BRITISH AEROSPACE, A SAUDI PUPPET COMPANY

Saudi Arabia bought British goods worth $2.25 billion in 1994. Under al-Yamamah, they have ordered about $31 billion worth of weapons. For 1996, the Saudi government has earmarked 700,000 barrels of oil per day for payment for the weapons. (March 1996 prices were $14.75 a barrel.)

This contract is worth $2 billion to one company alone, British Aerospace which manufactures Tornados for the Royal Saudi Air Force and has over 1,000 British employees working in Saudi Arabia. Companies, like British Aerospace, who are so revenue-dependent on contracts with the Saudi government would do well to heed the advice of Labor MP George Galloway: "With all our eggs in the unstable basket of Saudi Arabia, we risk losing everything when that dictatorship falls, for the people will remember the companies and individuals who conspired with their suppressers [sic] of democracy in their country."

The Saudi Arabian government has British Aerospace wrapped around its finger because revenues from the al-Yamamah deal saved the company from going under. In the early 1990's, it was losing as much as $1.8 billion dollars a year. The $30 billion al-Yamamah contract was signed in Riyadh in February 1986. British Aerospace refuses to reveal the exact terms of the contract, but newspapers have learned some of the provisions. Under the 1986 agreement, British Aerospace agreed to supply Saudi Arabia with 48 Tornados, 30Hawks, 30 Pilatus PC 9s, two Jetstream trainers, and a variety of missiles and ground-based equipment in exchange for oil. Two years later, under "Al-Yamamah II," the Saudi government ordered 48 more Tornados. In January 1993, immediately after the company reported one of the worst annual losses of any British company ever, Saudi Arabia ordered more Tornados. The focus of the Al-Yamamah contract is money not weapons. In the words of George Galloway, the Saudi government has ordered "vast amounts of unusable weapons" which were worth millions of pounds to British Aerospace. The Saudi government does not care whether the weapons work. The royal family is using the al-Yamamah deal as a cover. What is important is the commissions royal family members and their cronies get from the deal.

The Saudi government pays for weapons through a "counter-trade" agreement. They cede ownership of a certain amount of oil to the Bank of England who permits British Petroleum and Shell sell the oil on the market. The earnings are put into an account in the name of the Ministry of Defense. The Ministry pays installments to British Aerospace, the main contractor, when it delivers weapons to the Saudi government. The falling price of oil has led to the Saudis earmarking more barrels than originally provided for in the contract in order to meet its $3 billion dollar a year obligation and has shrunk the amount of funds available for the defense budget, since this so-called "government" contract does no fall under the Saudi federal budget, thus preventing the government from entering into as many new contracts as it would like and from paying on existing contracts with companies like UTC/Sikorsky. The International Monetary Fund has served notice that Saudi Arabia must change its financial practices. Despite this warning, after a lull of several months, the Saudi government is once again awarding contracts to British companies. Plans are underway to buy more military hardware to replace older aircraft.

Their greed spurred by British Aerospace's success, other companies are honing in on the action by becoming subcontractors under al-Yamamah. Proposals include: 150-300 Vickers¬manufactured Challenger 2 tanks, 80 GKN-produced Warrior armored fighters, AS90 self¬propelled howitzers, and Stormer armored cars, this package priced at $3 billion; and GKN Westland EH 101 transport helicopters. Vosper Thornycroft has built 3 minesweepers and expects to receive an order for at least 3 more.

THE AL-YAMAMAH CONTRACT EVOLVES

The Saudi government has dealt with the British through the lucrative al-Yamamah contract since the 1980's. In May, after a hiatus in awarding projects under al-Yamamah, the seventh al-Yamamah contract came into fruition. It is a joint venture between Harlow Chemical Company (Harco) and Dhahran Chemical Industries. The government has plans for even larger deals before the end of this year.

The Harco deal indicates that al-Yamamah, originally "an open-ended package of rolling contracts [with defense companies] built around a Saudi Arabian wish list," (Reuters), is casting a wider net to draw wealthier fish. Robert Craig, a financial adviser to the British government on deals such as al-Yamamah, says that the goal of al-Yamamah is "to attract as many blue-chip companies as possible." To this end, the Saudi government bent the rules to speed up the deal with Harco. According to Mr. Shiels, Harco's marketing development manager, "Al-Yamamah speeded our application by allowing us to cut through the usual bureaucratic layers. This then allowed us to tap into the range of tax and other financing incentives offered by the Saudi government." This special treatment included interest-free loans for up to half of the contract value, exemption from paying duty taxes on imported equipment and raw materials, a ten-year moratorium on paying taxes on the project, and tariff-free access for exports to other Persian Gulf states. While the al-Saud and their middlemen continue illegally to pocket millions of dollars of commissions from this deal, they deny the Saudi people revenues legally due from contracts with business.

In fact, Saudi citizens are questioning the military hardware purchases. They see Saudi Arabia being used as a dumping ground for weapons the Saudis cannot use or do not need, only so the royal family and weapons companies can line their pockets. Arabs do not understand why, instead of deploying the expensive, state-of-the-art weapons in the Gulf War, foreigners were called in to defend Saudi Arabian soil. As Martin Woollacott of "The Guardian" notes, "The expensive weaponry the Saudis have bought from the United States, France, and from Britain under the al-Yamamah deal, is essentially useless. The Gulf war showed that Saudi Arabia did not have the capacity to defend itself except with American help. With all its money, it lacks the population base to be in the same military league with powers like Iraq, Iran, or Egypt."

He goes on. "In the event of a internal rebellion, the need would be for infantry and armored cars. The tanks and warplanes would be largely irrelevant in such a situation unless one envisages, as some do, elements of the armed forces fighting one another in a civil war." Meanwhile, vastly needed infrastructure improvements to the Saudi landscape are on hold because of lack of funds. They are also fed up with the decadent royal family, and since 1994, hundreds of Saudi citizens have been arrested for criticizing the government. Despite the threat of imprisonment, clergy, academics, and professional Saudi citizens are sending letters to the king asking for humanitarian and democratic reform.

BRIBERY

Officially, al-Yamamah, initially hailed as "the world's biggest ever arms deal," is a contract between the British and Saudi governments; therefore, commissions are illegal. Over the past six years, however, evidence of bribes and commissions, of up to 45 per cent, relating to the contract has been trickling in.

None of the parties will reveal the exact provisions of the contract, but mounting evidence presages a scandal of enormous proportions. Al-Yamamah is not just a single contract, but a series of contracts for a variety of military products, especially aircraft and aircraft-related facilities and services. Some contracts provide definite commitments that have been fulfilled or are scheduled to be fulfilled, like the aircraft orders with British Aerospace. Others were vague in details and have been cancelled or postponed, like the building of an air base in Sulayil and British Aerospace's promise to invest in Saudi Arabia, making the contract an "offset" agreement.

The Saud family members behind the scenes include Mohammed bin Fahd, Bandar bin Sultan, Abdul Aziz bin Fahd, Khalid bin Sultan, and of course none other than Sultan. Mohammed and Abdul Aziz profit through his front men, Sheik Fahd al-Athel and Jonathan Aitken. Sultan and his sons Bandar and Khalid profit through their front man in London Wafic Said. It is a Saudi standard practice to use middle men whenever a deal entails commissions, which are placed in Swiss bank accounts and not included in the contract price.

Despite the denial of the alleged key players, some involved in the deal are talking. Sir Colin Southgate, chairman of Thorn EMI, admitted paying a 25 per cent commission on a 40 million dollar contract for bomb fuses for Tornados sold under al-Yamamah. Former US Marine colonel, Thomas Dooley, demoted for refusing to take bribes, named al-Athel as the agent acting for Mohammed bin Fahd in deals with United Technology Corporation/Sikorsky, a weapons manufacturing giant. Dooley attended a meeting where Dr. Wharton Schober, business manager for Mohammed, assured UTC/Sikorsky representatives that "Mohammed would ensure that Sikorsky achieved its objectives in Saudi [Arabia]." Court documents have confirmed many of Dooley statements including those about meeting with Mohammed's front man, al-Athel.

Aitken claims that he works for al-Bilad UK, an investment company. Al-Bilad UK is affiliated with al-Bilad, a Saudi conglomerate owned by Mohammed. Despite Aitken's claims, al-Bilad UK is not an investment company. It makes no investments at all. It buys ships, cars, and airplanes for Mohammed; it is Mohammed's London front company.

Commissions from weapons deals are so lucrative that the Saudi princes are competing to make profits on the same contracts. Ibrahim al-Namlah, a retired Saudi general and front man for Bandar bin Sultan and Khalid bin Sultan, tried to steer business with UTC/Sikorsky away from Mohammed and into his bosses' pockets. Confused UTC/Sikorsky executives went to Bandar to find out who they should be dealing with. While awaiting his answer, the executives met with both al-Athel and Schober in London. This meeting, too, has been confirmed by documents admitted into court. In the end, Bandar decided that Fahd and Khalid would profit from the UTC/Sikorsky deal, not Mohammed.

Gerald James, former chairman of Astra, parent company of BMARC, the arms company that employed Jonathan Aitken before Aitken entered the government, explicitly states that Aitken was hired for his connection to Mohammed. "Aitken said he had a longstanding connection with the Saudi Royal family. He suggested that it would be a good idea if he were put on the main board of Astra . . . In September 1988, he invited me to Geneva Hilton. He said al-Athel was particularly influential in military contracts. . . He had already discussed with me and my colleagues on the Astra board that al-Athel would be the person to push the weaponization of the helicopter on our behalf. . . . The purpose of the invitation to Geneva was to meet Princes Khalid and Bandar, Wafic Said, Al-Athel and any other royal who was going to be there." Wafic al-Said, known as "Mr. Fix-it" and worth over 300 million pounds is a friend of the royal family who, in addition to allegedly pulling in commissions on the al-Yamamah deal, is said to have helped Mark Thatcher, son of former British Prime Minister Margaret Thatcher, make 12 million pounds from the deal.

The story of bribery and commissions connected with the al-Yamamah deal is complicated, but it is clear that individuals are profiting from the deal at the expense of Saudi citizens.

SAUDI PROPAGANDA

With its al-Yamamah trump card, the Saudi government wields enormous influence over British politics. Saudi Arabia is the main customer of the British arms industry, and Great Britain's position as the leading arms supplier to Saudi Arabia after the US is so important that the British government is willing to support organizations entrusted with polishing the royal family image abroad.

The Gulf Center for Strategic Studies campaigns against individuals and organizations which criticize the Saudi government's human record, which includes public execution, amputations, and torture. In its newsletter, "Gulf Report," the Center claims that "the murderer should be executed to save his soul." It writes about the "disadvantages of a free press" and calls human rights champions to task for imposing "their beliefs on the rest of the world." The Center's director, Omar al-Hassan, is allowed unlimited access to the House of Commons and serves as a research assistant to Tory MP William Powell. The Center is also supported by other MP's such as Tony Marlow and Lady Olga Maitland. Last year, Prime Minister John Major spoke as guest of honor at a dinner sponsored by the Center.

SOURCES