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BBC lifts the lid on secret BAe slush fund

Category: News

Date: 04.10.2004
Printable version

With exclusive interviews with three former insiders, BBC TWO's The Money Programme lifts the lid on the secret slush fund BAe Systems (formerly known as British Aerospace) - Britain's biggest defence contractor - operated for Prince Turki bin Nasser, a leading member of Saudi Arabia's ruling royal family.

For almost 20 years Prince Turki was responsible for running the Saudi side of al-Yamamah, the biggest arms sale in British history, worth billions in orders to BAe.

In Bribing for Britain? (BBC TWO, Tuesday 5 October, 9.50pm) Peter Gardiner, one of the men who lavished luxury on Prince Turki for more than a decade, speaks out for the first time about how his small travel agency became a major conduit for money from BAe's secret slush fund.

Gardiner says: "Going back to 1989 it was two hundred thousand pounds or three hundred thousand pounds [a year]. Then it moved to about a million pounds a year and quickly to two and three and by the time it was completed it was moving up towards seven million pounds a year."


Gardiner reveals how, on BAe's instructions, he would lay on a seemingly endless stream of five-star hotels, chartered aircraft, luxury limousines, personal security and exotic holidays for Prince Turki and his entourage. All paid for from BAe's slush fund.

"This is way beyond the life style of most film stars," Gardiner told the programme. "Film stars were quite often around at the large hotels that we were visiting, but they wouldn't be living in this level of affluence."


Gardiner describes how BAe's largesse extended to Prince Turki's family as well. During a three month world tour arranged for the Turki family in the summer of 2001, Prince Turki's son enjoyed a £21,000 trip to Milan and a £99,000 skiing holiday in Colorado, USA.

Overall, Gardiner reckons, the five-star hotels, flights, limousines and security the Turki Family enjoyed that summer cost BAe around £2m.


"It's an extraordinary amount of money," Gardiner says, "but if you want the best of the best and there's quite a lot of people, that’s what it will cost."

Gardiner tells the programme he was also required to provide money to the Prince and his entourage. Sometimes as cash, sometimes as a bank transfer to pay off a credit card bill. The bank transfers, Gardiner recalls, averaged $100,000.


Gardiner says: "We didn't actually ask any questions about it, we were told to remit the payment and we did so."


Gardiner was also required to provide some unusual benefits for the Prince and his family.

After Prince Turki's wife and her entourage went on a shopping expedition, Gardiner faced a problem moving the amount of goods they'd bought.


"There was quite an accumulation of items," Gardiner recalls, "and the only way to get them back to Saudi Arabia was to charter a large aircraft, so we chartered a 747 freighter – a Jumbo."


The charter cost BAe between two and three hundred thousand US dollars.

On another occasion, Peter Gardiner was called on to purchase an entire video filming and editing suite and install it in Saudi Arabia.


"It was the state-of-the-art in every particular department with everything from remote cameras to a studio which would be specially constructed for it," Gardiner says.


The purpose: to video the Prince's daughter's wedding. The cost of the wedding video to BAe, Gardiner says was "close on £200,000".


The programme also interviews another insider Edward Cunningham, who is speaking out on television for the first time.


Working through a front company set up in the heart of Mayfair, Cunningham was instructed to look after more junior Saudis important to the al-Yamamah project, using money from BAe's slush fund.

Bribing for Britain? shows the range of Cunningham's activities.

Edward Cunningham was one of the people whose job it was to look after the Saudis who mattered to BAe. He settled gambling bills and arranged £150 prostitutes for Saudis visiting London on al Yamamah business.


"Some of them [the prostitutes] came from the area where I lived, which was very embarrassing for me as I was a Labour councillor in that area," said Cunningham.

Cunningham tells the programme he looked after officials at the Saudi embassy to ensure a ready supply of visas for BAe staff visiting Saudi Arabia on BAe business.


This included small gifts for junior officials, night-life entertainment and larger gifts for more senior Saudis.

Cunningham says canteens of gold or silver cutlery which retailed at around £1,000 each were popular gifts.


"I was inundated by everyone who was of any standing in the embassy. They all wanted one," Cunningham says. "They all wanted gold. They wouldn't take the silver ones."

The programme also describes the measures BAe took to disguise the destination of their slush fund money. Tony Winship, a retired RAF Wing-Commander and long-standing friend of Prince Turki, was key to this secrecy.

Wing-Commander Winship channelled BAe's slush fund spending through companies apparently unrelated to BAe. Peter Gardiner's travel agency, Travelers World, was one of these companies.

Gardiner describes how every month Wing Commander Winship would convert his detailed spending records into a one-page invoice.


The purpose of Winship's manoeuvre? Gardiner says: "He wanted to keep it very private, very secret, he didn't want prying eyes looking at any of these transactions."

The invoice for August 1995, for example, reads simply "Accommodation services and Support for Overseas visitors" with a total charged of "£987,365".
The invoice provides no clue as to what the money had actually been spent on.

The Money Programme investigation discloses that the executive then in charge of BAe's al-Yamamah project, Steve Mogford, authorised a series of slush fund invoices for payment with just three words: "OK to pay".


During the last four months of 1995 alone, the programme reveals, Mr Mogford authorised slush find invoices worth more than £3m.

The programme also names Mr Mogford as the man who halted an internal BAe investigation which might have revealed the true nature of the slush fund.

The investigation came about after Edward Cunningham alerted BAe's chief internal investigator Martin Bromley about his suspicions that Wing-Commander Winship might be creaming off cash from the slush fund to spend on himself.

Speaking exclusively to The Money Programme, Bromley describes how his subsequent investigation uncovered BAe's slush fund and the companies through which it was being channelled.


"It would appear that there were various front companies that were set up to disguise the fact that this expenditure was going on," Bromley tells the programme, "because it wasn't viewed as being a proper expenditure of British Aerospace shareholders' money."

Bromley's investigation into Wing-Commander Winship revealed evidence of a hideaway home Winship had set up for himself and his girlfriend. Bromley also found accounts at various casinos, gold charge cards, cars and boats which the Wing-Commander had at his disposal all funded wholly or in part by BAe's slush fund.

Bromley recounts how he wrote a report on his findings which he took to a meeting with senior BAe management. There, Bromley says, he found himself face to face with Steve Mogford, the BAe executive who'd signed off the slush fund invoices.

Bromley tells the programme Mr. Mogford instructed him to stop his investigation.


"I wasn't happy about it," Bromley says, "because I felt that they were probably going to sort of shove it under the carpet. I was a bit shell-shocked when I came out of the meeting I have to say."

At the time, Mr Mogford reported directly to BAe's Chief Executive, Sir Richard Evans. Of Mogford's instruction to halt his investigation, Bromley says: "I don't believe that Steve Mogford would've made a decision of that type without approval from Sir Richard... because it was just such a major decision to make."

Steve Mogford is today a board director and Chief Operating Officer of BAe.

In February 2002, Parliament toughened up the law on bribery and corruption, outlawing payments to foreign government officials.


Nevertheless, according to Peter Gardiner, Wing-commander Winship told him BAe wanted to keep their operation to fund Prince Turki going.

Gardiner said: "Mr Winship indicated to us that he'd heard from British Aerospace that there was a problem concerning the continuance of the programme and that they were looking for new ways round this. It would take some time to put a new system in operation and there was a lot of effort being put into a serious, don't worry it will continue, perhaps at a reduced level, it might go quiet for a while, but it would definitely continue as a programme, it was too important to give up."

In May 2004, following a series of press reports into BAe's slush fund, BAe's Chairman Sir Richard Evans appeared before Parliament’s Defence Select Committee.

Asked if the press reports were true Sir Richard said: "I can certainly assure you that we, and I believe most companies, are not in the business of making payments to members of any government."

The programme points out that since Sir Richard's answer was in the present tense, he could not be said to be commenting on BAe's activities in the past. Nonetheless, Mike Hancock MP told the programme that committee members were "gob-smacked" by Sir Richard's reply.

Mr Hancock told the programme: "At the very minimum the Defence Select Committee should summon him [Sir Richard Evans] back to the committee and clearly establish with him and with the company what the current position is and what historically the position is – why they gave the answer they did and why they weren't upfront with the committee about what had been going on."


Notes to Editors


Please credit BBC TWO's The Money Programme if any of the above is used.





Category: News

Date: 04.10.2004
Printable version


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