Second oldest profession in the world - arms dealing

I fear it was a terrible move to axe the Serious Fraud Office (SFO) investigation into the Al Yamamah ("the dove") arms deal between UK and Saudi Arabia.

All parties have been stressing (implausibly) that the decision was not economic - supposedly 50,000 arms-related jobs at stake. For example, see SFO's terse statement. The trouble is that OECD's Convention on Combating Bribery of Foreign Public Officials in International Business Transactions goes further in article 5:

Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved. (emphasis added)

Oh dear: the Prime Minister defended the decision as follows: [No 10 statement]

"Our relationship with Saudi Arabia is vitally important for our country in terms of counter-terrorism, in terms of the broader Middle East, in terms of helping in respect of Israel-Palestine, and that strategic interest comes first, particularly in circumstances where if this prosecution had gone forward all that would have happened is that we would have had months, potentially years, of ill feeling between us and a key partner and ally and probably to no purpose"

That contradiction with the convention, and others in the government statements, could form the basis for legal challenge to the decision [FT - Decision to halt case may be illegal].

Sorry it just doesn't add up...
Corruption allegations were extensive and serious [wikipedia summary of the allegations / Corporate watch]. The Telegraph reported that the Saudis were threatening to take the business to France [Halt inquiry or we cancel Eurofighters], and as if by coincidence a few days later the argument that national security was at risk was produced as the basis for closing the investigation. But why would the Saudis refuse to cooperate on security matters? They have a problem with Al Qaeda too.

Unprincipled
A novel argument was floated by the Attorney General [statement]: It has been necessary to balance the need to maintain the rule of law against the wider public interest.

Might be worth reading that again...!! The Financial Times dismissed it as a 'specious assertion' and called the move A Damaging Cave-in. Wrong signals have been sent in virtually every direction: allegedly corrupt Saudis and arms executives have flexed muscle and won; BAE's shares are well up; Jonathan Aitkin is back on the telly; the day of reckoning for the UK arms industry has been postponed (but not cancelled) delaying diversification again; honest firms have been let down; the rule of law has come second to vague secretive assertions of national interest.

Bad news for international development
Much damage will flow from this, but hit hardest will be the modernisers in Britain's international development agency DFID and the intended beneficiaries of their work. Modernisers stress the role of good governance in securing development outcomes rather than just piling in aid. The most recent DFID white paper Eliminating world poverty: making governance work for the poor majored on this [see section 2]. As recently as June 2006, Hilary Benn was appointed 'Ministerial champion for addressing international corruption' as part of a package of anti-corruption measures. With hapless timing (suggesting they may not have been entirely in the loop) on 9 December and just 5 days before the plug was pulled on the investigation, DFID announced that: UK calls for more action to tackle corruption and Secretary of State for Development, Hilary Benn declared:

“Tackling corruption wherever we find it – whether here or abroad – is essential. We will not tolerate those who extort, corrupt and deceive. Together we can make progress and by strengthening the institutions of government, promoting better transparency and accountability and giving a voice to those who are hit hardest by corruption – the world’s poorest – we can make a difference.”

Ooops! Of course, it looks ridiculous now - the timing especially so. But the damage is profound: it's hard enough to exercise leverage on corrupt kleptocrats, but how can you do it unless you are acting in a principled way against corruption where you find it at home? And this does rather cut the ground from under the feet of those appointed to tackle corruption abroad.

What about the jobs?
The conventions and principles are clear. Turn a blind eye and you may win a battle or two, but you and everyone else will lose the war. I'm not convinced that this is a long term business anyway - the jobs are alreday heading offshore. Better think about finding something else to make or do.