From the Sunday Times
A SECRET slush fund set up by BAE Systems, Britain’s biggest defence contractor, was used to pay tens of thousands of pounds to two British actresses while they befriended a senior Saudi prince and his entourage.
Confidential documents seen by The Sunday Times reveal that money from the £60m fund went on the mortgages and rent, credit card bills and council tax of Anouska Bolton-Lee and Karajan Mallinder. It even paid for language lessons.
BAE channelled the cash through a London travel company which financed “accommodation services and support” for Prince Turki bin Nasser and other Saudi figures responsible for the desert kingdom’s involvement in the £40 billion Al Yamamah arms deal.
The revelations are bound to reignite controversy over the deal, which sparked a bribery inquiry by the Serious Fraud Office (SFO). Documents giving details of the payments were handed to SFO staff.
The investigation was terminated in December when Lord Goldsmith, the attorney-general, told parliament that it was not in “the national interest”.
At the time of the payments Bolton-Lee, a former lingerie model-turned TV actress, and Mallinder regularly attended parties at the Carlton Tower hotel in London hosted by the prince who, as the then head of the Royal Saudi Air Force, was responsible for the purchase of 150 Hawk and Tornado jets from BAE.
A senior government official, speaking on condition of anonymity, said that the inquiry had been trying to establish why the women were paid through the BAE fund.
It is likely that both would have been interviewed later this year had the inquiry not been aborted.
Goldsmith’s move followed a series of threats made directly to Tony Blair by the Saudi government. The Saudis warned that they would halt all payments on the contract and cut diplomatic and intelligence ties with Britain unless the criminal investigation was stopped.
The SFO had been investigating claims that BAE had set up the fund to support the extravagant lifestyles of senior Saudi royals as a way of ensuring that what was Britain’s biggest arms deal survived.
The SFO established that BAE used Travellers World, a travel firm, to run the slush fund and channel payments to Turki and others.
The prince, who is married to a niece of King Abdullah, the Saudi ruler, was the key player in the deal because of his role within the military.
The documents relating to the actresses refer to Turki as PB – a code for “principal beneficiary” – BAE’s description of him.
They show that during 2001 and 2002 Travellers World paid the £13,000-a-year rent on Bolton-Lee’s flat in west London. One document reveals that she received “expenses” of £1,275 in cash. Bolton-Lee, 29, who has appeared as a hostess in the BBC’s The Generation Game, declined to comment.
The documents also show repeated payments made to Mallinder during 2001-2. In July 2001, a sum of £1,002.67 appears as being paid to “Associates-Mallinder”.
Other documents refer to payments for “Mallinder mortgage (£448)”; “Mallinder expenses (£1,000); and “Mallinder language course (£326).” Karajan Mallinder, who changed her name from Karen after a 1988 conviction for possessing cocaine, said she knew nothing about any slush fund companies but admitted that she was a close friend of Tony Winship, a BAE manager and former RAF wing-commander who was arrested in 2005 over allegations that he ran the fund.
She ended a telephone conversation with The Sunday Times abruptly when asked if she had met Turki and his party in the 18th-floor penthouse at the Knightsbridge hotel.
There is a fine line between schmoozing a client and paying a bribe. It's not clear that this deal fell the wrong side of that line, but for as long as attempts to investigate are blocked it will remain controversial. More pointedly (but sadly less thrillingly for the papers), this deal involves the transfer of significant jet fighter intellectual capital to Saudi Arabia. While Saudi is not hostile to British interests it is very possible that this will end up in the hands of countries that are. £40Bn over 10 years is a tiny percentage of Britain's total exports. HMG should not be propping up any public company, especially not the defence industry which is horribly inefficient, and especially not BAe Systems which is in rude health and whose majority interests now lie outside the UK. Al Yamamah stinks and we should drop it like a hot potato. If the French want to step in and apply a lower moral standard then that is their decision; Britain should know better.
Anthony Charlton, Swindon,
