Court overturns BAE-Saudi probe ruling

CLOSE TIES: Britain and Saudi Arabia last year signed a 4.43 billion pound deal to supply 72 Eurofighter planes to Riyadh. (AFP)

The Serious Fraud Office on Wednesday won a legal appeal against a ruling that it acted unlawfully by stopping a corruption investigation into an arms deal between Saudi Arabia and BAE Systems.

The House of Lords, the country's highest court, overturned an earlier High Court ruling over the probe into the Al-Yamamah arms deal in 1985, worth 43 billion pounds.

The Serious Fraud Office was investigating claims that BAE Systems, one of the world's biggest arms makers, ran a 60 million pound slush fund for Saudi officials in a bid to attract contracts.

But it ditched its investigation in 2006.

The move was announced by the government's then chief legal advisor, attorney general Lord Peter Goldsmith. Then prime minister Tony Blair explained the decision by saying the investigation could threaten intelligence links at a key point in the "war on terror".

The decision to shelve the probe was strongly criticised by anti-corruption campaigners and the press, which accused the government of bowing to pressure from Riyadh.

The campaigners staged a legal challenge against the decision at London's High Court, which in April ruled that the Serious Fraud Office had been wrong to ditch its campaign in a strongly-worded ruling.

The court said in April the Saudi threat over intelligence links was a "successful attempt by a foreign government to pervert the course of justice in the United Kingdom".

Judges Alan Moses and Jeremy Sullivan added that the Serious Fraud Office and the government had made an "abject surrender" to "blatant threats".

But now the House of Lords has overturned that finding.

The Serious Fraud Office's lawyer Jonathan Sumption had argued in the latest stage of the case that its decision to drop the probe was "legal and appropriate" and that the High Court had relied on "limited information" in making its ruling.

He also criticised it for highlighting allegations that Prince Bandar bin Sultan, head of Saudi Arabia's National Security Council, threatened to drop a Eurofighter aircraft contract before the probe was stopped.

Saudi Arabia has said it considers the affair an internal British matter.

BAE Systems said in a statement following the ruling: "The case heard was between two campaign groups and the director of the SFO.

"It concerned the legality of a decision made by the director of the SFO. BAE Systems played no part in that decision."

Britain and Saudi Arabia have close ties and last year signed a 4.43 billion pound deal to supply 72 Eurofighter planes to Riyadh in one of London's largest ever export orders.

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