‘No evidence of improper payments in MoD accounts’ over UK deals with Saudi Arabia
Auditor general Amyas Morse doubts whether the Serious Fraud Office will find anything improper in the Ministry of Defence’s books over a huge Saudi deal.
However, the comptroller and auditor general, who heads the National Audit Office (NAO), has not told SFO investigators this because they have decided against asking him questions about bribery allegations surrounding the government-to-government deal known as the ‘Sangcom project’.
And that decision is despite an initial plan by investigators to interview Morse about his previous MoD role that they believed gave him some oversight over the contract to overhaul the Saudi national guard’s communications systems.
“I provide strategic leadership across all the commercial and procurement activities, and champion best practice there”
Amyas Morse, speaking shortly after becoming “director commercial” at MoD
But Exaro can reveal that Morse expressed his scepticism to Margaret Hodge, Labour MP and chairwoman of the House of Commons public accounts committee, that the SFO would find any evidence of the MoD’s endorsement of bribes.
His comments followed a call for the NAO to investigate the Sangcom project by Nicholas Gilby, a former researcher for Campaign Against Arms Trade, who is writing a book on the history of corruption in the defence industry.
Gilby drew parallels with similar allegations surrounding contracts to sell military jets by BAE Systems to Saudi Arabia. Under such government-to-government deals, the MoD acts as the lead contractor by buying equipment on behalf of Saudi Arabia.
Hodge wrote to Gilby to say that she had asked Morse whether he would look into the allegations surrounding the contract, which is being carried out by GPT Special Project Management, a UK subsidiary of EADS, the European defence group.
Hodge continued: “He has explained to me that, in August, the Serious Fraud Office decided to open a criminal investigation into the allegations concerning GPT Special Project Management and its business in Saudi Arabia to which you refer in your letter. While this investigation is ongoing, it would not be appropriate for the National Audit Office to undertake separate detailed work.
“More generally, on all three of the projects to which you refer, the MoD undertakes checks to ensure that invoices raised by the prime contractors – principally, BAE Systems and EADS – are in accordance with the terms of the contracts and the detailed schedules underpinning the Memoranda of Understanding it has signed with the Saudi Arabian government.
“The Saudi customer will also carry out its own checks. It is as part of this process that any evidence of improper payments would be picked up. Payment is subsequently made by the customer to the MoD, which passes the money directly to the prime contractors.
“As such, there is no public money committed directly on the contracts and the comptroller and auditor general has confirmed that in undertaking its annual audit of the MoD accounts, the National Audit Office has found no evidence of improper payments or corruption relating to monies flowing through the MoD accounts.”
Morse is a chartered accountant who was a global partner at PwC when he was recruited to head up the MoD’s new commercial directorate in 2006.
As “director commercial” and with 2,500 staff, his main task was to develop the ministry’s relationship with industry and to provide “strategic leadership across the full range of MoD acquisition, procurement and commercial activities”. In addition, he was in charge of the “operational commercial service” for projects – including the Sangcom contract – within the department’s Defence Equipment & Support Organisation.
Speaking to the House of Commons defence committee a few months after his appointment, he said: “What do I do? Okay. I am head of the ‘defence commercial’ function, which means that I am in charge of developing the skills and capabilities of the commercial team across the MoD.
“I provide strategic leadership across all the commercial and procurement activities, and champion best practice there. I am, effectively, the owner of the procurement process. I have a responsibility and lead on strategic relationships with industry.”
With Saudi Arabia being such a key customer for British defence contractors, Morse took a keen interest in the Kingdom. He visited in 2009 – shortly before he moved from the MoD to run the NAO – to see Air Vice-Marshall Peter Ruddick, head of the Saudi Armed Forces Project, which is the ministry’s division that deals with other military sales to the country.