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Decision due in Jersey on arms deal slush fund

Richard Bingley | 28.11.2002 12:30

Where else would you get a former Tory defence secretary sliding to-and-fro into revolving doors, off-shore bank accounts serving as slush funds, hushed-up court cases and suspicious Sheikhs...why in the UK arms trade of course!

When defence secretary Michael Portillo and Qatar's government signed a £500m arms deal back in 1996, the minister must have been pleased at carving another pro-business notch upon a CV which would soon lead him to the leadership of the Conservative Party.

Six years on, and after a humiliating leadership drubbing at the hands of "quiet man" Ian Duncan Smith, Portillo's meteoric political rise has gone pearshaped. Nevertheless, his paltry pay as a backbench MP received a boost following his decision to join the board of arms-giant BAE Systems in September this year.

During his dealings with Qatar, Portillo convinced among others foreign minister Sheikh Hamad bin Jaber al-Thani, uncle to the Emir, to purchase 12 BAES Hawk trainer jets. The jets still await delivery and recently the pusillanimous sheikh revised the deal to six.

When the jets are delivered our former Tory defence chief stands to make money not just from a deal he lobbied for as a politician. But the increasingly assiduous MP for Kensington and Chelsea is safe in the knowledge that if Qatar defaults on payments, his government underwrote arms sales to Qatar, including BAE packages, to the tune of £228m in export credit guarantees, leaving the British taxpayer ultimately liable.

Attention has now turned to the mysterious case of a £100m bank account recently discovered in labyrinthine Jersey vaults. The fund is owned by none other than Qatar's foreign minister Sheik Hamad, with a penchant for expensive western property (did I just call him pusillanimous?), and BAE have been reported to have contributed £7m of its value.

The suspicious account was frozen by Jersey authorities two years ago. Qatar's ambassador in the UK appealed and the case was heard in camera - out of the public eye. When the Jersey Evening Post tried to report the case, Qatar's lawyers claimed that they were in contempt of court and the paper was gagged.

The Post found itself in court fighting the right to cover details of a case which Qatar said undermined its national security. In June this year, Jersey authorities dropped a criminal investigation into the fund, because at the time it was not against the law for arms companies to pay commercial fees, bribes or sweeteners.

The allegations are that European - along with British - arms companies paid cash into the bank account during the 90s. The 1996 deal spearheaded by Portillo also included the sale of 40 Piranha armoured vehicles from GKN Defence (now Alvis plc) based in Telford, two Vosper Thornycroft patrol vessels made in Southampton and an undisclosed sum of Starbust missiles from Shorts in Belfast.

Qatar has long been a conduit for arms. Two years ago Labour had a tooth removed from its ethical foreign policy when it was discovered a £5.5m arms package to Qatar negotiated by BAE, including Land Rovers and night sights, was being immediately gifted to the notorious Algerian armed forces, whose catchphrase tactic to quell internal dissent was 'kill one to scare a thousand'.

Until a decision has been reached in Jersey* to treat the civil case as if it were held in public, therefore releasing court papers and transcripts, we will be unable to establish which of these deals, if any, were laced with sweeteners. By which time it's entirely feasible that Conservative kingmaker and new BAE powder-monkey Michael Portillo will be touting for a top Tory party job; those revolving doors must be beginning make him dizzy… bets on Mr Portillo for shadow secretary of state for defence anyone?

*The decision has now been scheduled for Monday 2nd December in Jersey

Richard Bingley
- e-mail: richardabingley@hotmail.com
- Homepage: http://www.caat.org.uk

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