The Corruption of New Labour: Britain’s Watergate?

[John Simkin]

Story that has just appeared on the BBC website:

http://news.bbc.co.uk/1/hi/uk/6728773.stm

A Saudi prince who negotiated a £40bn arms deal between Britain and Saudi Arabia received secret payments for over a decade, a BBC probe has found.

The UK's biggest arms dealer, BAE Systems, paid hundreds of millions of pounds to the ex-Saudi ambassador to the US, Prince Bandar bin Sultan.

The payments were made with the full knowledge of the Ministry of Defence.

Prince Bandar would not comment on the investigation and BAE systems said they acted lawfully at all times.

The MoD said information about the Al Yamamah deal was confidential.

Up to £120m a year was sent by BAE from the UK into two Saudi embassy accounts in Washington.

The BBC's Panorama programme has established that these accounts were actually a conduit to Prince Banda for his role in the 1985 deal to sell more than 100 warplanes to Saudi Arabia.

The purpose of one of the accounts was to pay the expenses of the prince's private Airbus.

David Caruso, an investigator who worked for the American bank where the accounts were held, said Prince Bandar had been taking money for his own personal use out of accounts that seemed to belong to his government.

He said: "There wasn't a distinction between the accounts of the embassy, or official government accounts as we would call them, and the accounts of the royal family."

Mr Caruso said he understood this had been going on for "years and years".

"Hundreds of thousands and millions of dollars were involved," he added.

According to Panorama's sources, the payments were written into the arms deal contract in secret annexes, described as "support services".

They were authorised on a quarterly basis by the MoD.

The payments were discovered during a Serious Fraud Office (SFO) investigation.

The SFO inquiry into the Al Yamamah deal was stopped in December 2006 by attorney general Lord Goldsmith.

Prime Minister Tony Blair said at the time it had been dropped because of national security concerns.

Prince Bandar, who is the son of the Saudi defence minister, served for 20 years as ambassador and is now head of the country's national security council.

Jane Corbin, from Panorama, explained that the payments were Saudi public money, channelled through BAE and the MoD, back to the Prince.

The SFO were trying to establish whether they were illegal when the investigation was stopped, she added.

And she said she believed the payments would thrust the issue back into the public domain and raise a number of questions.

Liberal Democrat Treasury spokesman Vince Cable said that if ministers in either the present or previous governments were involved there should be a "major parliamentary inquiry".

"It seems to me very clear that this issue has got to be re-opened," Mr Cable told BBC Radio 4's The World Tonight.

"It is one thing for a company to have engaged in alleged corruption overseas. It is another thing if British government ministers have approved it."

[John Simkin]

I thought it might be worthwhile to explain some background detail to this BAE scandal.

The story begins in December 1984 when Margaret Thatcher approached Prince Bandar bin Sultan and asked him to help BAE get a new weapons contract with Saudi Arabia. At the time Bandar was Saudi ambassador to Washington. He was also a close friend of George Bush. Bandar had to do a deal with Bush before he could arrange for the arms contract with BAE to go ahead. Bush and Reagan gave their blessing to the deal in return for the appropriate rewards.

There were several reasons for this. Bush and Reagan did not mind where they got their bribes from. They also were aware that it had been illegal in the US since 1977 (the work of Jimmy Carter) for corrupt payments to be made to foreign politicians. However, the main reason concerned the unwillingness of the Reagan administration to be associated with an arms deal with an Arab nation. They knew that this would upset the powerful Israeli lobby.

The deal was arranged for the government by Charles Powell, Thatcher’s top political advisor (or in other words, her bagman). Others involved in these negotiations included Prince Bandar, Colin Chandler (Ministry of Defence) and Dick Evans (BAE Systems). Charles Powell is the brother of Jonathan Powell, Blair’s chief of staff who is currently being investigated for the cash for honours scandal. It is Powell who introduced Blair into the world of corruption.

In 1985 the Al-Yamamah agreement was signed by Michael Heseltine and Prince Sultan. The deal is worth £45bn to BAE.

In 1989 the National Audit Office started an inquiry into allegations that huge bribes were paid to land Al-Yamamah contract. In 1992 the auditor-general Sir John Bourn agrees to suppress the report after Thatcher claims its publication would upset the Saudis.

In 2001 a whitleblower at the Ministry of Defence claims that a BAE “slush fund” exists. BAE with the help of the MoD manage to cover-up the story. A second whistleblower provides information on the story to the Serious Fraud Office in 2004. The SFO begins an investigation into corruption at BAE. This is significant as in 1999 Blair signed up to OECD anti-corruption agreement. In 2002 the British government followed the US example by making it illegal for corrupt payments to be made to foreign politicians.

Over the next two years the SFO discover a considerable amount of evidence that the BAE had been involved in corrupting politicians from several countries including Saudi Arabia, Chile and South Africa. In 2006 Tony Blair orders the SFO to stop its investigation into Saudi Arabia. The reason is that the SFO is just about to gain access to Swiss accounts thought to have been linked to the Saudi royal family.

However, David Leigh of the Guardian continues to carry out his own investigation. He passed his information to the BBC who will broadcast next Monday details of how since 1985 BAE have given Prince Bandar over £1bn. It is also be made clear that the MoD and government ministers, both Tories and Labour, were aware of these payments.

The real issue is about what Prince Bandar did with this money. How much went to Margaret Thatcher, John Bourn, Charles Powell, Colin Chandler, Tony Blair, Lord Goldsmith, etc.?

[Chris Brown]

Jonathan F wrote:

What is the origin of this mess? The simple answer is that Labour - along with the other political parties - has, in the last decade, found itself short of money: the cost of fighting elections has risen, just as party membership has fallen. That's left a funding gap, which Tony Blair filled by turning to "high-value donors", very rich individuals able to write a seven-figure cheque.

Now, some Blair defenders describe this sequence of events as if it were a matter of pure, inevitable logic. No alternative course of action was possible: if you're short of cash, you get it from mega-bucks businessmen. But that was not the only option available. Blair could have turned, for one, to the trade unions and sought more money from them. Oh no, say the PM's allies: no Labour leader likes to be dependent on the unions.

John S wrote:

To create “New Labour”, Blair had to start removing the links with the trade union movement. Traditionally, the trade unions had been the main providers of money to the Labour Party. However, if Blair was going to this he had to find other financial backers. This became Sir Michael Levy’s job. However, the problem with obtaining large donations is that they always expect something back in return. Businessmen have always seen donations to political parties as an “investment”. Recently, there has been much speculation about this money being used to buy “honours”.

New labour (or old labour or socialist labour) could not rely on the trade union movement to cover its political funding. The movement just hasn’t got the financial clout it had in the past.

I don’t want to get into a political discussion with regard to Blair (or Thatcher). However I do believe that the longer a political party remains in power in a modern democracy its tendency towards corruption increases.

Chris Brown.

[George Monbiot]

Never let members of this government complain about corruption abroad. Never let them blame the failure of Tony Blair's mission to rescue Africa on venal dictators and grasping officials. The allegations published in the Guardian yesterday about slush funds used to oil the Al-Yamamah deal suggest that there is nothing that foreign despots can teach us about corruption.

In 2003, the Guardian uncovered evidence suggesting that the arms company BAE had been running a £60m slush fund, which it used to provide gifts and prostitutes to Saudi officials to facilitate its massive weapons deal. Prince Turki bin Nasser, the Saudi minister for arms procurement, was alleged to be a beneficiary. But the new allegations are on a different scale altogether. They allege that BAE channelled over £1bn to another Saudi official, Prince Bandar bin Sultan, as payment for ensuring that Al-Yamamah proceeded. Most damagingly for this government, the fees are alleged to have continued, with the authorisation of the Ministry of Defence, after 2002, when the payment of commissions to foreign officials became illegal in the UK. Prince Bandar yesterday denied the payments were secret or backhanders, and said they were within the contracts.

The Guardian's initial revelations gave the Serious Fraud Office little choice but to open an investigation. In 2005, the Saudi government informed Blair it would not lodge another order with BAE (for 72 Eurofighters) unless this case was abandoned. Last December, Lord Goldsmith, the attorney general, instructed the SFO to drop the case. He and the prime minister cited "national security" as the reason for this surrender. Something was being secured all right: but it was BAE's income and the backsides of the ministers - led by Blair - who put the company's interests ahead of the nation's.

This was not the first time Goldsmith intervened to prevent justice from being done. He has come to symbolise everything that is wrong with Blair's government: the cowardice of ministers, lawyers' truths, capitulation to corporations and foreign governments, and the judicial abuses permitted in a nation without a constitution. He represents something very old - the British establishment's closing of ranks - and something new: the corruption of purpose and method that has attended the project of liberal interventionism from its inception.

In fairness to our craven attorney general, all this goes back a long way. The Defence Export Services Organisation (Deso), which allegedly oversaw these payments, has channelled money to corrupt officials in foreign governments since it was founded by the government 40 years ago. As documents unearthed by the Guardian show, this was and is its main purpose. Since the Al-Yamamah deal was signed in 1985, Britain has been supporting, financially and militarily, one of the world's most despotic regimes.

This makes a mockery of successive governments' claims to be supporting democracy around the world, and ensures our security is now entangled with that of the Saudi princes. Al-Qaida's primary complaint is directed against the Saudi monarchy and the western support it receives. Like the war in Iraq, like Blair's support for Israel's invasion of Lebanon and his uneven treatment of Israel and Palestine, this deal helps ensure Britain is a primary target for terrorism: not because our government acted on principle, but because it acted without it. Blair has invoked all the strategic threats from which he claims to defend us.

Close down Deso. Reopen the investigation. Sack the attorney general and the senior civil servants at the Ministry of Defence. Open a public inquiry to determine what Blair knew. Wage war on tax havens and secret offshore accounts. Hold BAE to account. Then lecture the rest of the world on good governance.

http://www.guardian.co.uk/commentisfree/st...2098302,00.html

[John Simkin]

Never let members of this government complain about corruption abroad. Never let them blame the failure of Tony Blair's mission to rescue Africa on venal dictators and grasping officials. The allegations published in the Guardian yesterday about slush funds used to oil the Al-Yamamah deal suggest that there is nothing that foreign despots can teach us about corruption...

This makes a mockery of successive governments' claims to be supporting democracy around the world, and ensures our security is now entangled with that of the Saudi princes. Al-Qaida's primary complaint is directed against the Saudi monarchy and the western support it receives. Like the war in Iraq, like Blair's support for Israel's invasion of Lebanon and his uneven treatment of Israel and Palestine, this deal helps ensure Britain is a primary target for terrorism: not because our government acted on principle, but because it acted without it. Blair has invoked all the strategic threats from which he claims to defend us.

Yesterday, Tony Blair defended his actions with the words: "This investigation, if it had gone ahead, would have involved the most serious allegations and investigation being made of the Saudi royal family and my job is to give advice as to whether that is a sensible thing in circumstances where I don't believe the investigation would have led to anywhere except to the complete wreckage of a vital interest to our country. We would have lost thousands, thousands of British jobs."

Does this mean that no charges will be made against anyone if a conviction might mean the loss of jobs? This argument could be used about any criminal investigation of any company.

Blair's fear was about the loss of jobs from within the government and the MoD. The reason that the investigation was called off in 2006 was not about Prince Banda's bank account in Washington but about BAE bank accounts in Switzerland. The SFO was close to finding out the other people being paid out of BAE's slush fund. I suspect this money went to politicians and officials at the MoD who made the deal possible.

[John Simkin]

It was disclosed yesterday that Lord Goldsmith failed to disclose to the OCED anti-corruption team that he knew about BEA/Prince Banda’s Washington bank account. Goldsmith claimed that this was because of “national security” reasons. This was the same excuse given for withholding documents in the Duke of Kent’s death, the Suez Crisis in 1956, Watergate and the assassination of JFK. This excuse allows governments to “get away with murder” (and I do mean murder).

I do not imagine that the government or parliament will investigate this case. Hopefully, the OCED will continue with its investigation.

[Sid Walker]

Never let members of this government complain about corruption abroad. Never let them blame the failure of Tony Blair's mission to rescue Africa on venal dictators and grasping officials. The allegations published in the Guardian yesterday about slush funds used to oil the Al-Yamamah deal suggest that there is nothing that foreign despots can teach us about corruption.

In 2003, the Guardian uncovered evidence suggesting that the arms company BAE had been running a £60m slush fund, which it used to provide gifts and prostitutes to Saudi officials to facilitate its massive weapons deal. Prince Turki bin Nasser, the Saudi minister for arms procurement, was alleged to be a beneficiary. But the new allegations are on a different scale altogether. They allege that BAE channelled over £1bn to another Saudi official, Prince Bandar bin Sultan, as payment for ensuring that Al-Yamamah proceeded. Most damagingly for this government, the fees are alleged to have continued, with the authorisation of the Ministry of Defence, after 2002, when the payment of commissions to foreign officials became illegal in the UK. Prince Bandar yesterday denied the payments were secret or backhanders, and said they were within the contracts.

The Guardian's initial revelations gave the Serious Fraud Office little choice but to open an investigation. In 2005, the Saudi government informed Blair it would not lodge another order with BAE (for 72 Eurofighters) unless this case was abandoned. Last December, Lord Goldsmith, the attorney general, instructed the SFO to drop the case. He and the prime minister cited "national security" as the reason for this surrender. Something was being secured all right: but it was BAE's income and the backsides of the ministers - led by Blair - who put the company's interests ahead of the nation's.

This was not the first time Goldsmith intervened to prevent justice from being done. He has come to symbolise everything that is wrong with Blair's government: the cowardice of ministers, lawyers' truths, capitulation to corporations and foreign governments, and the judicial abuses permitted in a nation without a constitution. He represents something very old - the British establishment's closing of ranks - and something new: the corruption of purpose and method that has attended the project of liberal interventionism from its inception.

In fairness to our craven attorney general, all this goes back a long way. The Defence Export Services Organisation (Deso), which allegedly oversaw these payments, has channelled money to corrupt officials in foreign governments since it was founded by the government 40 years ago. As documents unearthed by the Guardian show, this was and is its main purpose. Since the Al-Yamamah deal was signed in 1985, Britain has been supporting, financially and militarily, one of the world's most despotic regimes.

This makes a mockery of successive governments' claims to be supporting democracy around the world, and ensures our security is now entangled with that of the Saudi princes. Al-Qaida's primary complaint is directed against the Saudi monarchy and the western support it receives. Like the war in Iraq, like Blair's support for Israel's invasion of Lebanon and his uneven treatment of Israel and Palestine, this deal helps ensure Britain is a primary target for terrorism: not because our government acted on principle, but because it acted without it. Blair has invoked all the strategic threats from which he claims to defend us.

Close down Deso. Reopen the investigation. Sack the attorney general and the senior civil servants at the Ministry of Defence. Open a public inquiry to determine what Blair knew. Wage war on tax havens and secret offshore accounts. Hold BAE to account. Then lecture the rest of the world on good governance.

http://www.guardian.co.uk/commentisfree/st...2098302,00.html

On October 16th 2001, at a time when much of the world was in a frenzy and most of the western mass media were willing to paint any signs of dissent as disloyal treachery, a level-headed British columnist warned in The Guardian against rushing to judgment on the facts. The author reminded us that democracy is sustained by skepticism.

... If we are to preserve the progress, pluralism, tolerance and freedom which President Bush claims to be defending, then we must question everything we see and hear. Though we know that governments lie to us in wartime, most people seem to believe that this universal rule applies to every conflict except the current one. Many of those who now accept that babies were not thrown out of incubators in Kuwait, and that the Belgrano was fleeing when it was hit, are also prepared to believe everything we are being told about Afghanistan and terrorism in the US.

There are plenty of reasons to be sceptical. The magical appearance of the terrorists' luggage, passports and flight manual looks rather too good to be true. The dossier of "evidence" purporting to establish Bin Laden's guilt consists largely of supposition and conjecture. The ration packs being dropped on Afghanistan have no conceivable purpose other than to create the false impression that starving people are being fed. Even the anthrax scare looks suspiciously convenient. Just as the hawks in Washington were losing the public argument about extending the war to other countries, journalists start receiving envelopes full of bacteria, which might as well have been labelled "a gift from Iraq". This could indeed be the work of terrorists, who may have their own reasons for widening the conflict, but there are plenty of other ruthless operators who would benefit from a shift in public opinion.

Democracy is sustained not by public trust but by public scepticism. Unless we are prepared to question, to expose, to challenge and to dissent, we conspire in the demise of the system for which our governments are supposed to be fighting.

Strangely, these days - even though so much more information has since become available indicating the official version of 9-11 is an impossibility - the author of Gagging the Sceptics seems to have changed his mind. He no longer advocates scepticism. He recently wrote two articles in the Guardian dismissing 9-11 sceptics and warning that "9/11 fantasists pose a mortal danger to popular oppositional campaigns."

What happened, George?

I'm afraid this unexplained flip has so coloured my view of your writing that I now find it hard to credit much that you write.

You behave as though you have been warned off inquiring into the veracity of 9-11 (and 7-7).

If that's not true, then I and many thousands of other others would appreciate an informed, rational, sufficiently detailed account of why you no longer believe scepticism is appropriate in relation to the official account of 9-11 (and 7-7). No gratuitous ad hominem attacks please. No slippery argumentation in which you avoid the strongest case against the official accounts. That type of thing gets noticed and can damage your reputation.

Your views on the collapse of WTC-7 would be especially appreciated - including the BBC's remarkable feat when it reported this unprecedented event on live TV nearly half an hour before it actually happened.

In this latest article, you write: "this deal helps ensure Britain is a primary target for terrorism: not because our government acted on principle, but because it acted without it. Blair has invoked all the strategic threats from which he claims to defend us."

Your nimble mind flies too fast for a simple guy like me, George.

Any chance of clearing up the most basic anomalies about 9/11 and 7/7 for your readers, before inviting us to lock in behind your latest grand assumptions about what stimulates or reduces the incidence of 'terrorism'?

As so many contemporary mainstream commentators seem to believe in miracles and other most unlikely events, I think I'll look back to earlier great wits for inspiration and guidance.

Voltaire is one of my favourites.

We should eschew belief in absurdities.. lest we be seduced into the commission of atrocities.

Edited June 9, 2007 by Sid Walker

[John Simkin]

There are several factors concerning the BAe Al Yamama deal that can be further elucidated.

Fistly, the arms deal was originally a covert conduit for arms sales to Saddam's Iraq. Opening anything up about that would be stamped on immediately.

Secondly, BAe evidently can always use its intimate knowledge of subterranean matters to blackmail anyone in government in the UK (see point 1).

Thirdly, Wafic Said, the BAe Saudi agent in this deal and Mark Thatcher were reported to be jointly administering the "commissions" related to the deal via the so called "Savoy mafia." One beneficiary of Mark Thatcher's generosity is believed to have been the Conservative Party. The sum paid to it, if I recall correctly, was approximately £200 million to one of its bank accounts in Switzerland. I'm struggling to remember them, possibly Rothchilds was the bank and the accounts were known as the "three rivers accounts" - but I may be misremembering them incorrectly.

I was also told that Margaret Thatcher benefited personally to the tune of an odd couple of hundred million or so. The total figure of Thatcher/Conservative Party commissions was somewhere between £400-450 millions, I was told.

I seem to remember a rumour that was published by Scallywag Magazine which claimed that the Tory party money later "disappeared" courtesy of Lord MacAlpine and that it was news of this that triggered Michael Heseltime's heart attack and brough to an end his hope of ever leading the Party.

Thank you for this summary. It is not clear how much Margaret Thatcher, Mark Thatcher and the Conservative Party received as a result of this deal. That they received large sums is not in dispute. One can understand why the Tories are giving support for Tony Blair and Lord Goldsmith over this issue.

There was another interesting story published in today's Guardian. It claims that BAE Systems used a secret payments system to transfer more than £13m to a company called Defence Consultancy Ltd (DCL). This company was registered anonymously in 1997 in the British Virgin Islands, with a bank account at the Henry Ansbacher merchant bank in Guernsey. The chairman of this bank at the time was Louis Hart. His son is David Hart, Thatcher's political adviser. Hart of course masterminded the destruction of the mining unions under Thatcher. He was also working at the time as a political adviser to BAE.

BAE used a front company, Red Diamond, for this transaction. Over the last 20 years BAE has used Red Diamond to channel hundreds of millions of pounds to confidential agents with offshore accounts all over the world.

[John Simkin]

Yesterday Tony Blair made an attack on those journalists who have been investigating the corruption of his New Labour government. He described journalists as a feral beast. Blair was especially angry with those online journalists who have reported on these illegal actions. He even talked about the possibility of trying to regulate the online world. Something that the Chinese government have been trying to do. I don't think that Google will give him the same deal as the Chinese. This is what these British journalists had to say about Blair's speech.

"Tony Blair is right to say that competition and fragmentation have led to a search for 'impact'. He's right to warn of too much focus on conspiracy. He's right to kick-start an important debate at an important time about the relationship between politics and the media. He's wrong, however, to suggest that accuracy's been traded for impact in TV news. He's wrong too to say that policy insights have been traded for allegations of misconduct. Whilst he did acknowledge the role of 'spin' in increasing cynicism about politics he would have wrongfooted those who want to avoid self-examination if he'd also reflected on the impact of his promise to be 'purer than pure' and of those missing weapons of mass destruction."

Nick Robinson, BBC political editor

"I regard what Blair said as a vindication of our stance on Iraq. He was wrong, we were right, and I can understand why he has been upset by the tone and substance of our coverage. However, I am completely unapologetic about our stance on what has been the most catastrophic foreign policy mistake of our time. If he wants journalists to take the workings of parliament seriously, perhaps it would be a good idea if he, and his senior ministers, turned up more often. But I accept that there has been a breakdown of trust between the public and politicians, which the press and the politicians each have to take responsibility for repairing."

Simon Kelner, editor, Independent

"Tony Blair is right in much of his analysis but woefully wrong in the conclusions he draws. Twenty-four hour news and other instant forms of journalism have had a negative impact on quality. But frequently that has been to Downing Street's benefit. The real problem with much of British journalism is not that it shouts too loudly but that it doesn't do what it is supposed to do - namely, find things out and get original stories."

John Kampfner, editor, New Statesman

"It tells you a lot about Blair's preoccupations that he left his big speech on the media till this point. It obsesses him. He says he's not playing the blame game, but it's hard to see how calling the media a 'feral beast' can be interpreted any other way. New Labour was very happy to tango with the media until it went wrong - most spectacularly over the Iraq dossiers and Hutton. We've had Brown admitting in the past 24 hours that the government was wrong over the dossiers. Does Blair agree with his successor? I don't think the proliferation of new media is bad for politics: quite the opposite. It may be bad for the present government, but that's not the same thing."

Matthew d'Ancona, editor, Spectator

"Over the years, in a personal capacity, he has been a customer of the Press Complaints Commission. His analysis of the development of media convergence is perfectly reasonable and we have already made some moves to address that. At the end of the day, you are dealing in the free flow of information and that must be protected. But the very fact that he has chosen it as a subject for one of his valedictory speeches is interesting in itself."

Tim Toulmin, director, Press Complaints Commission

"I thought it was an extraordinary ill-advised speech by a prime minister in the fag end of his tenure. He was railing against the media in the same way that sailors might rail against the weather. He probably enjoyed the most benign and friendly media of any political leader of almost all time. It's only the Iraq war and the consequence of the Iraq war - that he and Gordon Brown have admitted involved some mistakes - that changed that. This is a man lashing out in a very uncharacteristic way. The prime minister, a man who always smiles in adversity, lashes out as he walks out the door. Frankly, I think it has been sitting in the back of his mind for the last seven years, it's burst out and it's a big mistake and very sad."

Trevor Kavanagh, assistant editor of the Sun and former political editor

If Tony Blair needs a new career, he could possibly cut it as a media columnist. His speech to the Reuters Institute yesterday, in which he analysed how the media now cover politics, echoes points frequently made by myself and other commentators. It is indeed true, as Blair says, that the media face intense competitive pressures; that commentary trumps facts; that a politician's error always becomes part of a venal conspiracy; and that hidden meanings matter more to the media than what a politician actually says.

But despite his brief mea culpa - "we paid inordinate attention in the early days of New Labour to courting, assuaging and persuading the media" - he still doesn't get it. For a start, he shows a fundamental misunderstanding of the origins of the now highly opinionated Independent, which, he says, began "as an antidote to the idea of journalism as views not news". The early Independent was the first broadsheet to mix views and news on a large scale. When I was its education correspondent (1986-9), I was given a front-page slot to denounce Kenneth Baker, then the Tory education secretary. Baker got the same slot next day to denounce me. The point was to air a variety of views, not expel them.

More widely, Blair grossly underestimates the role of politicians in changing political coverage. His speech yesterday was a rarity: it wasn't trailed in advance. But consider how often you see stories saying that a minister "is expected to say today". This is a recent development, alongside the trailing of white and green papers, inquiry reports and every kind of announcement. The Hutton report - given by Blair "as an example of being held to account", although the judge conducting the inquiry was appointed by the government - was leaked to the Sun. The paper never revealed where the story came from, but it is hard to believe No 10 was wholly unaware that someone was giving its favourite paper a scoop.

Once important announcements had to be presented first to parliament (or at least the cabinet) and were jealously guarded until then. Leaking gives ministers substantial advantages. They can leak partially. They can leak to selected journalists, who may be deemed trustworthy or just grateful for a story. They can leak at a moment of their choosing, dovetailing the story with a "grid" of ministerial "initiatives" or burying embarrassing news. They can leak before potential critics have a chance to give a more informed verdict. They can even "leak" something that has already been announced so as to milk positive angles again. All these tricks are now used by companies, pressure groups, voluntary bodies and opposition politicians. They started in Whitehall.

Blair argues that "lines of accountability between parliament and the executive" haven't changed. This is untrue. MPs were once (at least in principle) first to know of government proposals. Now journalists are first. If parliament is no longer reported, as Blair complains, this is largely because it deals with old news.

The difficulty with Blair's speech is one of chicken and egg. Did the pressures of 24-hour news come first, or the politicians' more manipulative approach to supplying news? Probably they developed together, but the politicians - who face real competitive pressure once in four years - were surely in a better position to go back to the more measured habits of old. Why didn't Blair? The answer is that he survived a decade in office and, until the end, hardly suffered from, for example, taking the country to war on a patently false prospectus and entering dubious relationships with wealthy business people. The relationship between public life and the media might, as he says, "be damaged in a manner that requires repair". But the media didn't do him so badly, did they?

Peter Wilby is a former editor of the New Statesman and Independent on Sunday

[Simon Jenkins]

Remember, any government scandal always turns out worse than first it seems. Remember too that if it involves an assertion by the attorney general, Lord Goldsmith, race to the kitchen and count your spoons.

I thought that little more could be squeezed from the Guardian's BAE/Saudi corruption story until the BBC's revelation on Monday that long-denied bribes had actually been countersigned by the Ministry of Defence. Those who jeer at the ethical standards of foreign governments should understand that these officials, were they in Washington, would now be in handcuffs.

Even the French, since the 1998 OECD anti-corruption convention, have held eight prosecutions for international bribery. Britain has held none. If the al-Yamamah case ever comes within sight of justice, it will be no thanks to an honest prime minister, an alert cabinet, a Wilberforce-style MP, a government auditor, a policeman or a lobbyist. It will be thanks to a muck-raking media, described yesterday by Tony Blair as a "feral beast" of cynicism.

I recall a British civil servant seeing a picture of a veiled Margaret Thatcher descending the steps of a jet to grovel at the feet of some Saudi princes at the time of the 1985 al-Yamamah contract. "This," he said with a sigh, "will end in tears." Thatcher was also negotiating the Pergau dam deal with Malaysia, heavy with kickbacks. Tony Blair did likewise with the Tanzania radar contract, a third of which comprised bribes. Prime ministers seemed to think themselves above the law. In both latter cases they overruled ministers and officials.

The £43bn al-Yamamah deal was not so much about defence as laundering huge sums of surplus oil revenue into the pockets of the Saudi rich, distorting Britain's heavily subsidised defence industry into the bargain. The Saudis do not fight. They have no plausible army. Their purchases of overpriced ships and planes must be operated by mercenaries from Pakistan and elsewhere and sit rusting in docks and deserts.

Saudi foreign policy is based shrewdly on paying for protection from fundamentalist groups that might stir internal dissent. The Saudis financed the Taliban in Afghanistan, and intelligence suggests this is continuing through Gulf "charities". It is inconceivable that Saudi intelligence, so highly valued by Blair, was ignorant of Osama bin Laden's activities before 9/11, which were run mostly by Saudis. The threat to the present Riyadh regime is internal and is not to be met by Tornados and British destroyers. It is met with brutal repression, torture, sharia law and medieval treatment of women and foreigners. Yet this is a government that Britain's most sanctimonious of prime ministers calls a "good friend of ours".

Industry estimates put the price of 120 al-Yamamah jets at roughly 30% over cost. While America was excluded from the contract by its Israel lobby, the alternative supplier, France, must be assumed not to have overbid the British but to have declined to pay so much "commission". This went chiefly to the very man who negotiated the deal, Prince Bandar bin Sultan. The money, accepted as more than £1bn, was paid to a Riggs Bank account in Washington - now closed - to cover his gigantic jet and other luxuries.

Al-Yamamah was not just the biggest arms contract in the world but also the most opaque. It was awarded unprecedented protection from audit, a unique Bank of England facility, and payments through offshore companies into various Swiss bank accounts. All prime ministers and defence secretaries have taken oaths of allegiance to these mysteries as a mark of their machismo. All participants protest their innocence of wrongdoing, yet go berserk at the mention of the National Audit Office, the Serious Fraud Office or, more recently, the OECD. I repeat, in any honest country they would be in jail.

BAE announced this week that the former lord chief justice, Lord Woolf no less, had been ensnared into "heading an inquiry into the company's operations and ethical practices", but he had been warned off al-Yamamah, presumably because it is considered beyond the power of whitewash. When BP asked James Baker, a former US secretary of state, to look into its safety record, he was told specifically to examine the Texas City catastrophe, the reason for his appointment. Lord Woolf must be soft in the head to fall for BAE's ruse.

Goldsmith announced last December that the SFO's head, Robert Wardle, had spontaneously recalled his investigators from Switzerland for "reasons of national security". Goldsmith briefed that the £2m investigation, which he had approved, was collapsing for lack of evidence. This is now seen as the reverse of the truth. The inquiry was called off for gathering too much incriminating evidence, after frantic lobbying by the prime minister. This indicated that BAE's protestations of innocence were untrue. Bandar's "commission" went way beyond Trade Department protocols stipulating that no more than 5% of a contract value be paid to "local agents". Far worse for Goldsmith, the inquiry had discovered the government's own fingerprints all over the disbursements from the Bank of England.

Panorama revealed that the Ministry of Defence specifically processed, and may still be processing, quarterly invoices for £30m to Bandar. It so happens that the head of the relevant MoD sales unit, Alan Garwood, is a former BAE executive. He reports to Lord Drayson, the arms sales minister, who gave Labour £500,000 within weeks of being made a life peer in 2004 and described himself as "entrepreneur-in-residence" at the Said Business School in Oxford. Wafic Said was Bandar's aide in negotiating al-Yamamah and is assumed to figure among its many beneficiaries. That Blair should have made Drayson political overseer of the Bandar payments cannot be a coincidence.

As the onion skins peel back, al-Yamamah emerges as not a defence contract at all but a vehicle for financial "skimming" by rich Saudis (and Britons such as Mark Thatcher). While British governments could argue that before the 1998 convention such payments were legal, that has not been so since and they were specifically outlawed in 2001. Whitehall has been complicit in a colossal, secret and illegal act of bribery to win a grossly inflated contract. That is why Goldsmith had to suppress the SFO inquiry and why BAE dare not let Lord Woolf near the stinking trough. And Blair has the gall to call the press cynical.

http://www.guardian.co.uk/armstrade/story/0,,2101560,00.html

[John Simkin]

I thought that little more could be squeezed from the Guardian's BAE/Saudi corruption story until the BBC's revelation on Monday that long-denied bribes had actually been countersigned by the Ministry of Defence. Those who jeer at the ethical standards of foreign governments should understand that these officials, were they in Washington, would now be in handcuffs.

Even the French, since the 1998 OECD anti-corruption convention, have held eight prosecutions for international bribery. Britain has held none. If the al-Yamamah case ever comes within sight of justice, it will be no thanks to an honest prime minister, an alert cabinet, a Wilberforce-style MP, a government auditor, a policeman or a lobbyist. It will be thanks to a muck-raking media, described yesterday by Tony Blair as a "feral beast" of cynicism.

The £43bn al-Yamamah deal was not so much about defence as laundering huge sums of surplus oil revenue into the pockets of the Saudi rich, distorting Britain's heavily subsidised defence industry into the bargain. The Saudis do not fight. They have no plausible army. Their purchases of overpriced ships and planes must be operated by mercenaries from Pakistan and elsewhere and sit rusting in docks and deserts.

I find it completely repulsive when British politicians go onto television and claim that we have the least corrupt political system in the world. It is just the least reported corrupt system. Not the same thing at all.

It is an important point that these defence contracts are a money laundering scam. It is government ministers and MoD officials who are being well paid for this service.

[John Simkin]

At the centre of the corruption accusations against Tony Blair’s government concerns a tax loophole that Gordon Brown promised in 1997 he would close.

Under the government of Margaret Thatcher, wealthy people born abroad could live in the UK and therefore qualify for tax exemption. Non-domicile status allows foreign-born millionaires to avoid some income, capital gains and inheritance tax on assets offshore. The UK therefore became a tax haven for the rich. To show their appreciation of this tax loophole, these men donated large sums of money to the Conservative Party. They also provided jobs on their boards to senior members of the party when they retired from politics.

Although Tony Blair’s government was elected on the promise of removing this loophole, it has never happened. In 2001 Brown announced that this loophole was under review, however, nothing has been done about it and it was recently reported that the number of people claiming non-domicile status has almost doubled to 112,000.

It is no surprise that people like Lakshmi Mittal, Lord Paul, Sir Gulam Noon, Sir Christopher Ondaatje and Sir Ronald Cohen, who have saved large sums of money because of this loophole have donated millions to the Labour Party over the last 10 years. In return they received honours and business help from Blair's government.

Take for example Lord Levy’s friend, Ronald Cohen. Although he was born in Egypt he has spent virtually all his life in England. According to the Sunday Times Rich List, Cohen is estimated to be worth £260m. This has enabled him to save paying many millions in tax. In return he has given the Labour Party more than £1.5m and was knighted in 2001. He is also Gordon Brown’s personal adviser on the Middle East. This will guarantee that Brown does not change New Labour’s policy on Iraq, Israel and Palestine.

[John Simkin]

Attorney General Lord Goldsmith is to step down after six years in office. He said he will leave his post next week - as Tony Blair quits after 10 years as prime minister. Goldsmith says he has resigned but in reality he has been told by Gordon Brown that he was going to be sacked.

The legal spokesman for the Liberal Democrats, Simon Hughes, said Lord Goldsmith would be remembered as "one of the most controversial attorney generals in post-war British politics... He will always share responsibility for the decision to invade Iraq and to drop the investigation into alleged corrupt dealings between BAE and the Saudi government in connection with Britain's biggest ever defence contract."

Hughes is being too kind. Goldsmith is the most corrupt Attorney General in our history. Gordon Brown has made a gesture that he is about to clean-up politics. I only believe that if he orders a re-opening of the investigation into BAE and the Saudi government.

[John Simkin]

I heartily agree with your sentiments John, but I really don't see Brown opening up the BAe scar again.

Firstly, Brown is part of the same American influenced school as Blair and other leading members of New Labour. Neither Brown nor Blair were direct members of BAP but they were, as you can see, heavily influenced by them. See: http://www.unclenicks.net/bilderberg/www.b...erg.org/bap.htm and also: http://www.nthposition.com/inlovewithamerica.php

Secondly, the Saudi royal family are, besides being thoroughly greedy and corrupt --- not to mention very nasty --- far too close and important to America to allow the newly formed scab on this scandal to be torn open again.

You are probably right that Gordon Brown will continue to participate in the cover-up. However, it is true that Brown hates Blair with a passion and that he could use these legal cases to destroy his reputation as an honest politician (some people would argue that this reputation has already been destroyed).

So far the right-wing press have gone fairly easy on Blair over the BAE Systems scandal. That is because of Margaret Thatcher’s involvement in the original deal. However, as we move closer to the General Election, Brown will be very vulnerable to attacks about covering up New Labour scandals. Brown might find that he will need to expose Blair’s involvement in these scandals in order to protect his own reputation and to keep his job as prime minister.

There are several rumours circulating at the moment about Lord Goldsmith. It has been noted that he resigned late on Friday night. This is the best time to bury bad news. The timing of this is very significant. Why did he not announce his intentions several weeks ago? For example, when John Reid and Hilary Armstrong announced their intentions not to serve in Brown’s government (they both knew they would be sacked by Brown).

One rumour is that just before he goes next week, Lord Goldsmith will announce that he has decided not to prosecute any of those involved in the cash-for-honours affair. There would be an outcry but because the front pages would be dominated by news of Brown’s arrival as prime minister, he will get away with it.

Another possibility is that Brown will appoint a Liberal Democrat as Attorney General. For example, Lord Carlile and Lord Lester, have been suggested as people who might replace Goldsmith. Then Brown could then argue that the decision not to prosecute Lord Levy for selling honours was taken by someone outside the Labour Party. The problem with this is how can Gordon Brown ensure that the new Attorney General makes this decision? All I will say on this is that Lord Goldsmith, Lord Levy, Lord Carlile and Lord Lester have something in common. They also have this in common with the people who initially funded Blair’s campaign to become prime minister.

Lord Carlile would be my choice if I was Brown. Carlile has been a loyal government supporter of the Blair government. He is the so-called independent reviewer of British anti-terrorist laws, and has advocated the development of legislation in conformity with provisions of the Bush government's USA PATRIOT Act. Among those civil liberties targeted included the right to a trial, the requirement that charges be issued against the imprisoned, and limits on government wiretapping of citizens.

[John Simkin]

UK defence firm BAE Systems has said it is the subject of an anti-corruption probe by the US Department of Justice. According to BAE, the probe will look at its compliance with anti-corruption laws including its business "concerning the Kingdom of Saudi Arabia". BAE faces allegations that it ran a fund to help it win plane and military equipment orders from Saudi Arabia.

Maybe it was the BAE Systems deal that gave George Bush a hold over Tony Blair. Now that Blair is going, Bush has allowed the US Department of Justice to go ahead. It might be used to negotiate with Gordon Brown if he is thinking of removing all British troops from Iraq.

The interesting thing about the al-Yamamah contract is that it was between the British and Saudi governments, not between BAE and Saudi Arabia, and that BAE was only the contractor.