The revelation that the Ministry of Defence paid millions of pounds to a firm that would later be accused of being a conduit for secret payments to high-ranking Saudi officials is the culmination of a scandal that has been half a century in the making.
The £8m paid from an MoD bank account between 2014 and 2017 was in connection with a large defence deal, Sangcom, first struck in the 1970s.
In Geneva in the mid-90s the British government’s knowledge of payments being made to Saudi officials became clear, a court heard. It was there that a senior civil servant at the MoD is said to have informed two businessmen that the British government required their company to make payments to an offshore network.
The Sangcom deal had at this point been running for nearly two decades. Under the deal, Britain provided military communications equipment and training to the Saudi Arabian national guard, or Sang. In 1994 a British firm, GPT Special Project Management, won a bid to take over as the main contractor on the deal.
One of the contract’s requirements had been described in tender documents only as Item 8 – “to be advised”. It was in Geneva that the man from the MoD is said to have explained to the GPT executives what the mysterious Item 8 involved.
For every transaction that took place under the contract, GPT would secretly pay an additional sum to offshore companies belonging to a fixer, Peter Austin. These payments, the MoD man said, were essential. They also had to remain secret.
“I was familiar with facilitation payments … in the context of the Middle East,” another GPT director would later recall in court documents. “Commissions were then part and parcel of doing business in that part of the world.”
In 2020 investigators at the Serious Fraud Office brought corruption charges against two men over the payments.
One of these men, Jeffrey Cook, was GPT’s managing director from 2008 to 2013. The other, John Mason, was the accountant for Peter Austin’s offshore companies, known as Simec. Austin would also have been prosecuted, had he not been too ill. He died recently.
The two men were cleared of wrongdoing in connection with Sangcom when they were acquitted by a jury on Wednesday. They successfully presented an extraordinary defence: that the state, in the form of the MoD, had for decades authorised the payments for which they were being tried.
‘Dragged into the light’
In 2010 Ian Foxley, a senior financial executive at GPT, discovered payments to Austin’s offshore companies marked “bought-in services”. Armed with a cache of internal GPT documents, he fled the company’s Riyadh offices to turn whistleblower and handed his evidence to the SFO in the UK.
The information he provided led the SFO to trace more than £9m of payments from GPT to Simec, then from Simec to Saudi fixers, then from the Saudi fixers to Miteb bin Abdullah – a Saudi prince who was the head of the Sang – and his associates.
In July 2014 SFO officers carried out a series of arrests. Austin was detained as he got off a plane at Gatwick airport, while Cook and Mason were arrested at their homes in Blaenau Gwent and Norfolk respectively.
When the case finally came to court in 2022, Cook and Mason accepted that the payments had been made. But they were not illegal, they successfully argued, because they were approved by the British and Saudi governments.
Tom Allen KC, representing Cook, alleged that cabinet ministers, Whitehall mandarins and military figures had long known about, and approved, such payments so that British firms and not those from other countries landed the contracts. This complicity, he alleged, amounted to “very serious” misconduct by the government that had finally been “dragged into the light”.
Decades of British deal-making in Saudi Arabia relied on what one confidential Foreign Office cable from the 1960s described as a “deniable fiddle”: the Saudis wanted payments, and the British authorities were relaxed about them being paid. But neither wanted their fingerprints on the paperwork. Enter the middlemen.
Graham Brodie KC, representing Mason, argued this was the arrangement said to have been laid out by the MoD official in Geneva in 1994.
At a second meeting, in London, the same official revealed that “there was a document which had been signed by a permanent secretary and someone in authority in Saudi Arabia, which confirmed that the payments to Simec were necessary to enable the contract between the MoD and the Sang to run smoothly”, the court was told.
This “comfort letter”, locked in a safe in MoD offices confirmed that the “facilitation payments” were required, it was alleged in written evidence.
The MoD said it had been unable to find such a letter.
‘Collective amnesia’
The fact that, historically, payments were made to officials as part of arms deals with Saudi Arabia was not disputed by the SFO. It accepted that until the mid-90s the British government’s attitude in such deals was “permissive”.
After the SFO investigation began in 2011, GPT stopped the payments that were under scrutiny, prompting the Saudis to threaten to cut Britain out of the Sangcom contract, Cook’s lawyers claimed.
They alleged that it was amid this intense pressure that in July 2014 – the same month as Cook and Mason were arrested – the MoD landed on another “deniable fiddle”.
Defence lawyers argued that the Saudis were instead paid via a contract called Project Arrow. The secretive deal, described in documents referred to in court, involved the MoD directly paying £8m to a Saudi company, Arab Builders for Telecommunications and Security Services (ABTSS).
The existence of Project Arrow was not disclosed to the defence lawyers until halfway through an initial trial of Cook and Mason. The delayed release of evidence by the MoD and other concerns led to this first trial being halted in July 2022. The second trial started last November.
When the MoD eventually handed over the documents it had blanked out long passages, so it is not clear what exactly ABTSS was contracted to provide in exchange for the £8m paid under Project Arrow.
What is known is that the work involved computers and that significant proportions of the work were carried out by one or more unnamed subcontractors, with 15% of the money going to ABTSS as a markup, according to a judge.
ABTSS was identified by the SFO as a conduit through which GPT had, during the earlier period between 2007 and 2010, made payments to Miteb and high-ranking Saudi officials.
Cook’s lawyers argued it could not merely be a coincidence that the MoD secretly paid millions of pounds to ABTSS on the instruction of Miteb after GPT stopped payments to the prince via the very same company.
Evidence suggests there were concerns in the MoD, too. Emails from 2014 cited in court demonstrate that officials were uneasy about the potential implications for the MoD of signing a contract with ABTSS. In one, a civil servant pointedly said: “You mention the company has links to the prince – we will need to ensure we have got a fair and transparent price against which we are confident there can be no accusations made. Do not think this will be easy at all.”
Mark Heywood KC said Project Arrow was a legitimate contract for military equipment, and was directed at a time when GPT was increasingly unable to operate under the pressures of the SFO investigation.
The MoD would not provide any details about Project Arrow or the payments to ABTSS.
ABTSS did not respond to a request for comment. Miteb’s whereabouts is unknown.
Dr Susan Hawley, the director of Spotlight on Corruption, said: “This case has exposed high-level knowledge by the UK government and the Ministry of Defence about alleged corruption that has been going on for decades.
“It has also raised very serious questions about whether the MoD operated mechanisms for continuing to facilitate payments to Saudi public officials.”
Mr Justice Bryan, the judge who oversaw Cook and Mason’s first trial, ordered that the prosecution be halted in July 2022 until the MoD had made full disclosure of any documents it held relating to Arrow and other issues, though not before remarking on the “collective amnesia” of MoD witnesses during their sessions in the witness box.
With serious questions remaining about Project Arrow, the MoD may now be asked to provide a fuller account than the one heard by jurors.
