Britain is facing stinging international criticism for smothering a corruption inquiry into arms deals with Saudi Arabia, a decision that appears to sacrifice probity and rule of law for the sake of security and commercial relations.
Prime Minister Tony Blair, who took responsibility for the move to pull the plug on a two-year inquiry into the multibillion-dollar Al-Yamamah deals, argued that persisting with the probe would jeopardize the struggle against terrorism.
His chief law officer, Attorney General Lord Goldsmith, has indicated that lives were at stake. The government's argument is that the corruption inquiry, which was pursuing allegations that Saudi middlemen received tens of millions of pounds in bribes for "facilitating" the arms deals, was becoming so uncomfortable for the Saudis that it was jeopardizing cooperation on security.
But the move has generated furious condemnation. Domestically, critics are seeking a legal ruling to overturn the decision. And internationally, the Organization for Economic Cooperation and Development (OECD) says it suspects Britain is in breach of an anticorruption convention and has given London until March to come up with some answers.
"This is unprecedented," says Helen Fisher, an OECD spokeswoman. "It's a huge issue at the OECD. The committee makes it very clear that [bribery] is not a part of doing business, that there has to be a level playing field. When dealing with developing countries, bribery does massive damage."
When it was signed in the mid-1980s, the Al-Yamamah arms deal was trumpeted as a breakthrough moment for Britain's defense industry. The initial deal provided for the sale of 200 Tornado fighter jets to the Saudis, and was won from under the noses of French and US rivals. A second phase followed in the 1990s. Altogether the deal has already earned the now-private defense firm BAE Systems more than £40 billion ($79 billion), according to most estimates.
But there were soon whispers of bribery, allegations of perks lavished on Saudi dealmakers, accusations that senior figures in the Saudi royal and family may have benefited from bribes worth as much as £60 million ($120 million). An inquiry by Britain's National Audit Office examined the deal in 1992. Its report was unprecedentedly suppressed.
The Serious Fraud Office (SFO) took up the case in November 2004. Its deliberations reportedly threatened the third phase of Al-Yamamah under which Britain will supply Saudi Arabia with 72 Eurofighter aircraft for around £70 million ($140 million). BAE has denied any wrongdoing.
The government said the commercial aspect, though considerable, was not the reason for ordering the SFO to call off the hunt. Mr. Blair said last week that proceeding with the SFO probe "would have been devastating for our relationship with an important country with whom we cooperate closely on terrorism, on security, on the Middle East peace process."
Blair's case has been undermined somewhat by reports that MI5 and MI6, the security services, could not confirm that there were any explicit threats by the Saudis to discontinue cooperation if the investigation ran its full course.
But several security experts say that the case highlights the awkward dilemma facing Blair.
"The UK does have security problems and the Saudis can help," says Rodney Wilson, a Middle East expert at Durham University. "It comes down to names and flows of funding and people who are Al Qaeda sympathizers in the UK, activists," says Professor Wilson. "It's important information."
He says Britain had to balance international flak "with the possibility of getting blown up.... International criticism is one thing, but the job of the government is to protect citizens here and abroad and this information does help that."
For others, the scramble to keep the Saudis on board, however, is less understandable. MJ Gohel, a terrorism expert at the London-based Asia-Pacific Foundation, says Saudi cooperation in the war on terror has been "half-hearted." The Saudi government has not done enough, he says, to stop terrorist finance, and its domestic crackdown is aimed more at antiroyalty elements rather than at anti-Western ones.
"They buy a lot of arms from Britain, so on a trading and financial level it's important, but on a strategic and intelligence level, the advantages of this alliance are quite dubious," he says.
Critics at home and abroad can continue to embarrass Blair on the issue. Britain is a signatory to the OECD's convention on corruption. Article 5 says the prosecution of bribery "shall not be influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved."
The 29 other nations in the OECD, along with six observer nations, said last week they all had "serious concerns" that Britain was in breach of the convention. "To argue that the public interest was more important than the rule of law is an incredible reversal of 1,000 years of political struggle to enshrine the public interest in the law," says Lawrence Cockcroft, chairman of the British branch of Transparency International.
He says the affair will now make it harder for London to lecture others about corruption, weakening at a stroke the international consensus that has been building in the past decade to tackle graft.