Sun, Oct 29, 2006 - Page 6 News List

Telegram exposes UK-Saudi arms deal

FOR EVERYBODY'S EYES ONLY A telegram proving that the British government inflated the price for Tornado aircraft sold to Saudi Arabia was mistakenly placed in the archives

THE GUARDIAN , LONDON

The British government was scrambling on Friday to recover secret documents containing evidence suggesting corrupt payments were made in Britain's biggest arms deal.

The documents, published in full yesterday by the Guardian, detail for the first time how the price of Tornado warplanes was inflated by ?600 million (US$1.14 billion) in the 1985 Al Yamamah deal with Saudi Arabia.

A telegram with the details from the head of the Ministry of Defence's sales unit had been placed in the National Archives. It was hastily withdrawn by officials on Friday who claimed its release had been "a mistake."

Colin Chandler's telegram was sent from Riyadh, where he was arranging the sale of 72 Tornados and 30 Hawk warplanes on behalf of the British arms firm BAE. It revealed that their cost had been inflated by nearly a third in a deal with Saudi Defense Minister Prince Sultan.

"Sultan, who is crown prince, has a corrupt interest in all contracts," read a dispatch from the then British ambassador Willie Morris published in a recent Commons committee report.

An accompanying Ministry of Defence briefing paper prepared for the then prime minister Margaret Thatcher describes Prince Sultan as "not highly intelligent ... He has prejudices, is inflexible and imperious, and drives a hard bargain.''

The Al Yamamah deal, worth ?43 billion in total, has long been the subject of allegations of secret commissions to Thatcher's son Mark, and to several members of the Saudi royal family.

All those involved have always denied the allegations.

The telegram from Colin, now the head of budget airline easyJet, was unearthed by Nicholas Gilby, an anti-arms trade campaigner. After the Guardian showed it to the Ministry of Defence, officials were dispatched to the archives in Kew, where they loaded the files into a van and returned them to London's vaults. Campaigners had already copied all the papers and are planning to publish them on the Internet.

Britain's politically sensitive Al Yamamah program is under investigation by the Serious Fraud Office, which is probing corruption allegations against BAE.

The Ministry of Defence documents reveal that the price of each Tornado was inflated by 32 percent, from ?16.3 million to ?21.5 million. It is common in arms deals for the prices of weapons to be raised so that commissions can be skimmed off the top.

The ?600 million involved is the same amount that it was alleged at the time in Arab publications was exacted in secret commissions paid to Saudi royals and their circle of intermediaries in London and Riyadh, as the price of the deal.

Those allegations were treated with such concern in Whitehall in 1985, documents reveal, that a copy of the Arab magazine in question was immediately sent in confidence by the Foreign Office to Thatcher's chief aide at No 10 Downing Street, Charles Powell, with advice that officials "should simply refuse all comment."

Yesterday, 20 years on, the Ministry of Defence at first sought to take the same line. It insisted the Chandler telegram must have been leaked and said "we never comment on leaks."

In fact, a copy was released to the National Archives on May 8 by the Department of Trade and Industry.

Gilby, the researcher from the Campaign Against the Arms Trade who discovered it, said yesterday: "I was astonished when I saw the Chandler telegram. This information has been withheld by every single British government department, including the National Audit Office, for more than two decades."

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