Black Money

by Frontline

first published 7 April 2009

The US public television's flagship public affairs programme Frontline, produced a 60-minute documentary on "black money" -- the secret payments that make up the shadowy world of international bribery. It reveals how multinational companies create slush funds, set up front companies and make secret payments to obtain business and contracts. In describing the crackdown on these practices, the documentary focuses on BAE Systems and allegations about its billion dollar bribes.

The programme includes interviews with current and former prosecutors investigating alleged bribery and corruption involving BAE Systems, including Robert Wardle, the (now former) Serious Fraud Office (SFO) Director. Wardle describes as "blackmail" the Saudi threat to withdraw intelligence cooperation with the UK if the SFO's BAE-Saudi investigation continued:

Frontline: In a situation where one of the people who signs on the bank accounts involved in the money is the deliverer of the threats -- so why go along with it?
Robert Wardle: Because it's blackmail. It's not nice, but that's where we are.
Frontline: Blackmail?
Robert Wardle: Sure. I accept that. Threats were made, and I had to decide whether to give in to them or whether to continue with the investigation. At the end of the day, much against the grain, much against what I would have liked to have done, I took the view that the risk was too great to continue the investigation and risk the damage being done.

Deputy SFO Director Helen Garlick says in the documentary "We believed that we could show, if we got access to the Swiss accounts, whether or not a crime had continued to be committed, right up until the present day." In response to the question as to whether the SFO already had evidence that crimes had been committed, Garlick replies "Yes". After Robert Wardle stopped the investigation, he "was let go as director of the Serious Fraud Office, and then Helen Garlick resigned."

It was the documents and firsthand knowledge of BAE's alleged corrupt payments to Saudi officials provided by travel agent Peter Gardiner that started the Serious Fraud Office investigation into the arms deals. Gardiner queried why BAE was paying for the services he was providing to Saudi officials: "BAE always made it very clear to us that this was a highly confidential government-to-government contract", he says.

Black Money interviews public relations adviser Lord Timothy Bell, who was closely involved in the BAE-Saudi deals from the beginning advising Prime Minister Margaret Thatcher (and at times BAE and Saudia Arabia as well). Bell says:

"Of course there is suspicion, and of course people are entitled to be suspicious . . . But as far as I'm concerned, if the British government . . . and the Saudi government reached a sovereign agreement over an arms contract that resulted in a tremendous number of jobs in Britain, a great deal of wealth creation in Britain . . . and enabled Saudi Arabians to defend themselves . . . I think that's a jolly good contract."

The documentary includes an extended interview with Prince Bandar's legal representative, former FBI Director Louis Freeh, who says of the various arms deals: "This was a treaty that was set up to ensure maximum flexibility for the purchase of arms. If the [US] Ministry of Defense and Aviation wanted to purchase U.S. arms, U.S. arms could be purchased through BAE and the U.K. ministry in a way that did not deal with the objection of the U.S. Congress to the selling of American equipment to the Saudis."

The Chair of the OECD Working Group on Bribery, Mark Pieth, describes "black money" as "huge amounts of money, with corporations on the one side and heads of state on the other side . . . It goes to a few people, genuinely powerful people. You're talking about the center of legitimate power."

-- Watch Black Money

-- Read the transcript

-- Read a synopsis

-- Read full interviews with:

  • Louis Freeh, former FBI director representing Prince Bandar bin Sultan;
  • David Leigh, The Guardian journalist
  • Mark Mendelsohn, US Justice Department chief prosecutor for international bribery;
  • Mark Pieth, chair of the OECD's Working Group on Bribery.

-- Look at Frontline's additional Documents and Readings on bribery and BAE.

-- Explore Frontline's continued reporting into The Business of Bribes.