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In 1985, Saudi Arabia decided to purchase fighter jets to strengthen its Royal Air Force. To make the purchase, the government appealed to the Reagan administration; however, AIPAC has taken active steps to ensure that the transaction was not feasible. Due to the initial refusal, the prince of Saudi Arabia flew to London to meet with Margaret Thatcher. It should be noted that, in this country, there was no need to obtain the appropriate approval from the parliament according to the terms of MO (DESO), which, in its turn, made the arms deal implementable.
Details
BAE Systems was the largest arms manufacturer in the European countries and the leader in the UK. The Prince of Saudi Arabia and Margaret Thatcher made a deal concerning the purchase of 48 “Tornados” and 30 “Hawks” by Saudi Arabia (Aitken 25). The contract gained the name Al-Yamamah according to which the UK started delivering “Tornados” from the Air Force Reserve already by the end of the first month of cooperation. Gradually, the number of deliveries increased significantly and included additional weapons and maintenance. All the contracts concluded under this agreement totaled about 40 billion US dollars.
The principle of the deal was based on the barter exchange. Despite the fact that the supply was paid off officially, part of the money was paid in bribes (including 2 billion received by Prince Bandar, bill payment to the Chilean dictator, and a bribe to the husband of the Dutch queen). The essence of the barter was the daily deliveries of the tanker of oil from Saudi Arabia in exchange for UK fighters (Martin 219). It is essential to note that in spite of the date of signing the contract, the official delivery was recorded in 1989. Many researchers emphasize that most of the oil was sold on the spot market. In particular, the deals were delivered through banks such as British Petroleum and Royal Dutch Shell and the oil was sold at market prices. Given these conditions, the experts evaluated all oil supplies in the amount of 160 billion USD.
The total amount of payment for the fighters supplied by BAE Systems was about 80 billion including the bribes (Petersen 31). Thus, the core of the scandal lies in the fact that the documents provided by the Ministry of Defence did not commensurate with the real value of the fighters. A question that remains uncovered is how did the UK spend the money collected on the payment difference. That is to say, Al-Yamamah was not only a political contract (the struggle with communism by Saudi Arabia) but also the financial one (Holbrook 101). Interestingly, in addition to the illegal finance, the arms deal revealed the imperfections and loopholes in the legislation. To be more precise, the illegal financial activities were under the protection of the UK Law on non-disclosure of the state secret including offshore companies under the protection of the United Kingdom (Garrett 218).
Legislation
It is essential to note that the activities of the two countries included arms shipments through front companies and corrupted politicians. This agreement was examined on bribing and possible violations of laws such as the Law on the fight against corruption in foreign trade activities (Colaresi 99). Moreover, due to the fact that the revealed bribes amounting several billion dollars were transferred to Prince Bandar through the American bank accounts, this case also fell within the scope of the jurisdiction of the US government. Thus, the acts including the law on bribery and corruption (for instance, Prevention of Corruption Act 1906 and OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions) are applicable in this arms deal.
Works Cited
Aitken, Jonathan. Margaret Thatcher. A&C Black, 2013.
Colaresi, Michael. Democracy Declassified. Oxford University Press, 2014.
Garrett, Brandon. Too Big to Jail. Harvard University Press, 2014.
Holbrook, Donald. The Al-Qaeda Doctrine. Bloomsbury Publishing USA, 2014.
Martin, Stephen. The Economics of Offsets. Routledge, 2014.
Petersen, Tore. Anglo-American Policy Toward the Persian Gulf, 1978–1985. Sussex Academic Press, 2015.
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