro earlier this week revealed details of 28 payments totalling just over £14.5 million paid by the British company to two secretive companies in the Cayman Islands between 2007 and 2010.

We published a schedule – drawn up by a GPT financial officer – of the offshore payments.

GPT paid just under £14.4 million to Simec International, and another £141,000 to Duranton International, both of them companies in the Cayman Islands. Mystery surrounds the identities of the final beneficiaries of the payments.

Exaro has agreed not to name the financial officer because he fears for his life. But he says that the payments are “irregular” because the offshore companies are not suppliers in the contract. Most of the cash – at least £8.5 million – went after the MoD warning.

Evidence of the MoD’s knowledge is shown in an explosive report – obtained by Exaro – on the irregular payments, written by a second GPT executive, Ian Foxley, the programme director from June to December 2010 and a former lieutenant-colonel in the British army.

He sent copies of his report to the MoD, compliance officers at EADS and the Serious Fraud Office (SFO). It prompted the SFO last year to start a preliminary investigation into the allegations of corruption over the contract.

Following the furore over the separate ‘Al Yamamah’ defence deal with Saudi Arabia, EADS updated its ‘ethics policy’ in 2008, according to Foxley’s report. The SFO investigated alleged payments of huge bribes to members of the Saudi royal family to secure sales under ‘Al Yamamah’. BAE Systems, the lead supplier for that deal, denied the claims.

Tony Blair’s Labour government forced the SFO to close the ‘Al Yamamah’ investigation in 2006.

Richard Alderman told Exaro in a pointed interview before his departure as SFO director last month, that the UK’s reputation around the world suffered great and lasting damage from the “very regrettable and very unfortunate” decision forced on his predecessor.

The MoD’s Sangcom project team advised GPT in late 2008 that payments to Simec International were unlikely to be approved when next reviewed by departmental officials in the UK, according to Foxley’s report.

The astonishing claim is backed up by an e-mail that was sent by the first GPT whistleblower to the company’s chief financial officer, Laurence Bryant.

Exaro has obtained a copy of the e-mail, dated December 8, 2008, which concludes: “As I advised you on November 25, 2008, my concerns have increased since the local MoD team in Saudi advised payments to the Cayman Islands company are unlikely to be approved when next reviewed by the MoD in the UK.”

The same e-mail contains a stark warning: “As you know, I believe payments to the Cayman Islands company may be illegal,” adding, “I am flagging up to you a possible illegal transaction and seeking your guidance.”

Payments continued at least until July 2010.

Bryant declined to comment, referring questions to EADS.

A spokesman for EADS declined to answer specific questions and repeated its position: “Certain allegations have been made, and these are being properly addressed with our full and constructive engagement.”

The MoD declined to answer questions about its role. An MoD spokeswoman said: “This matter has been referred to the Serious Fraud Office. It would be inappropriate to comment further at this time.”

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Sarah Davies
Sarah Davieshttps://www.exaronews.com/
Exaro News investigates matters of public interest and seeks to uncover the truth.

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