(1) Legal challenge to decision to drop BAE corruption inquiry

PRESS RELEASE, 18 December 2006

On 18 December 2006, The Corner House and Campaign Against Arms Trade (CAAT) began a legal challenge to the decision to drop the investigation into bribery allegations involving BAE Systems Plc in Saudi Arabia. Lawyers, Leigh Day & Co, acting on behalf of the two organisations, issued letters to the Director of the Serious Fraud Office, the Attorney-General and the Prime Minister laying out their intention to judicially review the decision.

The basis for the legal challenge by the two NGOs is that:

• The decision was based on considerations of potential damage to relations with Saudi Arabia. This is expressly forbidden under the OECD's Anti-Bribery Convention (Article 5);
• The Prime Minister, in his advice on the public interest to the Attorney General and the Serious Fraud Office, improperly took into account considerations of damage to diplomatic relations;
• The advice given by the Prime Minister amounted to a direction to discontinue the investigation, which is an unlawful interference with the independence of prosecutors under domestic and international law.

CAAT spokesperson, Nicholas Gilby, said:

"The public expect BAE Systems to be subject to the same laws as the rest of us. But this decision shows that they are not. We are confident that this outrageous and unlawful decision will be overturned by the courts".

Susan Hawley, corruption expert at The Corner House, stated:

"This investigation was always a test case of how serious the UK government is about meeting its international commitments on combating corruption. The government has clearly breached its obligations under the OECD Convention. If the decision not to investigate is allowed to stand, international efforts to fight corruption will be set back by at least a decade. Corrupt politicians and businesses around the world will be rubbing their hands with glee."

ENDS

Notes to editors:

1. The Corner House is a not-for-profit social and environmental justice group. In 2005 it brought a successful claim for judicial review against the Department of Trade and Industry's decision to weaken anti-corruption procedures following lobbying by BAE Systems and other defence and aerospace companies.

2. Campaign Against Arms Trade (CAAT) works for the reduction and ultimate abolition of the international arms trade.

3. Article 5 of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions states that "Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved."

4. The OECD Anti-Bribery Convention was signed in 1997 and came into effect in 1999. It requires signatories to criminalise the payment of bribes to foreign public officials in international business transactions.

5. In June 2005, the OECD Working Group on Bribery evaluated the UK's implementation of the Convention, and expressed concern at the potential for 'national interest' considerations to influence the decisions on investigations. The Attorney General assured the OECD that "none of the considerations prohibited by Article 5 would be taken into account as public interest factors not to prosecute".

6. CAAT and The Corner House have instructed Richard Stein and Jamie Beagent at Leigh Day & Co solicitors and barristers David Pannick QC, Dinah Rose QC and Ben Jaffey of Blackstone Chambers.

7. A copy of the letter sent to the Serious Fraud Office is available here. A response is expected by 2 January 2007. If no satisfactory response is received, CAAT and The Corner House intend to issue a claim for judicial review.