BAE, Bandar, and Bush

Defense contractor BAE is under scrutiny in the British press for paying over a billion pounds through Riggs Bank in Washington, D.C. to Prince Bandar of Saudi Arabia, at the rate of 30 million pounds per quarter over the last ten years. This resulted in a British fraud inquiry by its Serious Fraud Office that was stopped last December by attorney general Lord Goldsmith, on grounds that according to the Guardian, "British 'government complicity' was in danger of being revealed unless the SFO's corruption inquiries were stopped." Tony Blair said that he accepted "full responsibility" for stopping the fraud investigation. The OECD has begun its own investigation.

Riggs Bank, which was used to launder money by the Saudis, former Chilean dictator Augusto Pinochet, and the government of Equatorial Guinea, had relationships with the CIA, as did Bandar and Pinochet (through his secret police chief Manuel Contreras, who banked at Riggs).

Riggs was investigated by the Treasury Department and the Senate, and admitted failure to report suspicious transactions or take actions to prevent money laundering schemes, for which it paid $25 million in fines levied by Treasury in May 2005.

Bandar and BAE claim that there is nothing wrong with their arrangement and that it did not constitute bribes paid to Bandar. The accounts Bandar used belonged to the Saudi Arabian Ministry of Defense and Aviation, but he spent huge amounts of money on personal expenses such as $17.4 million to build a palace and $400,000 on a luxury car purchase. When Bandar was interviewed by PBS Frontline for a show about terrorism, he made the following statement about corruption in the Saudi government:

But the way I answer the corruption charges is this. In the last 30 years, we have implemented a development program that was approximately ... close to $400 billion worth, OK? Now, look at the whole country, where it was, where it is now. And I am confident after you look at it, you could not have done all of that for less than, let's say, $350 billion.

If you tell me that building this whole country, and spending $350 billion out of $400 billion, that we misused or got corrupted with $50 billion, I'll tell you, "Yes." But I'll take that any time. There are so many countries in the Third World that have oil that are still 30 years behind. But, more important, more important -- who are you to tell me this? ... What I'm trying to tell you is, so what? We did not invent corruption, nor did those dissidents, who are so genius, discover it. This happened since Adam and Eve. ... I mean, this is human nature. But we are not as bad as you think. ...

Bandar, the former Saudi ambassador to the United States, is a friend of the Bush family. George W. Bush's uncle and major campaign fundraiser, Jonathan J. Bush, was a senior executive at Riggs Bank.

I suspect there is more scandalous information waiting to be uncovered.

UPDATE (June 15, 2007): The U.S. Department of Justice is now investigating BAE.