Britain, Saudi Arabia and corporate bribery: another Brexit conundrum

Anti-corruption NGOs have recently written to the Attorney General, concerned that the UK government may be tempted to drop its investigation into alleged bribery by Airbus subsidiary GPT in Saudi Arabia. Robert Barrington, Professor of Anti-Corruption Practice at the Centre for the Study of Corruption in Sussex University, argues that this would be a mistake – and not in the interests of either the UK or Saudi Arabia.

Some day soon, we should expect the next chapter in the GPT story. To re-cap, GPT is a defence-related subsidiary of French aerospace giant Airbus. It had a £2billion contract in Saudi Arabia, but a British whistleblower came forward with detailed and documented allegations of bribery. The Serious Fraud Office investigated.

Having investigated, the next stage for the SFO – if it wants to prosecute – is to gain approval from the Attorney General. Where there is sufficient evidence to merit prosecution, there are very few circumstances in which such permission can be legitimately withheld – and inevitably, one of them is that old get-out for cornered governments, ‘national security’ (see paras 49-52 of the Framework agreement between the Law Officers and the Director of the Serious Fraud Office of January 2019).

Could prosecuting some GPT executives, and possibly some colluding Ministry of Defence officials, genuinely threaten national security? It is unlikely. But it might well embarrass the Saudi government, a strategically important relationship for the UK, particularly post-Brexit.

This has echoes of the BAE Systems case fifteen years ago, in which the then Attorney General apparently pressurised the Director of the SFO to drop its investigation into BAE’s (alleged) bribery in Saudi Arabia – on grounds of national security. The sense of unease was compounded when the UK Ambassador to Saudi Arabia – who had advised the Attorney General and SFO Director – retired and became the international business development director at BAE Systems. In the end, the US authorities got fed up with the British approach, and launched the prosecution themselves. It is worth noting that the ‘national security’ defence was heavily contested at the time, though it was much closer to the post-9/11 paranoia and concerns about withdrawl of Saudi security cooperation. The legal challenges were taken right up as far as the House of Lords. In today’s parlance, that means the Attorney General could be heading for a showdown in the Supreme Court – perhaps not a great look for the UK Government at this moment.

So Geoffrey Cox, the current Attorney General, has an important choice to make over GPT, which will inevitably draw comparisons with the BAE case and will be seen as setting the UK Government’s line on corporate corruption post-Brexit. Mr Cox has two broad options:

Option 1: get the SFO to drop the case. The upside may be good relations with Saudi Arabia, and perhaps a message to British business that this government is very keen to do whatever it takes to facilitate post-Brexit exports. But there is a big downside.

Option 2: allow the SFO to proceed. If the whistleblower’s case is as strong as it looks, we can assume there would be a prosecution. But apart from supporting the interests of justice, there is also considerable upside to this.

Of course, it’s not as simple as it looks. The UK government will want good relations with countries like Saudi Arabia, an urge that will increase post-Brexit, and will worry that a high-profile bribery case will damage relations. But despite this, there are some very good upside/downside reasons to proceed with a prosecution:

1. The UK’s standing in the world. Dropping the GPT case will attract widespread condemnation, not least from the influential OECD anti-bribery working group. This will make it near impossible for the UK to take a credible stance on corruption in international forums for a while – including two that will focus on corruption, the G20 in Saudi Arabia in 2020 and the UN Special Session on Corruption planned for 2021. Perhaps more seriously, the UK’s wider standing in the world will be damaged at a moment when it wants to increase, not diminish, its global reputation. Apart from being seen to break its international obligations, the UK would be giving the impression that it is easily pushed around by those countries with which it is desperate to trade.

2. Upholding the rule of law. Bribery is against the law. The Government has been keen to emphasise, with regard to Brexit negotiations, that it believes in the rule of law. This case is a test for its commitment.

3. Companies support anti-bribery laws. Since the Bribery Act of 2010, which resulted in part from the fall-out of the BAE Systems case, many UK companies have been more explicit about their support for anti-bribery legislation, not least because adhering to a consistent global standard is the only plausible way for multi-national companies to operate. A situation in which the UK government says it is acceptable for certain industries to bribe in certain countries creates uncertainty, mixed messaging, and the risk of British companies being prosecuted by another country if the UK fails to do so.

4. Bribery has consequences. Academic research – from the Centre for the Study of Corruption in Sussex University and others – unambiguously demonstrates the negative consequences of bribery. If the British and Saudi governments conspire to drop the GPT case, they will send the message that bribery in Saudi Arabia is acceptable and executives and officials can act with impunity. Much research into the consequences of bribery looks at the economic, social and individual damage. But strongly in the thoughts of policy makers and politicians should be the example of other MENA countries where citizens became so outraged at corruption and the impunity of government cronies that they took to the streets, toppled governments and instigated civil wars. The GPT case would not cause this by itself; but it would be another heavy dose of oxygen breathed into the fire of simmering outrage.

The good news is that there is at least one way out of this, in which justice is done and the UK maintains good diplomatic relations and its standing in the world. The UK government would need to agree with Saudi Arabia that a prosecution of the UK executives and officials is in the interests of both the UK and Saudi Arabia.

The Saudi government has already been making noises about the need to restrain egregious corruption. With the forthcoming listing of Aramco, it has its own reasons to signal how it wants to do business in the modern world. And most importantly, Saudi Arabia risks severe embarrassment as the G20 host if the UK drops this case. Mr Cox’s advisers may be tempted to follow the BAE model, because once a precedent has been set it seems easier the next time. But Mr Cox should also be thinking about the long-term fall-out of that case, Britain’s standing in the world, and whether his Saudi counterparts will be unanimously taking the same line as they did in 2006.

Far from being a risk, the GPT case actually presents the governments of both the UK and Saudi Arabia with an opportunity. It is a chance for the UK to signal to the world that it will be sticking to global standards post-Brexit; and for Saudi Arabia to send a message that it wants to take its place in the G20 on equal terms with other leading nations.

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