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« SFO Chief Calls For US-Style Reforms | Main | Grynberg v. BP et al »
Tuesday
Apr152008

All The News That Fits The Prince

Hurrays all around for the British High Court's ruling last week. It said the Serious Fraud Office broke the law last year when, under irresistible pressure from the Blair government, it dropped an investigation into alleged bribes from British defense contractor BAE to Saudi Prince Bandar. Whenever the rule of law wins a big one, which it surely did in London last week, there's something to cheer about.

The SFO's decision to stand down was a travesty. It seemed clear at the time that had the investigation continued, it would have confirmed that BAE secretly paid £1 billion to Prince Bandar in return for inside help selling Typhoon jet fighters to the Saudi government; that the money moved irregularly from American banks to accounts in Switzerland; and that the prince, who was once Saudi Arabia's ambassador to Washington, shared the largess with other Saudi officials. According to reports, the prince didn't bother to deny what had happened, only that neither he nor BAE had broken any laws -- notwithstanding British prohibitions on international public bribery, Swiss money laundering concerns, and the application of the U.S. Foreign Corrupt Practices Act.

While shutting down the investigation was a shocking development -- and although Mr. Blair said vaguely that the reason was the U.K.'s national security -- the case still seemed to be just the latest international corruption saga, albeit on a grand scale and played out in the public eye. But then in mid February this year, things took a sinister turn.

At a High Court hearing in London contesting the SFO's scuttling of the investigation, a two-judge panel, according to the Guardian newspaper, "heard unchallenged allegations that it was Prince Bandar, the alleged beneficiary of £1bn in secret payments from the arms giant BAE, who threatened to cut off intelligence on terrorists if the investigation into him and his family was not stopped. Investigators said they were given to understand there would be 'another 7/7' and the loss of 'British lives on British streets' if they carried on delving into the payments. The government argued . . . that these threats were so 'grave' and put Britain's security in such 'imminent' threat that the head of the Serious Fraud Office had no option but to shut down his investigation immediately."

It sounded way too . . . sensational, a silly plot twist in a B-movie where everyone in sandals is a bad guy. But last week Lord Justice Moses and Justice Sullivan confirmed the worst. The threats were real, they said; the U.K. government didn't dispute the facts. Speaking of the prince's message and the government's reaction to it, the justices said: "Had such a threat been made by one who was subject to the criminal law of this country, he would risk being charged with an attempt to pervert the course of justice. . . . So bleak a picture of the impotence of the law invites at least dismay, if not outrage."

The editors of the Wall Street Journal said this: "Mr. Blair has eloquently argued on other occasions that bringing democratic institutions to the Middle East is a vital part of fighting Islamic terrorism. In stopping the BAE case, his administration missed a perfect opportunity to show the Saudis that one of the foremost of these institutions is the rule of law -- and that neither justice nor human lives should be toyed with for expediency's sake."

The Journal's sentiment is right, of course, but it makes a molehill out of a mountain. This case is about a lot more than a missed opportunity to show the Saudis the benefits of the rule of law. It's about the enormous chasm that separates the West and one of its touted in situ allies in the war on terror. It's about oil-importing countries being vulnerable to political blackmail. It's about the agenda in Iraq and the region and whether any of it makes sense in light of the self-interests of the local regimes.

But coming back to our bailiwick, the British High Court said it will issue orders for action later. In the U.S., the Justice Department is running its own investigations into BAE and Prince Bandar, who incidentally has retained for his defense Freeh Group International, among whose partners are former FBI director Louis Freeh, former head of enforcement at the SEC Stanley Sporkin, and retired British High Court judge Sir Stephen Mitchell.

What will happen with this case in London and Washington in the coming months? We have no idea. But either we'll all discover along with the Saudis that the West does in fact have the political will to enforce the rule of law when it comes to international public corruption. Or we'll see, as the High Court lamented, a sad capitulation and the awful impotence of the law.

View prior posts about BAE and Prince Bandar here.

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