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Sun 17 Feb 2008 02:36 AM

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UK 'powerless' over Saudi threats

Security not commerce was behind decision to drop BAE corruption probe, gov't insists to court.

The UK government was powerless to resist threats from Saudi Arabia which forced it to drop a BAE corruption probe, a court heard Friday.

Lawyers for the Serious Fraud Office said the ‘grave’ and ‘imminent’ threat to British national security was so great the office had no option but to close its two year investigation into the Al-Yamamah arms deal, UK media reported.

The SFO had been investigating allegations that BAE ran a 60 million pound ($126 million) slush fund, offering sweeteners to Saudi officials in return for lucrative arms contracts.

According to a legal challenge by campaign groups, ending the inquiry was illegal, and based on commercial rather than security reasons.

A lawyer for the groups said the government had not denied that Prince Bandar bin Sultan, who allegedly received $1 billion in secret payments from BAE, had in July 2006 threatened to withdraw a contract for Typhoon fighter jets if the inquiry was not dropped.

The $8.8 billion deal for 72 Typhoon jets was eventually sealed in September 2007.

“How can we be sure that the prime minister’s obvious concern that he was about to lose the Typhoon contract didn’t affect he language and strength with which he advocated the national security concern?” asked Dinah Rose.

Government lawyers insisted security was the only issue, with British lives at stake if Saudi Arabia cut off intelligence on terrorism, saying the state could not ‘magic away’ the threats.

Judges, however, said the court had 500 documents which showed other considerations had been taken into account, including a letter from Tony Blair to his attorney-general expressing concerns about the Typhoon contract.

Continuing with the investigation would present “critical difficulty” for the contract as well as a “real and immediate risk of a collapse in UK/Saudi security, intelligence and diplomatic consideration” which would have “seriously negative consequences for the UK public interest” the letter said.

Judges said they would deliver a ruling as soon as possible, but did not give an exact timeframe.

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