Paris - The Organisation for Economic Co-operation and Development (OECD) said yesterday it had “serious concerns” about UK Prime Minister Tony Blair’s decision to drop a fraud investigation into defence contracts with Saudi Arabia.

Secretary-general Angel Gurria said the body questioned “whether the decision was consistent with the OECD antibribery convention” and would discuss the issue in March.

In December, Blair intervened to end a three-year investigation into allegations of corruption surrounding the sale of BAE Systems weapons to Saudi Arabia under the Al Yamamah contract.

Blair said the probe threatened to damage relations between the two countries and jeopardise a new agreement with the kingdom to buy 72 Eurofighter jets, also made by BAE Systems and partners, in a deal worth at least £10bn. He also said there was no guarantee of a successful prosecution.

“How can you know if the investigation is justified unless you allow it to proceed until it’s finished?” Menzies Campbell, leader of the opposition Liberal Democrats, asked News 24 television. The OECD review might lead to “yet more embarrassment for Great Britain”.

Saudi Arabia is a British ally, sharing intelligence on the al-Qaeda terrorist network, and UK exports to Saudi Arabia were £1,6bn in 2005, the biggest market for British goods in the Middle East after the United Arab Emirates. Blair has repeatedly refused to specify the security concerns that prompted him to call off the probe.

Thirty-six countries have ratified the OECD antibribery convention, including all 30 OECD nations. The code was introduced in 1999 and requires signatories to have laws criminalising the bribery of foreign public officials and impose criminal penalties on those who do or offer to do so.

The OECD is examining whether Britain broke its treaty obligations. The judgment may hinge on whether there is any provision for national security concerns under the agreement, potentially opening the way for groups in the UK to challenge the government over its decision.

“The credibility of the convention depends on its implementation and enforcement by the countries that are signatories to it,” the OECD said.

MI6 and MI5, the UK’s intelligence services, had no information suggesting the Saudis intended to sever security links, The Guardian newspaper said on Tuesday, citing unnamed government officials.

Earlier this week, Campbell called on Blair to come clean over his involvement in a controversial R30bn arms deal between SA and BAE. The UK Serious Fraud Office is probing the 1999 BAE contract to supply SA with military aircraft at allegedly double the price of a rival Italian bidder.

With acknowledgement to Mark Deen, Reuters and Business Day.