Defence companies such as BAE Systems are strategically important to the British state, but the exact nature of the relationship has changed over the last two decades as the domestic arms industry has been opened up to international competition.
Traditionally arms manufacturers simply supplied their own national governments, making them little more than glorified quartermasters.
This relationship made the close association between the technological and commercial wellbeing of the national arms industry and military and economic power relatively easy to observe.
The relationship is neither as intimate nor as obvious now because of changes in the global weapons market.
To keep unit costs to a minimum, shore up Britain’s balance of payments and advance strategic interests abroad, governments tended to encourage manufacturers to sell arms to other countries.
Traditionally these were countries with relatively undeveloped arms industries. Recently, declining expenditure on equipment, spiralling research and development costs, and increases in the cost of arms has changed this dynamic – forcing manufacturers to explore markets in developed countries and setting the context for consolidation in the industry.
This has weakened the link between domestic arms manufacturers and the state. Not only is the British industry becoming less reliant on the state as a customer, but there is also a possibility that, as BAE seeks a US partner, it may one day cease to be “British” as we commonly understand the term.
Despite this, the link is still close. British officials still cling to the idea that national security requires a domestic industry and the British arms industry is still regarded as a strategically important sector of the economy.
When the government expressed an interest in sourcing cheaper ammunition from South Africa, for example, BAE complained of a lack of patriotic support and threatened to sell the company to an overseas buyer. Concerned that it would lose a domestic source of ammunition, the Ministry of Defence caved in.
Government support for British arms exports is coordinated by the Defence Export Services Organisation, which has set up offices in several major export markets. High level political lobbying is also common.
Tony Blair and other ministers, for example, were reported to have vigorously lobbied Indian politicians over the sale of Hawk jets to India and the Al Yamamah deals with Saudi Arabia which caused the current scandal, were secured with high level ministerial assistance.
The government underwrites billions of pounds worth of arms exports through Export Credit Guarantees. A revolving door between the industry, state and military ensures that the influence and resources are tied to those of the arms industry.
It is difficult to know exactly how extensive corruption is, but there is sufficient evidence to suggest that it is widespread. Denis Healey, a former Labour defence secretary, said that bribery always played a role in the sale of weapons and that Middle Eastern governments do not buy weapons unless corrupt payments are made.
The scope of the Serious Fraud Office (SFO) investigation is instructive. As well as looking at potentially corrupt payments to Saudi officials, the SFO is reported to be looking into claims regarding BAE in South Africa, Tanzania, Romania, Chile, the Czech Republic and Qatar. It is also investigating allegations of bribery and fraud in Bosnia, Nigeria, Zambia, Costa Rica and Egypt.
In some ways, it is more helpful to ask not whether officials have been bribed to secure arms contracts, but whether there are any arms deals that go ahead in the absence of corrupt payments.
The question concerning the aborted SFO investigation is not that it was pressured into terminating the investigation by the prime minister and attorney general Lord Goldsmith, but this followed similar efforts by BAE.
In November 2005, BAE lobbied the attorney general’s office on a private and confidential basis, requesting that the investigation be discontinued for public interest reasons.
They argued that the investigation would seriously affect relations between the UK and Saudi Arabia and would inevitably prevent the UK securing the next installment of work under the programme.
Although the attorney general’s office suggested that these issues should be raised with the SFO directly, it immediately set about exploring the public interest issues arising from the investigation with other government departments.
This marked the beginning of sustained pressure from the attorney general on the SFO in which doubts were raised about the ability to secure the evidence it needed for a prosecution.
Tony Blair also became involved, focusing on the political fallout of the investigation, emphasising that it would damage security, intelligence and diplomatic cooperation between Saudi Arabia and the UK.
This prompted the attorney general to take the highly unusual decision to review the case in detail. It was during this process that SFO said that it might not be in the public interest to proceed.
Al Yamamah has been central to the continued independence and relative financial strength of BAE. It would be surprising if something, such as an SFO investigation, which might jeopardise this or similar deals in the future, would be allowed to continue.
The government has persistently claimed that the issue is one of national security, but this still doesn’t adequately explain the sequence of events which suggest that the government set out to privilege BAE’s interests.
The point is that political pressure on the SFO increased immediately after BAE had lobbied Lord Goldsmith. Historically, prime ministers have not batted for Britain as such, but rather schemed for British business – and in this respect Tony Blair is no different.
Gary Fooks is a senior lecturer in criminology at London South Bank University. He has written widely on corporate crime. His book on corporate crime will be published by Sage Publications in 2008.