Ministry of Defence is one of two agencies slammed over Saudi ‘Sangcom project’

By Frederika Whitehead | 29 May 2012

UK government agencies stand accused of “wilful blindness” over alleged bribes paid as part of a huge Saudi defence contract.

A former lieutenant-colonel in the British army accuses the Ministry of Defence (MoD) and the UK Trade & Investment Defence & Security Organisation (UKTI DSO) of negligence over – or complicity in – corruption in the government-to-government deal.

The former army officer, Ian Foxley, was the programme director for the Sangcom project to overhaul the Saudi Arabian national guard’s communications systems in a contract reportedly worth £2 billion.

“The MoD was either negligent, acquiescent or downright complicit to the corrupt payments” – Ian Foxley, former programme director, Sangcom project

Foxley set out the allegations in a letter to Vince Cable, business secretary, copied to David Cameron, prime minister, and Philip Hammond, defence secretary.

Exaro has revealed details of 28 transfers totalling just over £14.5 million linked to the project and paid to two companies in the Cayman Islands between 2007 and 2010.

Foxley says that the companies were not sub-contractors on the project. Mystery surrounds the identities of the final beneficiaries of the payments.

Exaro also revealed that the MoD was aware of the offshore payments in late 2008, but the transfers continued for at least another 19 months.

Last year, Foxley supplied material on the Sangcom project to the Serious Fraud Office (SFO), which has been carrying out a preliminary investigation.

In his letter of January to Cable and Cameron, Foxley says that the documentary evidence supporting his allegations of corruption “points quite clearly to the acquiescence” of the MoD, and “clear knowledge” of “wrongdoing for the past five years.”

“Since this could not have been practicable without the endorsement of the UKTI DSO, it points also to the inescapable conclusion that UKTI DSO was also knowledgeable and acquiescent to these corrupt practices.

“Since all monies and payments within the Sangcom project were effected through MoD bank accounts… it is apparent that the MoD was either negligent, acquiescent or downright complicit to the corrupt payments.

“The former possibilities show a ‘wilful blindness’ by the MoD and UKTI DSO, whilst the latter possibility indicates active criminal participation. In each case, two major government departments have fallen seriously short of the integrity and proper practice that is expected of them.”

Cable heads the Department for Business, Innovation and Skills (BIS), which oversees the UKTI DSO, a body that works closely with the MoD to help the UK defence industry to sell to overseas governments.

Foxley’s letter is among a large volume of submissions published as part of a government consultation exercise on reforming the Financial Reporting Council, the regulator responsible for promoting corporate governance in the UK.

He worked for the prime contractor on the Sangcom project, GPT Special Project Management, which is a British subsidiary of EADS, the European defence giant.

He draws parallels in his letter between the GPT case and the separate ‘Al Yamamah’ defence deal with Saudi Arabia. The SFO investigated alleged payments of huge bribes to members of the Saudi royal family to secure sales under that deal. BAE Systems, the lead supplier for ‘Al Yamamah’, denied the claims.

In 2006, Tony Blair’s Labour government forced the SFO to close the ‘Al Yamamah’ investigation, citing “national security”.

Foxley tells Cameron and Cable in his letter: “Given the precedent of the ‘Al Yamamah’ scandal, it is incredible that, not only were such practices allowed to continue after 2007, but that the same corrupt processes were initiated by GPT when the new contract was signed in February 2010.”

“It could be proposed that the failure to prosecute the ‘Al Yamamah’ case was taken by the defence sector as a carte blanche to carry on their corrupt practices because the British government lacked the moral fibre to see through awkward and embarrassing prosecutions that would reflect badly on British companies and its own government departments.”

“It will also not be difficult to prove that the parallels within the defence procurement processes used within the ‘Al Yamamah’ project are so close that the conclusion, hitherto not voiced in public, is that the MoD (and thus UKTI DSO) was also acquiescent, negligent or complicit in their wilful blindness in that project also.”

The MoD and UKTI DSO declined to comment.

EADS has said that “certain allegations” have been made and “are being properly addressed with our full and constructive engagement.” It declined to comment on Foxley’s letter.

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