UK Lords consider BAE-Saudi arms deal probe

The Serious Fraud Office sought the appeal to the Law Lords after the High Court ruled in April that the agency's decision was unlawful following a legal challenge brought by anti-corruption groups.

The fraud office maintains that the agency's director made a legal and appropriate decision to stop the corruption inquiry in late 2006, after receiving threats from the Saudi Arabian government to withhold cooperation on critical issues of anti-terrorism.

"The SFO director was convinced that Saudi Arabia wasn't bluffing," SFO lawyer Jonathan Sumption told the five Law Lords hearing the two-day appeal at the Houses of Parliament.

However, lawyers for the Campaign Against Arms Trade and The Corner House, which sought a judicial review because of the public importance of the issues involved, said that the decision by the former director, Robert Wardle, "did not satisfy the strict necessity test."

"On his own evidence, there were alternative steps open to the United Kingdom which were not exhausted and the damage to the rule of law wasn't properly addressed," CAAT and Corner House lawyer David Pannick told the hearing.

In a strongly worded judgment, the High Court ruled in April that the Saudi threat was a "successful attempt by a foreign government to pervert the course of justice in the United Kingdom." Lord Justice Moses and Justice Sullivan added that the SFO and the government had made an "abject surrender" to "blatant threats."

However, Sumption told the Law Lords that the High Court had made several incorrect assumptions about the law and the agency's actions, noting that some of the key evidence had been "redacted," or heavily edited, for security and diplomatic reasons.

"They proceeded on limited information available to them," Sumption said.

He also criticized the High Court for highlighting the alleged direct involvement of Saudi Prince Bandar bin Sultan, the former ambassador to the United States and now head of Saudi Arabia's National Security Council, in making the threats to drop a multibillion-dollar Typhoon Eurofighter contract before the inquiry was halted. A $40 billion deal for 72 Typhoons was signed in September.