How long can BAE, Britain's biggest arms company, run a secret service and trump the armed forces?

The parallel universe of BAE: covert, dangerous and beyond the rule of law

How long can Britain's biggest arms company run a secret service and trump the armed forces in political influence?

George Monbiot
Tuesday February 13, 2007
The Guardian

There is a state within a state in the United Kingdom, a small but untouchable domain that appears to be subject to a different set of laws. We have heard quite a bit about it over the past two months, but hardly anyone knows just how far its writ runs. The state is BAE Systems, Britain's biggest arms company. It seems, among other advantages, to be able to run its own secret service.

This week, Campaign Against Arms Trade (CAAT) hopes to obtain a court order against BAE. The order would allow it to discover how the arms company obtained one of its confidential documents. CAAT instructed its lawyers, Leigh Day & Co, to seek a judicial review of the government's decision to drop the corruption case against BAE, which is alleged to have paid massive bribes to members of the Saudi royal family. Leigh Day sent CAAT an email containing advice on costs and tactics. The email ended up in the hands of the arms company.

How? Correspondence between a plaintiff and his lawyers couldn't be more private. The last people you would show it to are the defendants in the case. But somehow the letter found its way to BAE's offices.

The arms company argues that it was the unwitting and unwilling recipient of the email. So why does it refuse to tell CAAT who sent it? Why, far from assisting CAAT's attempt to explain this mystery, has it threatened the group with costs for seeking to reveal BAE's source?

CAAT has good reason to be suspicious. In 2003, the Sunday Times revealed that BAE had carried out a "widespread spying operation" on its critics. "Bank accounts were accessed, computer files downloaded and private correspondence with members of parliament and ministers secretly copied and passed on." The paper said the arms company made use of a network run by a former consultant for the Ministry of Defence called Evelyn Le Chene. "Le Chene recruited at least half a dozen agents to infiltrate CAAT's headquarters at Finsbury Park, north London, and a number of regional offices." They provided BAE with advanced intelligence on CAAT's campaign against the sale of its Hawk aircraft to the Suharto dictatorship in Indonesia. The arms company also obtained CAAT's membership list, its bank account details, the identity of its donors, its letters to ministers, even the contents of private diaries belonging to its staff.

After the story was published, CAAT asked a team of investigators to examine the messages sent from its offices. They found that one of the group's most senior members of staff, the national campaigns and events coordinator, had sent 181 emails to an unfamiliar address. Many of them contained extremely sensitive information.

The coordinator, Martin Hogbin, denied that he was an agent of Le Chene's. He claimed that the mysterious email address belonged to a former CAAT volunteer, and that he had been sending him this information because he might find it interesting.

The investigators contacted the former volunteer, who told them that he had not received any messages from Hogbin, and did not recognise the address. CAAT took the case to the United Kingdom's Information Commissioner, who found that the email address belonged to "a company with links to Evelyn Le Chene". Both Le Chene and Hogbin refused to assist the investigations. If it was true that Hogbin was working for Le Chene, it would be a tremendous coup for her and her clients. As campaigns and events coordinator, he knew more than anyone else about CAAT's plans. If BAE were to obtain and make use of such intelligence, it could anticipate and outmanoeuvre the Campaign's attempts to expose or embarrass it.

BAE's spying operations represent just one way in which the company looks like a parallel state. It also appears to enjoy crown immunity. Last August, this column suggested that the Saudi corruption case might be dropped, in order to protect a new order for 72 BAE jets. It was not a hard prediction to make - Saudi Arabia had made the new deal conditional on the abandonment of the case. But I could not have guessed that both the attorney general and the prime minister would make such a show of squashing the investigation. They seemed to go out of their way to demonstrate to BAE's clients that they would do whatever it took to protect the new order, even if it meant exposing themselves to allegations of collusion.

The prime minister has never taken such a risk on behalf of one of his departments, let alone his ministers or officials (witness how Lord Levy and Ruth Turner have been left to swing). There are just two friends for whom he will put his legacy on the line: George Bush and BAE.

In 2001, Blair overruled Clare Short and Gordon Brown to grant an export licence for BAE's sale of a military air-traffic control system to one of the world's poorest countries, Tanzania. The World Bank had pointed out that the contract was ridiculously expensive - Tanzania could have bought a better system elsewhere for a quarter of the price. In January the Guardian revealed that BAE Systems allegedly paid a $12m (£6.2m) "commission" to an agent who brokered the deal.

In 2005, Blair made a secret visit to Riyadh to expedite BAE's deal with the Saudi princes. He then sent both John Reid and Des Browne to clinch the order. Ministers in the UK have always acted as unpaid salesmen for the arms companies, but seldom has a prime minister muddied his hands this much. Blair pushed the order through by promising the Saudis that they could have the first 24 planes ahead of schedule. How? By selling them the jets already allotted to the RAF. BAE's interests, in other words, trump the requirements of our own armed forces.

Blair has also broken his government's pledge to publish the report by the National Audit Office on BAE's dealings in Saudi Arabia. It remains the only NAO report never to have been made public. We can only guess why the prime minister needs to protect it.

It could be argued, with some force, that this government has always had a special relationship with big business, rather like its special relationship with George Bush (it gets beaten up and thanks him for it). But the special favours it grants BAE are deeply resented by other corporations. After the suppression of the Saudi case, F&C Asset Management, a very large institutional investor, wrote to the government to complain that its decision undermined the rule of law and the predictability of the investment climate. Hermes, Britain's biggest pension fund, said that it threatened the UK's reputation as a leading financial centre, and the chairman of Anglo-American wrote that the abandonment of the case "damaged the reputation of Britain".

At what point does the government conclude that this company has got out of control? That it presents a danger to national interests, to the reputation of the prime minister, to the privacy and civil liberties of its opponents? Why does it appear to be above the law? For how much longer will it be permitted to run what looks like a parallel secret service? Of all the questions we might ask of our ministers, these are the least likely to be answered.

George Monbiot is the author of the bestselling books The Age of Consent: A Manifesto for a New World Order and Captive State: The Corporate Takeover of Britain, as well as the investigative travel books Poisoned Arrows, Amazon Watershed and No Man’s Land.

He has held visiting fellowships or professorships at the universities of Oxford (environmental policy), Bristol (philosophy), Keele (politics) and East London (environmental science). He is currently visiting professor of planning at Oxford Brookes University. In 1995 Nelson Mandela presented him with a United Nations Global 500 Award for outstanding environmental achievement. He has also won the Lloyds National Screenwriting Prize for his screenplay The Norwegian, a Sony Award for radio production, the Sir Peter Kent Award and the OneWorld National Press Award. A full archive of his articles, with references, is available at www.monbiot.com.