Monday, May 14, 2007

Like myself, Dave Jardine is a Brit long resident here in Indonesia.This blog is a reflection of that duality, of never losing touch with one's roots whilst more permanently being away from them.

The UK has vast investments here in Indonesia and has long had an interest in having good relationships with the Indonesian military, not least because UK arms sales are a lucrative source of foreign reserves. That British Aerospace Systems (BAE) has bribed various members of Indonesia's political élite in the past is well documented, as I commented back in 2005, here and here.

That BAE's corrupt practices have been condoned by the oh-so-ethical Labour Party is less well known. Dave Jardine has contributed the following article shedding some light on the hidden agenda of the UK government in its relationships with Indonesia.

This article is copyright. Please email Dave if you wish to reproduce it.

In early February this year the Indonesian Ambassador to London signed with the British government a Memorandum of Understanding (MOU) enjoining the United Kingdom and Indonesia to jointly fight corruption. What, one wondered, were the mutual benefits in this arrangement? Who would be doing what for whom? Would Indonesia demonstrate a new hygiene in its judicial system? Would the politicians begin to take business and governmental corruption seriously? Would the British show themselves to be squeaky clean?

This remarkable agreement came about within weeks of Prime Minister Tony Blair’s so-called New Labour government interfering in the legal process by bringing to a halt through the politically appointed Attorney General Lord Goldsmith an investigation by the Serious Fraud Office (SFO) into bribery and slush funds involving the country’s leading arms manufacturer BAE Systems. The company is alleged to have made huge payments to well-placed Saudi Arabian connections in a deal involving Swiss bank accounts and other ‘backdoor’ methods, all to avoid Parliamentary scrutiny. BAE’s Al-Yamamah contract to service the defenses of Saudi Arabia is massively lucrative and worth billions of dollars.

Blair met with Goldsmith, Defense Secretary Des Browne, Foreign Secretary Margaret Beckett and the heads of Britain’s notoriously mischievous intelligence services and it was decided to terminate the SFO’s investigation, which, if carried to its logical legal conclusion would have led to prosecutions. The justification: the inquiry endangered ‘national security’, surely a bizarre notion, and ‘put at risk Britain’s broad foreign policy objectives in the Middle East’, which, apparently, include propping up the brutally repressive Saudi regime as well as illegally occupying Iraq.

This move was made after enormous diplomatic pressure from Riyadh. In other words, the lawyer Blair and his inner circle interfered with the legal process at the behest of a foreign government. This was surely a humiliation for the United Kingdom.

Two NGOs, the anti-corruption The Corner House and the Campaign Against the Arms Trade (CAAT) lodged a judicial appeal against the blockage of the inquiry, contending that it is in contravention of the ant-bribery code of the Organization of Economic Cooperation and Development to which the UK is a signatory.

The latest development is that the London government has tried to oust Professor Pieth, the Swiss legal expert who heads the OECD’s anti-corruption watchdog. London wants him removed for pursuing the matter of the blocked BAE System’s inquiry. Attempts at diplomatic arm-twisting by Britain have left a bad odour with foreign governments. Meanwhile, Pieth and the OECD Director General Angel Gurria of Mexico suspect London may have planted various character assassination pieces in UK publications, although British diplomats deny this.

The implications are quite clear: Blair’s government will go to any lengths to protect high-level business corruptors involved in deals that are linked to major foreign policy objectives. To do this they are prepared to subvert international conventions to which the UK is a party. The OECD anti-bribery code expressly forbids “consideration of the impact of corruption probes on relations with a foreign state, as CAAT has noted in a very recent press release.

BAE Systems, meanwhile, has got dirty. It recruited consultant Paul Mercer to monitor activist groups and Mercer duly committed an offence in so doing by releasing a CAAT email containing the confidential legal advice the group had obtained. Mercer is now under a court order.

Indonesians studying this affair may reasonably ask whether the United Kingdom is in these circumstances a worthy partner in a joint fight against corruption. If the UK protects its high-level corruption suspects in this fashion then what does Indonesia have to learn? Equally, Indonesians may be legitimately concerned that this very same BAE Systems is deeply interested in developing Indonesia’s arms production base, a pet scheme of Defense Secretary Juwono in tandem with the Indonesian Armed Forces (TNI).

Lastly, Indonesians may have noted that the leader of the government proposing to jointly fight corruption with their country is the first serving British Prime Minister to have been questioned by the police, this in connection with the ‘cash for honours’ affair.

David Jardine

It is reported today that Swiss authorities have launched an investigation into alleged money laundering by BAE.

Federal prosecutors in Bern launched at the weekend their own official investigation into BAE, this time for alleged money laundering. Investigators there will be able to examine Swiss accounts held by billionaire middleman Wafic Said, who is regarded as a potential witness.

Hundreds of millions of pounds are reported to have passed through the accounts, from an offshore company secretly owned by BAE called Poseidon.

BAE's secret operations in Switzerland have emerged at the centre of many of the worldwide allegations against the company.

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