http://news.scotsman.com/index.cfm?id=1908982006

SNP demands EU probe on halting of Saudi arms inquiry
BRIAN BRADY WESTMINSTER EDITOR

SCOTTISH Nationalists will today attempt to deepen the row over the 
abandoned fraud inquiry into a multi-billion-pound Saudi arms deal by 
calling on European investigators to enter the controversy.

SNP Europe spokesman Alyn Smith has referred the government's decision 
to drop the Serious Fraud Office (SFO) inquiry into the Al Yamamah arms 
deal to the European Commission. The dramatic move could drag one of 
Tony Blair's closest confidants into the controversy.

The MEP has written to European trade commissioner Peter Mandelson and 
justice commissioner Franco Frattini, requesting that they investigate 
the decision.

The audacious response mirrors SNP MP Angus Macneil's decision to call 
in Scotland Yard to investigate claims that Blair had offered honours in 
return for financial assistance to the Labour Party. That unprecedented 
move sparked the "cash-for-honours" investigation, one of the most 
embarrassing and perilous challenges to threaten the Prime Minister 
during almost a decade in power.

The attempt to call in external scrutiny of the SFO decision comes as 
the head of one of Britain's biggest pension funds warned that it could 
threaten the UK's reputation as one of the world's most important 
financial centres.

Attorney General Lord Goldsmith announced earlier this month that he was 
"discontinuing" the probe into arms firm BAE Systems in relation to the 
Al Yamamah contract, claiming it was in the interests of safeguarding 
"national and international security".

The surprise announcement came amid rumours that the Saudis had 
threatened to cancel a £40bn contract to buy 72 Eurofighter Typhoon jets
 > from BAE if the investigation continued.

But Smith claimed it could wreak untold damage on Britain's relations 
with allies closer to home.

He said: "The decision of the Serious Fraud Office, however it was 
taken, looks bad and will undoubtedly have a negative impact on our 
relationship with other countries in the EU - especially if it was taken 
to stop France getting new contracts from Saudi Arabia.

"Calling this investigation off with no conclusions, no charges or even 
any exonerations goes against the rule of law and the standards of 
justice Europe expects of all member states.

"We all know Commissioner Mandelson is a friend of Mr Blair's, but he's 
in the EU now and he must act accordingly."

The SFO had spent over two years investigating claims that BAE Systems 
had paid bribes to secure the arms deal with Saudi Arabia in the 1980s - 
allegations that the company has consistently denied.

Although foreign governments, including the Americans, had been 
complaining about reports of corruption for several years, the SFO 
finally began its investigation in July 2004 after detectives were shown 
evidence suggesting that BAE used a £60m "slush fund" to buy gifts for 
members of Saudi Arabia's royal family in order to secure contracts.

But the decision provoked fury in Saudi Arabia, where officials were 
hugely concerned about the impact on individuals who might be named 
during the course of the inquiries.

Blair said he was satisfied the decision to drop the probe was justified 
in the light of concerns about potential damage to Britain's relations 
with Saudi Arabia, one of the most valuable Middle Eastern allies in the 
international war on terror. But he has faced mounting pressure since 
the decision was announced, as opponents systematically attacked the 
excuses offered by a series of ministers.

The UK's biggest pension fund added its voice to City criticisms of the 
decision to halt the inquiry, warning of the potential impact on 
international trade. Mark Anson, chief executive of Hermes, which 
manages the BT pension scheme, wrote to Blair saying the decision had 
threatened the UK's reputation as a leading financial centre and would 
have a high long-term cost for business and markets.

+++



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