A Boy and His Dog

...The deal of the century, as it came to be known, took three years to complete. But when it was finally signed by Prince Sultan, the Saudi defence minister, on the Caribbean island of Bermuda in 1988 it provided British Aerospace with a stream of revenue worth around $2bn (£1.02bn) a year, with a current total that stands at more than $40bn.

It involved the sale of 72 Tornado fighters and 50 Hawk jet trainers, the construction of two airbases and a host of other equipment, training and spares, serviced by more than 3,000 UK experts stationed in Saudi Arabia. They called it Al-Yamamah: the dove...

In 1985 the Saudis were desperate to upgrade their defences. They were concerned even then about the spread of Islamic fundamentalism touching their Shia citizens in the oil-rich east, as well as the possibility of being drawn into the Iran-Iraq war, in which they took the side of Saddam Hussein. They approached France for its Mirage 2000s and the US for the F-15E, in the face of strenuous opposition from the Israeli lobby.

In the end Britain triumphed, due, in large part, to the intervention of Margaret Thatcher. She assiduously cultivated Sultan on his private visits to London and developed a close relationship with King Fahd, whose opinion of the British prime minister verged on infatuation...

Consenting adults, and I'm okay with that, but... Ewwww... ....

The deal was immediately controversial and perpetually shrouded in secrecy. It was paid for by the delivery of up 600,000 barrels oil a day, with the money going into a dedicated MoD account. But given the Saudi royal family's propensity for extravagance and corruption, the allegations of kickbacks soon surfaced and have never gone away.

It was not only princes and their officials who were said to have benefited but also, allegedly, Mrs Thatcher's son, Mark, through his friendship with one of the intermediaries, the Syrian/Saudi billionaire Wafic Said...

Such was the sensitivity of the arrangement that a National Audit Office report in the early 1990s was, unprecedentedly, suppressed. The official British line has always been that this was a government-to-government contract, and no agents were involved. But evidence that commissions or bribes were paid by BAE, as it now is, and some of its sub-contractors such as Rolls Royce, Thorn EMI and Royal Ordnance, have been seeping into the public domain for years. Rolls Royce was even sued in the high court by agents acting for one of the princes because it had reduced the level of its commissions.

The alleged principal method for concealing the bribes was to increase the price of the goods; so, it appears, the Saudi princes were stealing from their people.

But after Al-Yamamah 1, the deal just rolled on. It was renewed in 1993 when Saudis agreed to buy another batch of 48 Tornado war planes. In a third stage, signed last year, Britain is selling up to 72 more planes, this time Typhoons.

The Guardian disclosed that accidentally released Whitehall papers, including a telegram from Chandler, revealed how the price of the Tornados had been inflated by 32%. Another document in the archives quotes a dispatch from a British ambassador saying the family of Prince Sultan "had a corrupt interest in all contracts". Two years ago this newspaper also revealed something of the quantity of money that was allegedly being passed around when it published details of the lavish BAE Systems hospitality showered on Prince Turki bin Nasser, the deputy head of the air force, and his family.

By then, the Serious Fraud Office had launched an inquiry into allegations; laws that came into force in 2002 made paying bribes on overseas deals a criminal offence. SFO officers have been trawling seized documents and have arrested and interviewed some BAE officials.

They unravelled details of arrangements for commissions being paid through Swiss bank accounts, and appeared to be about to approach the Swiss authorities for access to them. The scale of the alleged slush fund, concealed in Swiss bank accounts of Panamanian companies, may be as much as £100m.

BAE and all individuals have always denied any wrongdoing.

All the allegations have infuriated the Saudi royal family, not least because they have fuelled the resentment against the regime by its own militants and fundamentalists throughout the Muslim world.

In the past few weeks there have mutterings - aired by BAE Systems itself - that the Saudis are upset, the new Typhoon deal is in peril, and thousands of jobs are at risk if the Serious Fraud Office continues its investigations...

But no problem, because, you know, as sure as Jim Baker is their Consigliere, the Poodle is on the job...

A major criminal investigation into alleged corruption by the arms company BAE Systems and its executives was stopped in its tracks yesterday when the prime minister claimed it would endanger Britain's security if the inquiry was allowed to continue.

The remarkable intervention was announced by the attorney general, Lord Goldsmith, who took the decision to end the Serious Fraud Office inquiry into alleged bribes paid by the company to Saudi officials, after consulting cabinet colleagues...

Really, is there any greater love?