Cast your mind back to the al-Yamamah arms deal signed in the 1980s. After the first of the two deals was signed, allegations surfaced that payments of around £600m had been made to members of the Saudi royal family and various middle men.
In the years that have followed various investigators have claimed that up to £6bn worth of ‘commission’ payments and entertainment slush fund spending were made as part of the £43bn deal. The payments were designed to ensure the Saudis purchased (mainly) British Aerospace aircraft and maintenance contracts. The Serious Fraud Office began an investigation and, only under political pressure, dropped it in 2006 to prevent the loss of yet another Saudi arms deal.
BAE Systems, as the company was later renamed, was also involved in another bribery scandal that saw Tanzania purchase a fast becoming obsolete £30m Watchman military air traffic control system that could only provide limited use for civil air traffic control needs – which is what was required to support more civil air traffic in support of the country’s growing tourism industry.
BAE had paid an ‘agent’ Shailesh Vithlani, BAE’s former marketing adviser in Dar es Salaam, around £7m to grease the wheels of the deal, which was funded by Tanzania through the use of aid money given for school education. The Serious Fraud Office became involved and BAE was fined half a million pounds and promised to pay Tanzania £30m for the benefit of its people.
There are many more cases, but these two give a flavour of the serious criminality of paying bribes to help deals go through. Now fast forward to this year and the story that India has passed over the ‘Eurofighter’ Typhoon fighter aircraft in favour of Dassault’s Rafale fighter.
In December last year, the Secretary of State for International Development, Andrew Mitchell, spoke about UK aid to India – which was coming under fire given that India has rapidly created more wealth than the UK, has a space programme, aircraft carriers and the aircraft to go on them and is actually an international aid donor itself – and was reported by the Independent in the following terms:
Asked about the strategic goals of Britain’s aid programme to India, Mr Mitchell yesterday referred to the proposed education scheme in Orissa, and added: “It’s about everything I have just mentioned. The focus… is also about seeking to sell Typhoon. The relationship is a relationship you have to take in the round.”
The Minister, after previously pushing the line that Indian defence spending was reducing and its people are in need of our money, had bluntly admitted the reality that the UK Government was sending British taxpayers’ money to India as part of an effort to secure the sale of 126 Typhoon fighter jets. It is effectively a £1.2bn bribe being paid over four years to sweeten an arms deal.
A significant aggravating factor in this aid-for-fighter jets effort is the news in the Sunday Telegraph that India’s Finance Minister, Pranab Mukherjee, and other Indian ministers tried to terminate Britain’s aid to the country last year, but relented after the British begged them to keep taking the money. It goes on to explain that officials at the Department for International Development (DfID) told the Indians that cancelling the programme would cause “grave political embarrassment” to Britain, according to sources in Delhi.
BAE Systems, and British Aerospace before it, has been investigated and prosecuted by the Serious Fraud Office for paying money to secure arms contracts. So why is the UK Government able to do exactly the same thing without sanction, pressuring India to take our money dressed up as aid at a time we have more than enough requirement for the cash and are still borrowing heavily? Surely we should be expecting the SFO to launch a prosecution against the government. If not then isn’t the government signalling to private companies that this behaviour is acceptable?
Autonomous Mind 
How much do you think Dassault have paid/ are proposing to pay the Indians in ‘inducements’?
I’m not excusing bribery; it’s inherently wrong. But, in the world, the majority of our customers aren’t so pristine. The questions I would ask are, did we as a country benefit from winning the Saudi orders? Would we as a country benefit from winning the Indian order?
And as an employee, it’s not my job to worry about the ethics; better paid people than me are employed to do that. And that goes for me as a consumer in general; I want affordable (to me) goods, ethics is for people who either don’t buy anything, or are so wealthy they can afford to agonise over such matters.
Agree entirely with John in Cheshire, as I would imagine do the vast majority of the people in this country.
AM, I generally agree with you,but on this no. he whole world bribes their way into business. Our crime is to be so bad at it we get caught!
If your getting at the double standards them I’m with you on this AM. Using tax payers money to bribe a government while chasing private companies for doing the same thing is bloody hypocrisy. I don’t know why John & Neil can’t see it. It’s my money being sent to the ungrateful Indian sods FFS!!!!! Why didn’t the government quietly help BAe reduce it’s unit costs instead?
DavyC, I’m sorry but I just can’t accept your suggestion. It’s not a government’s job to interfere with free markets (and I know we don’t have them) but to suggest that our government should subsidise BAE Systems, so that they don’t have to offer inducements, is just risible. If it’s OK for BAE, then why not Vodafone, or Centrica, or BP or any other company. And if we’re offering to subsidise these, then why on earth are they allowed to operate as independent companies; surely, they should be nationalised. The logic takes you to communism, whichever way you look at it. And who’s to say that the French still wouldn’t get the contract?
Indeed many so called Civil Servants will have their sticky fingers in this corruption as we seek to expedite our banana republic credentials.
We were very naive about the Al Yamanah arms deal. This is simply the way business is done in large parts of the world. The fact that the investigations were dropped because they were jeopardising another arms deal, shows that reality was imposing itself and the humbug of the position which had been adopted.
As for the Indian aid and jets business. Commercial companies are likely to pay for something and make as sure as they can that they get it. Governments find it harder to be so naked in their intentions and to cover their tracks.
You can see aid being used to drum up business for companies in the donor country by being tied. e.g. construction of a dam with the aid conditional on it being spent with approved (our) contractors. As for aid payments to India supposed to be lubricating a deal with no connection to anything the aid could possibly be about, it’s a ridiculous idea.
Overseas aid is such a corrupt mess and so tied up with politicians’ vanity rather than answering a need, that I’d like to see the aid budget cut to zero and the means for administering it dismantled.
If it was later thought necessary to reinstitute it, it could be done on a case by case basis and the administration constructed as a clean build. As it is, it’s become something we spend money on because we’ve always spent money on it without many questions asked as to what its objectives are and whether it fulfils them. It’s no surprise that it’s sort of become associated with inducements but there’s no clear thinking.
Autonomous Mind said: “If not then isn’t the government signalling to private companies that this behaviour is acceptable?”
It looks like a protection racket with a bit of gambling thrown in. The Government socialises the cost of the bribes and pays them upfront. The aim being to create jobs at home and then pay for the earlier spending with the resultant tax revenues. It goes wrong when, due to past and poor Government procurement decisions, the British companies have uncompetitive products.
With an admitted decision to tie foreign aid and foreign trade together they are utterly mad in failing to reduce aid budgets when the partners at the other end decide to shop elsewhere. But then, I suspect the pushing of aid = trade was just a convenient fiction to satisfy the Westminster bubble that aid budgets could be considered as investment and advertising and not just patronising spendthrift policies. Otherwise people would start questioning why the aid budgets are being made to match an arbitrary UN/Maurice Strong figure.
AM I agree with john in cheshire. I have worked in the Middle East and did not much care for the ethics all round. In fact I was disgusted with much of what I witnessed and occasionally was asked to participate in. Out there it is at all levels, and if you are a straight as a die country kiwi like me you are not equipped to deal with much of it and either ship out or learn fast.
But it is not just about us having a holier than thou attitude to these matters. We can abandon all influence in these counties or we can play their game and hopefully balance up the books against countries like China who currently ride rough shod over local populations all over Africa and South America.
I am appalled at the the amount of “aid” we give to India, and the explanations are becoming ever more ridiculous, and this is worth pursuing. Not only that but we import so called “expertise” especially in IT from India leaving our own workers untrained and struggling for jobs.
We have lost the plot completely in the UK, but going on about bribes in what was once the third world is going to achieve nothing, other than demonstrate some of the traits that we so despise in our political class.
We we have to fixed our own back yard before we can move to the rest of the world. You do an excellent job of drawing to our attention the ruinous actions of our political class, but this subject will only result in further job losses if carried through to its logical conclusion. Its all about returns and this is a subject that offers no returns to ordinary people, and perhaps only satisfy a personal objective.
I’d agree with the bulk of the comments here. It may be illegal (then again, it was specifically made illegal by Blair, and then the law was sidelined by his Government- the original mid-1980’s Saudi Arms sweeteners were not illegal at that point…).
Two wrongs don’t make a right, but there’s no sense in pre-hobbling an export product against competitors who are perfectly versed in traditional Arms sales corruption. If the UK is going to adopt that position – well, fine – ‘no sweeteners’. It’s then incumbent upon the Government which makes that Law to apply it to arms imports – as in, the UK refuses to deal with Arms manufacturers from nations which disincline to adopt the same disciplines.
In this day and age, and in particular with regard to a successful product employing many thousands, what is good for the Goose must decidedly apply to the gander.
I think the point I’m making has been missed.
How can it be right for government or its agencies to prosecute companies for using sweeteners or payments to win contracts, then do exactly the same thing with our money to help win a fighter jet deal? The post is about the double standards of the government – but crucially using OUR money in a way that would see companies prosecuted.
One possibility is that the aid was never a bung for the jet fighter contract and no serious attempt was made to link the two, there was merely some nebulous notion of influence. It’s just that aid to India is a very questionable policy which few people can see the sense of and which is unpopular. The Typhoon contract was an excuse to justify it which was trotted out without much consideration. It was a very silly reason to give and a moment’s thought would have shown how hypocritical and unsatisfactory it was, and how it could explode in the faces of those giving it.
I think part of the problem the government has comes from a natural reaction such as “Why are we giving aid to India when they can afford to spend on jet fighters and they are not even buying them from us”? Questions like that beg the assumption that the aid payments are a bung.
Governments and politicians typically get away with all sorts of things which would see commercial companies go under and their directors behind bars.
e.g. the dubious legality of bailiff services and the abuse of laws intended to deal with terrorism.
AM I understand that point you make in your comment and agree.