AFP
Friday, January 5, 2007

Britain's government is facing international pressure over its decision to halt its probe into a controversial arms deal between British defence group BAE Systems and Saudi Arabia during the 1980s. The Organisation for Economic Cooperation and Development, a grouping of 30 industrialised nations, confirmed Thursday that it had written to the British government asking it to explain why it dropped the investigation last month.
"The letter was sent before Christmas asking for further information about the BAE affair," OECD head of media Nicholas Bray told AFP.

Britain's Attorney General Peter Goldsmith denied in December that the government had contravened an OECD convention, to which Britain is a party, on combating bribery in international business transactions.

Goldsmith announced on December 14 that the Serious Fraud Office (SFO) -- a government department -- had halted its investigation into claims that BAE Systems had established a slush fund for some Saudi royal family members.

British Prime Minister Tony Blair has defended the decision, saying years of "ill feeling" between Britain and "a key partner and ally" would have developed if the investigation had been allowed to proceed.

The fund allegedly provided perks including luxury cars to keep the Saudis on board at BAE. It was also allegedly linked to an estimated 50-billion-pound deal from the 1980s involving the supply and support of Tornado and Hawk jets as well as the construction of an airbase.

BAE earlier this year agreed to a 10 billion-pound (14.8-billion-euro, 19.8-billion-dollar) deal with Saudi Arabia for 72 Eurofighter jets, and the deal was reportedly under threat because of the SFO investigation.

The Financial Times said Thursday that the OECD had "taken the unusual step of writing a formal letter to the Foreign Office to ask why the Serious Fraud Office stopped its investigation last month".

According to the business daily, the letter was sent on behalf of the OECD's working group on corporate bribery.

The FT quoted Mark Pieth, the bribery group's chairman, as saying:

"I am not condemning Britain at the moment. I just want to hear an explanation, and it had better be a good explanation."

A spokeswoman for the Foreign Office told AFP: "We have received this letter and will be responding in due course."

The FT meanwhile added that the OECD had asked for the information to be provided ahead of discussion of the case at a regular meeting of the OECD this month, to be attended by British officials.

A Foreign Office spokesman said the January OECD meeting would not make the BAE-Saudi matter part of its agenda.

But he added: "My understanding is that at the end there will be a sort of 'tour de table' to discuss other pertinent issues and I have no doubt it will be raised at that point.

"The attorney general set out the reasons for the decisions that were made which seem to be in line with the convention, but I'm sure that this will be discussed at the meeting in a couple of weeks' time."

Goldsmith had said the SFO halted its probe after representations made both to him and the head of the SFO "concerning the need to safeguard national and international security".

One of the articles of the OECD convention on bribery states that contracting parties "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".

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