The anti-corruption organisation Transparency International is examining a complaint about a report it issued in 2004, which concluded that “there is little evidence of widespread systemic fraud and corruption” in the UK. The complaint is not about Cash For Honours, nor the BAE Systems overseas bribes scandal. Instead, former arms industry employee Rob McCartney has complained that the report ignored evidence consistent with claims of fraud on UK government arms procurement contracts, and apparent efforts by government ministers to hide that evidence.

In March 1988 Labour MP Dale Campbell-Savours, a member of the House of Commons Public Accounts Committee, accused Marconi Command and Control Systems of committing fraud on the BATES project by making unnecessary changes to the specification and then overcharging for them. In November 1999 British Aerospace (BAe) bought the Marconi group of companies from GEC & renamed itself BAE Systems. In 2004 Sir Raymond Lygo said that when he was in the head of BAe, they regularly underbid for contracts and used changes to the specification as an excuse to push up the price. British taxpayers had to fork out an extra £3 billion for “cost overruns” on MOD procurement contracts in that year alone, and 90% of the increase was from projects involving BAE Systems.

Rob McCartney points out that statements by government ministers about the alleged BATES fraud appear to be inconsistent, not only with other published information, but even inconsistent with each other. On 20th November 1987 Tory minister Sir Tim Sainsbury, replying to a Parliamentary question from Dale Campbell-Savours, claimed that the cost of changes to the BATES specification was “less than 1.5%” of the project cost. On 23rd June 1997, in a written answer to a Parliamentary question from the Plaid Cymru leader Dafydd Wigley, Labour minister Lord Gilbert claimed that the cost of developing BATES had not increased since 1985. “They can't even agree over whether or not there was any increase” says Rob McCartney. “When the contract was announced in October 1985, the headline price was £100 million, An increase of 1.5% on that would amount to £1.5 million worth of changes. However, when the BATES system was finally accepted by the MOD in July 1993, the price of the Fixed Price development contract had tripled to £300 million. The 1991 Statement on Major Defence Projects, from the National Audit Office, showed that the BATES project overran by an entire year because of changes to the specification. Since it was only supposed to be a two year contract, an extra year of work due to changes would imply a price increase of around 50%”.

Rob McCartney's last job in the arms industry was at the Stanmore, Middlesex, site of BAE Systems. He resigned from that at the end of April 2000. In June of that year The Observer newspaper published an article based on his information about fraud at the site while it was under Marconi management. The MOD Police then launched a criminal investigation into his allegations. “I consider their investigation to be a complete farce” he says. “They made no effort to prevent evidence being destroyed or altered during the first few months of the investigation. Their eventual report accepted a statement from MOD civil servants that “The price paid for the BATES system was the price which was originally agreed”. Anyone can see that £300 million (the price paid in 1993 ) is not the same as £100 million (the price agreed in 1985)”. According to Rob McCartney, MOD Police officers told him “we work for the MOD, we're part of the MOD” and “as long as they're happy, that's all we care about”.

“I've contacted around 20 political parties and a number of NGOs about fraud on UK arms contracts” says Rob. “Privately some say they believe me, but none of them is prepare to publicly call for a criminal investigation by an independent force. I met with Staff of the UK branch of Transparency International in 2003. They told me they couldn't do much because of lack of resources, but they never expressed any scepticism. I only became aware of the 2004 report in the last couple of weeks when I found it mentioned on the Internet. I was outraged and complained immediately.”

Referenced sources of information:
National Integrity Systems, Transparency International Country Study Report, United Kingdom 2004
Sir Tim Sainsbury's statement - Hansard column 691, 20 November 1987
Lord Gilbert's letter of to Dafydd Wigley 23 June 1997 (D/Min(DP)/JWG/MP/2046/97/M),
The 1991 Statement on Major Defence Projects, National Audit Office (ISBN: 0102121031), Figure 5 on page 7 .
“BAe faces MoD fraud inquiry”, The Observer June 18 2000  http://observer.guardian.co.uk/uk_news/story/0,6903,333611,00.html