Corruption and the Arms Trade

News here has been full of allegations of bribery in connection with an arms deal between BAE Systems and the Saudi government.  The deal took place in the mid 1980s and was worth billions of pounds.  For more than twenty years, there have been suggestions, evidence and articles that the deal was obtained, over French and US competition, by corruption.

It is back in the news now because investigations by the Serious Frad Office were recently halted.  Why is unclear.  Two reasons have been offered: because there was no prospect of prosecution; and because of national security interests.  Of the two, the first is probably untrue and the second is an excuse for embarrassment.  Now we hear that international investigations were frustrated and not provided with all the relevant evidence, notably a bribe of £1 billion to Proince Bandar of the Saudi royal family.  Further details can be read at: http://www.guardian.co.uk/baefiles/story/0,,2100761,00.html.  Anyone wanting to know more should also watch the Yes Minister episode on the subject of corruption: The Moral Dimension from series three.

There are a number of intertesting aspects to this story.  First, like Paul Wolfowitz’s behaviour, it undermines the ability of UK officials to talk about ‘good governance’ when discussing aid and debt cancellation.  Indeed, the retort has been publicly used by some aid agencies.

Second, while since 2002, bribery abroad by UK companies has been illegal, the legal postion in the 1980s was less clear.  That it was immoral is fairly clear.

So why is the current government so embarrassed?  After all, it all happened under the Conservatives.  This is the third and perhaps most interesting aspect.  The case reveals the close links between government and the arms trade.  Former ministers, MPs and retired civil servants sit on company boards.  Ministry of Defence civil servants and executives in the trade regularly exchange places to bring ‘commercial’ sense to the workings of Whitehall.  It is all very cosy and not at all like Weber’s model of bureaucracy.  Civil servants have too close a relationship with their commercial friends.  How can they contract effectively?  How can they oversee and licence the trade effectively?  Is it any surprise to find they may have covered up for colleagues facing corruption investigations?

All this when BAE Systems is hoping for another giant contract with the Saudi government.  No wonder nobody wants anyone looking too closely at the past – it might also embarrass the Saudis.

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