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Instead of buying arms to protect their country, it was the commissions to members of the royal family and to their counterparts on the this side which mattered. As we saw when Saddam invaded Kuwait in 1990, the Saudis paid the Americans and their partners in the coalition to protect them and eject Saddam from Kuwait. Coming on top of arms deals like Yamama this means the Saudis pay for protection twice.
The bribes and commissions on Yamama II were realized in three ways. There were outright cash payments, a simple percentage of what the Saudis pay British Aerospace. Then there was the barter part of the deal. The Saudis shipped 400,000 barrels of oil to Rotterdam. The proceeds from selling the oil were remitted to BAe but not before the value of the oil was understated or the value of the military hardware was overstated. He differential was used to pay the royal agents.
The third way of realizing commission was on the offset part of the deal. By Saudi law 40 per cent of all armament contracts must be placed with Saudi companies. As there were no Saudi companies capable of making any of the hardware or providing any of the services needed, British Aerospace is supposed to have created two maintenance companies to perform this part of the work.
The only part of the maintenance companies which was Saudi was the chairman who was a member of the royal family. The 5000 mechanics and technicians who worked under him were seconded to the Saudi companies by British Aerospace. Being Saudi the companies escaped the scrutiny of the various anti-fraud laws of other countries. This in turn made it possible for the Saudi companies to realize vast commissions.
A conservative estimate of how much commission has been realized, pegging at a mere 10 per cent of the volume of Yamama II business transacted, produces the staggering sum of £4.3 billion, 10 per cent of £43 billion. However, indications are the total figure is much higher. Press reports allege £680 million worth of commission was paid on the Tornado part of the deal alone.
Originally posted by rich23
And there is a problem about dealing with corrupt regimes [...] How do you reconcile the two? Do you just ignore the inconsistency?
Why is it ok to give enormous kickbacks to the Saudi Royals, yet take a dim view if Mark Thatcher getting his little piggy nose in the trough?
It seems it's hard to make an honest living in a corrupt world.