Saudi government named in UK contract fraud investigation

MULTI-MILLION dollar transactions in the Middle East are being investigated by the UK’s Serious Fraud Office (SFO) under new laws to combat international corruption. Four cases in which British companies are alleged to have bribed foreign public officials are currently under scrutiny.

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By  Rhys Jones Published  August 7, 2005

MULTI-MILLION dollar transactions in the Middle East are being investigated by the UK’s Serious Fraud Office (SFO) under new laws to combat international corruption. Four cases in which British companies are alleged to have bribed foreign public officials are currently under scrutiny. One of the four cases involves an investigation into service contracts between the Saudi Arabian government and BAE Systems. The SFO and UK Ministry of Defence Police have said that they are looking into suspected false accounting in contracts for services between Robert Lee International, Travellers World, and BAE, in connection with defence equipment contracts and the Saudi government. BAE Systems is expected to post increased earnings this year, following the acquisition of US defence company UDI and improved revenues in Saudi Arabia. Under the UK’s Anti-Terrorism, Crime and Security Act 2001, which was enacted after the September 11 attacks, UK courts have jurisdiction over certain offences of corruption when committed overseas by British citizens or companies. “The investigation into suspected false accounting at two UK service providers to BAE in relation to defence equipment contracts with the government of Saudi Arabia is continuing,” David Jones, head of communications at the SFO told Arabian Business. Robert Wardle, director of the SFO, said that gifts did not have to be part of doing business in countries where corruption was a way of life. But in the private sector, which includes all current cases under investigation, there were such cases, although he believed that they would be comparatively few. Wardle cited an episode of the BBC television comedy Yes Minister, where one character’s [Jim Hacker] wife received an antique rose bowl from a Middle Eastern government to celebrate the signing of an arms contract. “The acceptance of the gift, with a valuation written on the back of a menu, gave [the government] the ammunition it needed to stop Jim exposing the bribes paid to secure the contract. Except they were not called bribes — they were called things like commission payments,” Wardle told the Sunday Times, adding that in some countries corruption remained a way of life. “It is accepted as being necessary to ensure a living and to make things work,” explained Wardle. “It is only disapproval and action that will force a change. Corruption will wither if no-one is prepared to pay a bribe — or at least if it is confined to criminals rather than international corporations,” he added. The new international jurisdiction of the UK courts to prosecute such offences “merely reflects changes in business practice and the increasingly international nature of trade and business”. Wardle added: “It also reflects the huge advances in communications, especially using information technology, the web and way of moving money.” The UK has obligations to combat bribery of public officials under a convention drawn up in 1997 by the Organisation for Econonmic Co-operation (OECD) and Development. But the OECD has criticised the lack of action by the UK and the absence of a coordinated approach by prosecution and investigative authorities. Obtaining contracts from a public authority or bypassing or overcoming the procurement process designed to achieve best value was often linked with crimes such as theft, bid-rigging or price-fixing under the Enterprise Act 2002. The cases, which are believed to involve bribery in transactions in the region will be a test of the SFO’s new offensive on corruption in international business deals. They are among a group of 17 cases of potential bribery and corruption referred to the SFO by the National Criminal Intelligence Service in the past year since the fraud office agreed to take on the vetting and investigation of such allegations.

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