Private Eye no 1334, 22 February - 2 March 2013
HP Sauce p.10
EUROPEAN defence giant EADS still hopes to brush off bribery allegations concerning its British subsidiary GPT Special Project Management and a £2bn Saudi government contract (Eyes passim).
Despite strong words in the Middle East earlier this month, David Cameron, like Tony Blair before him, is thought not to be too keen on upsetting British-Saudi relations by prosecuting the corruption that sustains a dubious regime and billions of pounds' worth of arms contracts.
Meanwhile, even as the Serious Fraud Office director David Green mulls the case, two Tory MPs are doing their bit for the business.
According to the register of members' interests, Oliver Colvile, MP for Plymouth Sutton and Devonport, went on a three-day, £6,000 visit to Riyadh in December paid for by the Saudi government as part of a "UK Defence Forum delegation to gain an understanding of the political and security framework as related to the Saudi government". The forum is a think-tank funded by big arms firms, including EADS. It is led by lobbyist Robin Ashby, who accompanied Colvile, and is run by his firm, Bergman PRo
Another Tory, Filton and Bradley Stoke MP Jack Lopresti, went to the kingdom at the same time, also paid for by the Saudi government. Lopresti makes no mention of the UK Defence Forum but says he went "to meet with members of the Shura Council (the Riyadh parliament's upper house), government ministers and various human rights groups".
The Eye asked Mr Lopresti if in fact he had gone with the UK Defence Forum, and for more details of the human rights groups he met on a trip funded by a Saudi government that is traditionally keener on deals than on rights. Answer came there none.
Things are looking less cosy in the US, certainly for EADS, with the FBI reportedly looking into the GPT case. A fair chunk of the offshore payments, as the Eye first revealed, went through HSBC New York branches and the arrangements might well fall within the long reach of American law enforcers, despite their thoroughly British origins - as the Eye can this week reveal (see p39).

p.39
UK SAUDI ARMS DEALS
A Very British Coup
THE dodgy multi-million pound offshore payments made by a British company involved in a £2bn arms deal with Saudi Arabia, exposed by the Eye last May, have remarkable roots back in the very earliest days of the hugely lucrative British-Saudi arms trade, we can reveal.
Details of the payments for apparently sham "bought in services" by GPT Special Project Management Ltd, a subsidiary of European defence giant EADS, are currently gathering dust in the pending tray of Serious Fraud Office director David Green but are part of a long and dishonourable trade going back half a century.
Back in 1962, when Egypt's Soviet-backed president Gamal Nasser fomented a republican coup against the royalist regime in Yemen, Saudi Arabia's south-western neighbour, leading British right-wingers urged action. They perceived a threat to Aden, then a British protectorate, to the south; but there was no official appetite for intervention in the wake of the Suez humiliation and given US support for Nasser.
Unofficially something could be done, however; and Julian Amery MP (pictured right), then a right-wing aviation minister and his friend David Stirling, the wartime founder of the SAS now itching to reassert British power, persuaded foreign secretary Alec Douglas-Home that they should set up a covert, deniable, operation.

Awash with petro-dollars
Soon Stirling had assembled a group of ex¬ SAS men to marshal Yemen's poorly organised royalist forces, all funded by a rich but weakly armed Saudi regime feeling threatened by Nasser's encroachment next door. The British Field Liaison Force (BFLF) as it became, achieved some mutually beneficial military success, arguably keeping Nasser's forces out of Saudi Arabia until a deal for the supply of Lightning jets that effectively became the Saudi air force, negotiated by Stirling and legendary fixer Geoffrey Edwards, came off in 1965.
Duff Hart-Davis, author of The War That Never Was, reports the mercenaries' commander Jim Johnson explaining: "Big David [Stirling] and Geoffrey Edwards had gone quite a way down the line with Tourist [codename for Saudi defence minister Prince Sultan]. Tourist would sign their enormous deal if we could guarantee to hold everything together long enough for them to get their bits here." The Yemen operation, in other words, was good both for business and the Saudi royals who would prove such generous customers in the coming decades.
Although the dogs of war felt betrayed when the British government withdrew from Aden, Stirling and Edwards managed to persuade defence secretary Denis Healey of the merits of lucrative "govemment-to-govemment" deals with the Saudis for equipment, training and maintenance that would be run by ex-SAS men. One BFLF veteran, Bernard Mills, would tell filmmaker Adam Curtis in 1999: "We had already shown in Yemen and other things that we had the capability of doing it."
A series of major contracts followed, ballooning in value after the 1974 oil price hike left Saudi Arabia awash with petro-dollars.
Among the biggest was a £400m deal (more than £2bn in today's money) concluded in 1978 for a new communications network for the Saudi Arabian National Guard, the 30,000-strong personal army of Prince Abdullah, now the country's 88-year-old king.
The "SANGCOM" deal, signed by the Ministry of Defence as a government-to-government contract with the Saudis using Cable & Wireless as "prime contractor", would transform Abdullah's Guard into a rapid reaction force that could quell any uprising and keep the oil flowing.

Sins of commission
The contract was won, according to a Times report at the time, "against exceptionally fierce foreign competition, especially from the US". And, as the British government accepted by this stage, winning and retaining such contracts required ample "commissions" for Saudi sheikhs and officials.
It was into this rich new world that two obscure outfits had recently stepped, although their names would only become known decades later when the project manager on the latest phase of the SANGCOM project, now operated by GPT Special Project Management Ltd, blew the whistle on millions of pounds in payments to them.
On 23 October 1975 Simec International, a Liechtenstein "anstalt" foundation, was created and a moribund British company within the London merchant banking group Antony Gibbs & Sons changed its name to Duranton Ltd, taking on a new role as "agents, advisers and consultants, in particular to persons and institutions interested in trade between Europe and the Middle East". The timing was telling: a later MoD memo reveals that in the same month Cable & Wireless's "detailed proposals, prepared by them and approved by MOD(PE) ['procurement executive'] were submitted to the National Guard in October 1975".
Simec was established by two Brits. One was Bryan Somerfield, a former "political officer", aka an MI6 intelligence officer, in Aden, who had gone on to use his local knowledge as an agent for, among others, Marconi. British embassy papers from around the time, unearthed by author Nicholas Gilbey, record officials remarking how Somerfield "had found the right connections for doing business with the National Guard" and "had a special pull with the Royal family". His partner in the venture would be a bright young engineer, Peter Austin, who hailed from Marconi's home town of Chelmsford and was now working for the company in Beirut.

A domestic affair
According to Liechtenstein papers filed by Simec, obtained by the Eye, both operated out of addresses in Lebanon, the former's listed simply as "Haus Somerfield" in the town of Shemlan, home to the Middle East Centre for Arabic Studies (a well known "spy school" until the Lebanese civil war forced its closure), the latter's an apartment block in downtown Beirut.
Duranton was a more domestic affair, set up within the London banking group that since 1973 had been run by Sir Philip de Zulueta, a former private secretary to successive prime ministers Eden, Macmillan and Douglas-Home. He also sat on the London committee of the Hong Kong and Shanghai Banking Corporation (HSBC) and was a director of its subsidiary, the British Bank of the Middle East, which could explain why, right until 2010, payments to Duranton and Simec flowed through HSBC accounts in London and New York.
When Stirling's Yemen venture had been approved by Macmillan back in 1962, de Zulueta had been a hawkish confidant keen on confronting Nasser. Now his bank, Antony Gibbs, was funding hundreds of thousands of pounds (several millions in current prices) in fees and expenses in seeking out contracts for anything from financial services to private hospital building in the Middle East. By the end of 1978 Duranton Ltd was in hoc to the tune of £375,000, or £2.2m at today's prices, to other Antony Gibbs companies.

Gizzard job
The set-up certainly exploited the Saudi influence garnered by the SAS men in the early 1960s. Bernard Mills (pictured below), one of the key commanders back in the Yemeni mountains and a co-founder with Stirling of infamous 1960s mercenary group Watchguard, joined the Duranton board. An Arabic speaker, he became the firm's roving representative before leaving the company in 1979, during which time, he says, Duranton was not yet involved in the SANGCOM project.
Thirty-five years on and now 80 years old, Mills showed that you can take the man out of the special forces, but not the special forces out of the man, concluding a call from the Eye shack: "I don't want to see my name appearing, thank you very much, in Private Eye... Otherwise I shall come down and probably slit your gizzard. Not sure where a gizzard is, but it sounds not the sort of thing you would like to have slit."
In 1980, when the Antony Gibbs group was bought up by the Hong Kong and Shanghai Banking Corporation, Duranton was sold to Simec, the Liechtenstein anstalt run by Somerfield and Austin and channelled millions of pounds in commissions until 1984, following which a similar role was played by companies bearing the Duranton name first in Ireland, then in Switzerland.
By this stage, with Somerfield retired, Austin was top dog, running the Simec and Duranton network from his own private island, Little Whale Cay, in the Bahamas (see Eye 1329), from which, now aged 70, he apparently continues to operate.
The SANGCOM contract itself rolled profitably on under several new phases over the decades. In 1994 Cable & Wireless dropped out as prime contractor and was succeeded by GPT, a joint venture between GEC and Plessey which was taken over by European conglomerate EADS in 2007. Then in February 2010, a further £2bn extension was quietly handed to GPT without any competition.

Ethics man
The most startling feature of the case is that the payments by GPT to what are now Cayman ¬registered Duranton and Simec companies created in 1982, continued long after the explosive BAe/Al Yamamah scandal. GPT paid £14m to them between 2007 and 2010, the payments approved in Riyadh by a Ministry of Defence team that, the Eye's revelations show, must have known what lay behind Simec and Duranton.
The dubious payments were even flagged up first by an internal GPT whistleblower, financial controller Mike Paterson, who was met with the response ITom his parent company's compliance officer that "I am prepared to accept some
corruption because I like my company better than ethics" (see Eye 1331). Then, in January 2011, a more public whistleblower, project director Lt Col Ian Foxley, took details to the Serious Fraud Office, whereupon the payments ceased.
Neither whistleblower, both intimately familiar with the SANGCOM operation, could see any purpose for the Simec and Duranton payments (or the flash cars for Saudi officials that accompanied them). The real reasons, it is now clear, are to be found somewhere in the drifting political sands of the 1960s.