British company paid off prince

LONDON: British Prime Minister Tony Blair has defended his decision to halt a fraud inquiry into a major Saudi Arabian arms deal, saying it would have led to the "complete wreckage" of vital British national interests.

Blair's comments at a press briefing during the Group of Eight (G8) summit in Heiligendamm, Germany, yesterday followed revelations in the British media that a Saudi Arabian prince received huge payments from a British arms company in connection with an arms deal worth more than £40 billion.

The BBC's Panorama programme and the Guardian newspaper said Prince Bandar bin Sultan, formerly Saudi Arabia's ambassador in the US, was paid more than £1bn by BAE Systems, Britain's biggest arms procurer.

Yesterday, a high-level Saudi diplomatic source denied that the prince received any commission. "This news is far from being true. These are lies, and they lie a lot about such issues," the source said.

The so-called al-Yamamah deal, signed in 1980 by the government of Margaret Thatcher, is on record as being Britain's largest arms contract.

For more than 20 years, successive British governments have claimed they knew nothing of secret commissions, which were outlawed in Britain in 2002.

The Labour government was yesterday facing fresh demands for an inquiry into the deal after Blair intervened to halt an investigation by Britain's Serious Fraud Office in December.

Yesterday, Blair repeated that, had the fraud investigation continued, Saudi Arabia would possibly have ended all co-operation on intelligence and security matters.

"This investigation, if it had gone ahead, would have involved the most serious allegations and investigations being made of the Saudi royal family," Blair said in Germany.

"My job is to give advice as to whether that is a sensible thing in circumstances where I don't believe the investigation would have led to anywhere, except the complete wreckage of a vital interest to our country." Blair said the fight against terrorism would have been compromised, and thousands of British jobs would have been lost, had the investigation continued.

According to the BBC Panorama investigation, up to £120 million a year was secretly paid by BAE into two accounts in Washington for a period of more than 10 years.

The BBC report said the accounts were a "conduit" to Prince Bandar for his role in the deal to sell more than 100 Tornado fighter jets and other arms to Saudi Arabia.

There has been no response from BAE, which has in the past denied any wrongdoing.

Meanwhile, Gordon Brown, who is due to succeed Blair as prime minister by the end of the month, has signalled his support for stricter controls on arms sales. "I hope we will be able to do more on arms sales in the next period," he told Labour Party supporters at a rally on Wednesday.

With acknowledgements to Sapa and Cape Times.