In the last post we reported that the Attorney General, Dominic Grieve, was said to be considering whether the Serious Fraud Office should be permitted to continue to investigate allegations that GPT, a UK subsidiary of the global defence manufacturer, EADS, made illicit payments to a member of the Saudi Royal family in order to secure a contract worth £2 billion. We previously suggested that if this report were true, then it echoed the BAE Systems case in 2006 when Tony Blair, the then Prime Minister caused an international outcry by effectively forcing the SFO to drop an investigation into allegations of bribery in the multibillion dollar Al Yamamah UK – Saudi defence contract.
Six months later, it appears that the Attorney General has decided not to get involved because, we suppose, of the risk to Britain’s international reputation if there is further political interference in the workings of the criminal justice system. A decision to stop the SFO’s investigation would be politically explosive, both domestically and internationally.
For those of you who are following this story, the investigation started as a result of an employee of GPT, Lt Col Ian Foxley, who was stationed in Saudi Arabia, whistleblowing on the company’s alleged illicit activities. Our first blog post on this story looked at a comparison of relevant whistleblower laws in the US and the UK. In short, however, it seems that the life of a whistleblower becomes particularly difficult once he or she has decided to go down that path. In the US, within certain very strict parameters, whistleblowers can be well rewarded or compensated for taking this courageous step. We have previoulsy posted on the new SEC whistleblower rules here and here. In the UK, by comparison, there is no compensation for whistleblowers generally, other than to a limited extent within the competition arena.
In the Financial Times on 6 March 2012 it was reported that the Foreign Office had confirmed in late 2011 that allegations of bribery against GPT had been discussed by Foreign Office officials with representatives of the Kingdom of Saudi Arabia on a number of occasions. Further, in GPT’s 2010 accounts, it stated that it was not yet clear what would be the outcome of the SFO’s investigation. It stated:
“The certain allegations have been made in connection with the company’s contracts with a subcontractor group. These allegations have been notified to the UK authorities with whom EADS is maintaining a dialogue…the relevant subcontracts were terminated. This termination has led recently to an unquantified claim from the subcontractor group for monetary damages…”
It is further reported by the FT that the SFO is allowing GPT to undertake its own internal investigation into the matter which will then be reported to the agency itself. This is not at all unusual. The SFO is generally happy for companies to undertake their internal investigations, on understanding that the results will be shared with them, as it saves the SFO a significant amount of time and precious resources.
This is an interesting story which will probably run on for some time yet. However, the fact that the Attorney General has decided not to get involved in trying to block the investigation is a sign that the government is taking the Bribery Act and the recent enhanced enforcement of the UK’s existing corruption laws much more seriously than it was six years ago. If the Saudis are trying to use the threat to withdraw from the intelligence sharing agreement, it appears not to have gained traction with the current British government.