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UK Ministry of Defence officials appeared to express concerns about payments made to a Cayman Islands bank account by a subsidiary of EADS, the pan-European defence contractor, as early as 2008, according to an email seen by the Financial Times.
Those payments, which continued until at least 2010, and gifts allegedly given to Saudi generals, are the subject of a criminal investigation by the Serious Fraud Office into GPT Special Project Management, a UK-based EADS subsidiary.
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GPT provides communications equipment to the Saudi National Guard via a government-to-government programme involving the MoD.
An MoD team headed by a major general oversees the so-called Sangcom programme, and is supposed to approve GPT expenditures. Saudi payments to GPT must also be routed through an MoD bank account.
The MoD is also probing the matter and passing relevant material to the SFO, people familiar with the matter said.
According to a December 2008 email by a GPT executive who first queried the payments and gifts, MoD officials shared his concerns.
“As I advised you on 25 November 2008, my concerns have increased since the local MoD team in Saudi advised payments to the Cayman Islands company are unlikely to be approved when next reviewed by the MoD in the UK,” Mike Paterson, the GPT executive, wrote.
GPT transfers to Cayman Island accounts maintained by two companies, Simec International and Duranton International, continued until the middle of 2010, according to documents seen by the FT. Simec and Duranton could not be reached for comment.
The MoD said it insisted on the highest standards of propriety in all contracts and took the allegations of misconduct in relation to the Sangcom programme very seriously.
“That is why we referred them to the Serious Fraud Office,” the MoD said. “It would not be appropriate to comment on this specific contract at this time as it is subject to an SFO investigation.”
According to people familiar with the investigation, the MoD began to collate material in the middle of last year, shortly after a whistleblower took evidence to the SFO.
The MoD’s involvement with the project raises the stakes for the UK government.
In 2006, Tony Blair, then prime minister, quashed an SFO investigation into the alleged bribery of a Saudi prince by BAE Systems, Europe’s biggest defence contractor, which was vying for a £40bn fighter jet contract. Mr Blair cited national security grounds and was supported by the attorney-general.
Dominic Grieve, the current attorney-general, has not impeded the SFO’s inquiries into Sangcom or its decision last week to launch an official investigation.
He reviewed the case files last year and has been kept informed of developments, people familiar with the SFO’s probe told the FT.
The attorney-general would typically decide on whether charges should be laid in politically sensitive cases, the people added, but this only occurs at the end of usually lengthy investigations.
He would determine in such a situation whether the SFO director was correct in believing it is in the public interest to prosecute and whether there was a reasonable chance of conviction.
Additional reporting by Caroline Binham