Publication: The Times Issued: Date: 2006-11-13 Reporter: Sam Coates

BAE : The Weapons Company with Influential Friends at Highest Level

 

Publication 

The Times
Date

2006-11-13

Reporter

 Sam Coates

 

The weapons company with influential friends at the highest level

Tony Blair has been dubbed the unofficial travelling salesman of Britain's biggest arms company, ever since its then chairman openly backed him to become Prime Minister in January 1997. Five months later, after Mr Blair's general election victory, the new Prime Minister was promoting the interests abroad of the company, then known as British Aerospace.

In June 1997 he flew to Germany to persuade the Government there to approve the £45 billion Eurofighter and other aircraft that British Aerospace was helping to build. After a merger with Marconi Electric Systems in 1999, which created BAE Systems, Mr Blair tried to persuade the Czech Government to approve a £1 billion deal to buy Gripen fighter jets.

Robin Cook, the late former Foreign Secretary, alleged in his memoirs: In my time I came to learn that the chairman of British Aerospace [Sir Richard Evans, who stood down in July 2004] appeared to have the key to the garden door to No 10. Certainly I never once knew No 10 come up with any decision that would be incommoding to British Aerospace.

Now BAE's methods are coming under intense scrutiny, after the Serious Fraud Office began investigating claims of a £60 million slush fund used by BAE to pay off Saudi Arabian dignitaries. This money is alleged to have helped to provide prostitutes, Rolls-Royce cars and Californian holidays. BAE has always denied any wrongdoing.

As part of that investigation, officers from the SFO and the Ministry of Defence police have been looking at whether the deal between BAE and the Tanzanian Government for a military air traffic control system was corrupt. Nobody ever questioned that Tanzania needed a new and reliable air traffic control system. Frequent system failures meant that pilots found themselves flying into the East African republic on a see and be seen basis.

But MPs and the World Bank asked why in the mid 1990s the Tanzanian Government had decided to buy a system with military capabilities when the country had only eight military aircraft. The World Bank said that it was ten times more expensive than they needed. Investigators are believed to be examining whether backhanders were paid to officials from the Tanzanian Government to encourage them to agree to the deal.

In Britain, the political controversy arose because the equipment's potential military use meant that BAE had to seek permission for an export licence from the British Government. There is no suggestion that any British government figures are under suspicion. Mr Blair's judgment to side with BAE against some vociferous Cabinet opposition will, however, be called into question if the deal is found to be corrupt.

The decision on whether to grant an export licence was initially the responsibility of the Department of Trade and Industry under Patricia Hewitt. She supported the scheme, but objections from other departments meant that the matter was referred to Mr Blair.

The issue came to a head in a stormy Cabinet meeting in December 2001. Gordon Brown, the Chancellor, was furious when he saw how much a British company, aided by a British bank, was charging Tanzania, having agreed a new aid package months before.

Clare Short, then the International Development Secretary, said that the money would be much better spent on other Tanzanian priorities such as agriculture and education.

This issue was raised in Parliament by the Liberal Democrat MP Norman Lamb. Alan Johnson, then a DTI minister, replied: I want to put it clearly on the record that the Government have no evidence that the deal was in any way corrupt.

Within four months of the deal being approved, however, Ms Short publicly suggested that it could be corrupt. I find it very difficult to believe that a contract like that could have been made cleanly, although I have no information to that effect, she said in 2002. Now the Serious Fraud Office will try to determine whether she was correct to be suspicious of the deal.


Who's Who

Sir Richard Evans

Chief executive of British Aerospace 1990-98, then chairman in 1998 and retired in 2004. He has been interviewed by the Serious Fraud Office during its investigation into allegations of fraud linked to Saudi Arabian defence contracts. None of those intverviewed have been charged


Tony Blair

Close links with BAE Systems and personally approved the sale of its military air traffic control system to Tanzania. Has helped BAE with several deals over the years. BAE's political influence is widespread. Charles Powell, the brother of Jonathan Powell, Tony Blair's Downing Street chief of staff, is a consultant, according to the Register of Lords interests

Gordon Brown

Opposed the deal when it went through Cabinet. His wife, Sarah, was born in Tanzania and he visited last year. He is understood to have been angry that the loan used to pay for the air traffic control system was being paid by debt relief intended for primary education


President Mkapa

President of Tanzania 1995 to 2005. He approved the deal, saying: No one has given me an iota of evidence about corruption and no one has shown me we cannot get value for money


Norman Lamb

A Liberal Democrat MP, now Sir Menzies Campbells chief of staff, who has doggedly investigated the BAE sale. Met police from the Serious Fraud Office and Ministry of Defence police last Wednesday


Clare Short

Former International Development Secretary who has since left the Labour Party. She has maintained that she has no firsthand evidence of corruption, but opposed the scheme from the outset in Cabinet and voiced fears something was amiss with the deal in April 2002

With acknowledgements to Sam Coates and The Times.