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Alleged Overseas Corruption debate


16th July 2007

Jonathan Djanogly calls for clearer legislation to tackle overseas corruption.

Mr. Jonathan Djanogly (Huntingdon) (Con): I congratulate the Solicitor-General on her new role.

The motion is very widely drawn. It is much too widely drawn for our liking. It is too scattergun in its approach, and, dare I say, plenty of heat and too little light are emanating from the Liberal Democrats. The motion is too vague to receive our support today; however, we think it appropriate to debate the issue of dealing with overseas corruption and to review past events, not least in an attempt to establish a new consensus on the pressing issue of addressing bribery and corruption. In that context, I should make it clear that the Conservative party believes there is a need for further and clearer legislation to tackle overseas corruption.

Let me begin by saying something about the Tanzania contract, which is mentioned first in the motion and which we believe to be a relatively clear-cut issue. In 2001, the British Government were asked to consider applications for export licences for the sale to the Tanzanian Government of a military-level air traffic control system. The system cost some £28 million, and the heavily indebted Tanzanian Government took on more debt to secure it. The International Monetary Fund told the then Prime Minister, Tony Blair, that it was very concerned about the impact of the purchase on Tanzania's external debt burden. Despite the opposition of all the most informed, respected and qualified observers, approval for the licences was forced through what I understand to have been a divided Cabinet by the Prime Minister. Last year the Serious Fraud Office and the Ministry of Defence began investigating the deal for alleged corruption. It appears that we are talking about £12 million of commissions, some 29 per cent. of the contract value being in commissions.

The Conservative party remains very concerned that the Tanzanian contract has damaged this country's reputation for fighting corruption. That is why my hon. Friend the Member for Sutton Coldfield (Mr. Mitchell) called a debate on the issue as long ago as 30 January this year. I thank the Minister for taking the opportunity to tell the House today what point the investigations have reached, although I am not entirely sure from what she said that they have moved much further forward.

Corruption and bribery legislation in the United Kingdom has of course been under scrutiny for some time. Existing English law is based on the common-law offence of bribery and a range of add-on statutory offences. The scope of United Kingdom bribery offences was extended to bribes offered outside the United Kingdom by part 12 of the Anti-terrorism, Crime and Security Act 2001. However, as it seems to apply only to United Kingdom companies and not to foreign subsidiaries of such companies, its worth is limited.

Proposals for reform were made as a result of the Law Commission's 1998 report, and in December 2005 the Government started a consultation on the reform of corruption laws. In March this year, however, the Home Office announced that no consensus had emerged from the consultation, and that the Law Commission would be asked to undertake a further review. In parallel with the Government's efforts and in order to facilitate discussion of the need for comprehensive legislation, an alternative proposal was introduced as a Private Member's Bill in the House of Lords in November last year. At this stage it is unlikely to translate into legislation. Nine years down the road and despite all the usual new Labour anti-corruption spin and promises, we are not even close to new anti-corruption legislation. Has that become a priority now that a new new Labour regime is in place? The Solicitor-General addressed that issue in her earlier remarks, but will she commit to such reform being a priority?

The Solicitor-General: I have already said that we have asked the Law Commission to prioritise that. We have given it extra resources and when we receive its consultation document, which we hope and expect will be accompanied by a draft Bill, we will give it all priority. I should add that it is not for want of trying that the Government have not managed to change this law. Proposals were scrutinised in depth, including by Conservative Members in the Joint Committee on the draft corruption Bill, and they were sent back. I hope that our efforts have made the law-when it comes-better than before.

Mr. Djanogly: I thank the Solicitor-General for the confirmation that that is a priority.

On the al-Yamamah contract, the 1985 deal took three years to complete and involved the sale of fighters and trainer jets, the construction of two airbases and a range of other equipment and training, provided by more than 3,000 British experts stationed in Saudi Arabia. The contract is reported to have been worth some £40 billion to the UK over the last two decades, and it has secured our country's position as one of the world's top defence experts. The contract was renewed in 1992, after the Saudis agreed to buy another 48 Tornado fighters, and in 2005, in the deal's third stage, the British agreed to sell up to 72 Typhoon planes.

The Serious Fraud Office launched an inquiry into allegations surrounding the al-Yamamah contract. SFO officers seized documents and arrested and interviewed some BAE Systems officials. The SFO discovered details of commissions being paid via Swiss bank accounts, although BAE and the Saudis have always denied any wrongdoing. The Saudi Government have also expressed anger at investigations into members of the Saudi royal family.

In December 2006, the then Attorney-General, Lord Goldsmith, stated that the SFO would discontinue its investigation. The SFO maintains that it was its own decision to pull out of the inquiry prompted by concerns over potential damage to national security, as opposed to its being forced to do so by the then Attorney-General. Lord Goldsmith stated that all relevant agencies were clear about the importance of UK-Saudi relations in the fight against terrorism. He said that if that co-operation were lost, there would potentially be damage to UK national security.

Some have argued that the SFO was told to stop the investigation because another multi-million pound deal with the Saudis might be lost. That is particularly relevant as it would constitute a breach of article 5 of the Organisation for Economic Co-operation and Development convention on combating bribery of foreign public officials in international business transactions. Its key words are:

"Investigation and prosecution of the bribery of a foreign public official...shall not be influenced by considerations of national economic interest".

However, the then Attorney-General and the director of the SFO-and the Solicitor-General again today-have claimed that the decision was not based on commercial interest, and the then Attorney-General made it clear in the other place on 1 February that he did

"not believe that the convention does, or was ever intended to, prevent national authorities from taking decisions on the basis of such fundamental considerations of national and international security."-[ Official Report, House of Lords, 1 February 2007; Vol. 689, c. 378.]

We do not dispute that interpretation of the convention, but the Liberal Democrats must say whether they do, and cut through some of the confusion they have caused.

There is, however, a further question: to what extent were there fundamental security issues? On 16 January, a report in The Guardian suggested that Sir John Scarlett, head of MI6, will not endorse the idea of British national security being at risk as a result of the probe, and that MI5 had no evidence that Saudi Arabia would sever its security links with the UK. However, following the report, the Foreign Office stated:

"Contrary to the Guardian article, SIS (MI6) shared the concerns of others within the government over the possible consequences for the public interest of the SFO investigation."

On 18 January, Lord Goldsmith stated that all relevant agencies were clear about the importance of UK-Saudi relations in the fight against terrorism and that if that co-operation were lost, there would potentially be damage to UK national security. The hon. Member for Twickenham (Dr. Cable) spells out the deliberations of the Attorney-General and the head of the SFO, but we understand that ultimately the SFO maintains that it decided to pull out of the probe and that it was not forced to do so by the then Attorney-General-although the Attorney-General has the technical power to do that. I note that the Solicitor-General has today given further details of the national security implications, which was helpful. The Attorney-General had another reason to end the probe. He said in the other place that he was

"sceptical about the evidential basis".

He also said that after clearing his diary and spending some three days reviewing the evidence in detail with SFO investigators, and then taking leading counsel's advice, he

"formed the conclusion that, ultimately, this case was not going to succeed".-[ Official Report, House of Lords, 1 February 2007; Vol. 689, c. 380.]

We ultimately accept that position, and would not want to spend yet more millions of taxpayers' money on a trial doomed to failure from the start.

The Government also spoke about the problem of getting evidence from Saudi Arabia in a scenario in which no one from BAE Systems or Saudi has said that they had done anything wrong.

David Howarth: The point that the hon. Gentleman has not taken into account is that the director of the SFO disagreed with the Attorney-General's assessment of the likelihood of success in an eventual prosecution. It is not just a political point; it is an important point about what the law said at the time and what evidence there was.

Mr. Djanogly: The hon. Gentleman is right, as the Solicitor-General said that he was. I do not think there is any dispute that there was a difference of opinion between the SFO and the Law Officers, but it seems that there was a progressive discussion, which eventually came to a conclusion.

Mr. Borrow: My understanding is that Mr. Wardle believed that there was a possibility of a prosecution if the investigation continued, not that he had the evidence to justify a prosecution, nor that he believed that there would be a prosecution. It was the Attorney-General's view that there was not and would not be enough evidence for a prosecution.

Mr. Djanogly: That is right. The Attorney-General came to the House of Lords and said that there were two planks to the decision. On one, he had a difference of opinion with the SFO. That has come out, and more details have been provided today, for which we should be grateful.

The Liberal Democrats' motion states that

"serious damage has been done to the reputation of British business".

The issue is complicated by the fact that it is not just a case of a private company contracting with the Saudi Arabian Government. As my hon. Friend the Member for Beaconsfield (Mr. Grieve) said:

"It is a relationship package at a Government-to-Government level rather than an ordinary commercial agreement."-[ Official Report, 7 February 2007; Vol. 456, c. 881.]

Furthermore, it is plain that the cultural view of bribery-or shall we call it greasing the wheels?-has changed dramatically in the UK since al-Yamamah was first signed more than 20 years ago. That cultural change was represented by the 1997 OECD convention. We could spend much time looking at the nature of agency payments, but as over-generous and distasteful as those payments and the related corporate entertainment may have been, and as many good headlines as were created for the tabloid press as a result, there seems to be inadequate evidence, after much investigation, to prove that a crime was committed.

On 7 February, my hon. Friend the Member for Beaconsfield, the shadow Attorney-General, concluded that there was no evidential basis for the Attorney-General having been involved in any wrongdoing in relation to the closure of the investigation. I see no reason to change our position now, but if any additional and significant information is available, it should be handed over to the relevant authorities for consideration.

The Liberal Democrats' motion refers-their Front-Bench spokesman did not-to

"the consequences for the role of the Attorney General".

However politically convenient it may be for them to attribute blame to the Attorney-General, we believe that there is insufficient evidence to sustain such an assertion.

Moreover, the Lib Dems seem to be missing the real issue, which is that what constituted the public interest was and is cultivated not by the Attorney-General, but by the Prime Minister, the Foreign Secretary and the Cabinet, all of whom have been remarkably quiet on the issue. My right hon. and learned Friend the Member for Kensington and Chelsea (Sir Malcolm Rifkind) said:

"If the ultimate reason for the decision was national security, it would be for neither the SFO nor the Attorney-General but the Prime Minister to express a view on the matter. It would be the Attorney-General, reflecting the view of the Prime Minister, who would then have discussions with the SFO."-[ Official Report, 7 February 2007; Vol. 456, c. 886.]

The Solicitor-General today set out some more detail from the Prime Minister's memorandum, for which we were grateful. However, I note that it has been released now rather than at an earlier stage. I feel that the Government could have been more transparent in that regard.

Mr. Andrew Tyrie (Chichester) (Con): When Robert Wardle was asked who took the decision and was told that the Prime Minister had asserted that he had, apparently he replied that it was his view that he had taken it.

Mr. Djanogly: I thank my hon. Friend for that clarification. Do the Lib Dems not realise how convenient it must be in practical terms for the current Labour Cabinet to let the ex-Attorney-General be the primary target for their criticism? Do the Lib Dems believe, in constitutional terms, that removing the Attorney-General and Solicitor-General from Parliament would mean that their accountability to Parliament would improve? I would say that it would not. As they would not be able to speak in Parliament, the Law Officers could even more easily be used as a scapegoat by the Cabinet if things were to go wrong.

The Solicitor-General: I am quite puzzled about how the hon. Gentleman has managed to conjure up a situation in which the Cabinet is blaming the last Attorney-General, when I spent a long time this afternoon justifying and setting out in great detail why he did his duty properly and with integrity. No one is blaming him at all; he was right.

Mr. Djanogly: I certainly did not say-let me make this clear-that the Cabinet, or anybody else, is blaming the last Attorney-General. I am saying that the Prime Minister and the Cabinet could have been rather more transparent and open in their views of what constituted national security interests. They seemed happy to leave it to the Attorney-General to make that case for them when it is arguable that they should have had more of an input themselves.

The Solicitor-General: It is quite difficult to win in this case. The hon. Gentleman has complained already that the Prime Minister was ready to say that he took full responsibility, making it plain that he had had substantial input, and yet the hon. Gentleman complains that somehow that Prime Minister left the Attorney-General to carry the can when he should have intervened. The hon. Gentleman needs to be realistic about the allocation of appropriate roles. The Prime Minister made the position clear, the Attorney-General passed the view on, with his advice attached, and Mr. Wardle made the decision-it is very clear.

Mr. Djanogly: We can disagree on that point.

The Conservative party believes that on the basis of the then Attorney-General's comments about the highly speculative nature of the inquiry and any final prosecution being unlikely, the decision to discontinue the investigation in view of the potential damage to our national security was inevitable and the only sensible course of action. However, it is important that lessons are learned from those events. The great failing of the motion is that it looks back rather than forwards. It does not even mention the need to improve the legislative framework to deal with corruption, although the hon. Member for Twickenham touched on that aspect in his remarks.

There is clearly a need for the Government to provide greater guidance on the operation of the 2001 Act and its impact on payments to individuals abroad, in addition to the Minister's support for earlier and better transparency on the mechanisms of Government decisions. That was certainly a welcome development, and we look forward to receiving further details on it. As for BAE, we welcome its decision to appoint Lord Woolf to carry out a review of its ethical standards and I note that the Minister provided the House with an update on the other SFO investigations into corrupt practices of UK businesses overseas.

Although we are unable to give our support to the Lib Dem motion, we hope that today's debate will reinforce the need for the Government to produce legislation to deal with the issues that have been highlighted by the motion. It is unacceptable to us that such an important issue as corruption is being dealt with in the form of a private Member's Bill, not least because it trivialises our need to comply with our obligations under article 1 of the 1997 OECD convention on bribery. The Government need to take responsibility for the issue and to move the agenda forward. I note and welcome the Minister's promise of a draft Bill and we hope that its delivery will involve less delay than in the past.

5.49 pm



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