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  • 6/10/2025
Lowell Bergman examines the shadowy world of international bribery, and how multinational companies maneuver to get billions of dollars in business.

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01:13Bribery. It's a trillion dollars a year.
01:26It's huge amounts of money with corporations on the one side and heads of state on the other side.
01:32It's concealed, it's camouflaged, and there's a whole world of conduct that rarely sees the light of day.
01:38Now, there is an international crackdown and a pivotal case.
01:42People in power do not like the investigation to come too close to them.
01:47Involving prime ministers and princes.
01:50I would be offended if I thought we had a monopoly on corruption.
01:55With allegations of blackmail.
01:57Blackmail?
01:58Sure.
01:59Involving billions in slush funds.
02:01It goes to a few people, genuinely powerful people.
02:05You're talking about the center of legitimate power.
02:09Look, this is black money.
02:10Mainly what happens with black money is people steal it because they can.
02:15Tonight on Frontline, correspondent Lowell Bergman investigates black money.
02:20You're busy poking around.
02:21It's got nothing to do with you.
02:22You should mind your own business.
02:24That's 8-4-0, traffic's British Nata heading to your right and a left turn north.
02:48Clear to land, traffic will be two jets departing.
02:51May 13th, 2008.
02:54Houston, Texas.
03:00British Airways Flight 195 arrived at the George Bush Intercontinental Airport.
03:11The chief executive officer of BAE Systems made his way toward immigration.
03:16British-based BAE, also known as British Aerospace, is the world's third largest arms manufacturer, and its biggest customer is the Pentagon.
03:31Welcome to the United States.
03:32But the CEO's visit quickly turned sour.
03:35If you're under investigation, the U.S. authorities are probably going to take whatever steps they feel are lawful to try and get information.
03:53Officials copied his documents, downloaded his phone, and then gave him a subpoena to appear before a federal grand jury.
04:00This was an aggressive tactic taken by the Department of Justice to send the message that this investigation was being taken seriously by the United States.
04:09This investigation of BAE Systems is part of a new crackdown on corruption led by the Justice Department.
04:17The BAE case has become a critical test of that effort and the international fight against bribery.
04:24This is a story that began over 20 years ago with what became an $80 billion international arms deal, a fighter jet deal involving BAE, the United Kingdom, and Saudi Arabia.
04:47And if there was one person who was the main man behind this arms deal,
04:52it turned out it was the U.S. Ambassador Prince Bandar bin Sultan.
04:57This is the same Prince Bandar who at times calls himself Bandar Bush.
05:02This is the one that everybody now calls Bandar Bush because he's so close to President Bush and the Bush family.
05:09I mean, you couldn't be better connected than this man.
05:12A shrewd dealmaker, friend to princes and presidents, Prince Bandar is connected on both sides of the aisle.
05:21You know Prince Bandar?
05:22Of course, very well.
05:24How would you describe him?
05:26He's a master diplomat.
05:29As a friend of mine, he's been quail hunting with me, which is about as close together in the south as you can get to another person to invite him to come quail hunting.
05:38So Bandar's a good friend of mine.
05:40He's a larger-than-life character.
05:42He had fantastically good political relationships in that he was close to the American government and other European governments, particularly the U.K. government.
05:51He managed good and close relationships that were positive and beneficial to both sides.
05:57In 1985, Prince Bandar was tasked with getting new fighter jets for the Saudi Arabian Air Force.
06:06At first, he approached the United States on a supportive President Ronald Reagan.
06:11But the Saudis couldn't easily buy direct from the U.S. because there would be problems with Congress because of the Israel lobby.
06:19It was easier politically to buy this equipment from the British.
06:24And it was pretty much a secret at the time that then-British Prime Minister Mrs. Thatcher and then-U.S. President Ronald Reagan had been involved with Bandar in organizing this arms deal.
06:36She immediately informed us that she considers Saudi Arabia as a strong friend and would be willing to support the kingdom with whatever the kingdom needs.
06:48End of discussion. From there on, everything else was technical.
06:52I can remember when Mrs. Thatcher told me that she had signed this fantastic contract that would secure thousands of jobs and create great wealth for Britain.
07:01There was an agreement between the British government and the Saudi government and the subcontractor, the person to deliver the aircraft and the equipment with British Aerospace.
07:11The deal was called Al Yamama, the dove in Arabic.
07:16It was seen as a political triumph for Margaret Thatcher in the U.K.
07:20Bandar watched as his father, the powerful Saudi Minister of Defense, signed the deal.
07:27The secrecy that surrounded the Al Yamama contract fueled long-time suspicions of corruption within the Saudi royal family.
07:35The way the Saudis paid for all those arms was in oil, which was then sold, producing an enormous amount of cash that was exempt from any public accounting.
07:48The suspicion is that if you have a deal like that with that much money floating around in cash.
07:53Look, of course there's suspicion, and of course people are entitled to be suspicious, but there is a difference between suspicion and fact.
08:00As far as I'm concerned, if the British government and the Saudi government reached a sovereign agreement over an arms contract that resulted in a tremendous number of jobs in Britain, a great deal of wealth creation in Britain, and enabled Saudi Arabians to defend themselves, I think that's a jolly good contract.
08:17There had always been rumours about this Saudi arms deal, but nobody could ever stand it up.
08:24The headlines today.
08:25...stations of bribery have marked Britain's biggest claims that huge commissions...
08:29...48 tornadoes saved 20,000 jobs in the aerospace...
08:33While rumours swirled, this man had an inside view.
08:38Peter Gardner was a high-end travel agent working in London when the deal was signed.
08:43One of his clients was Prince Bandar's cousin, the Saudi Prince Turki bin Nasser.
08:49He was the deputy commander of the Royal Saudi Air Force, in charge of administering the al-Yamama contract.
08:56I could see the lifestyle of people improving vastly during this period.
09:02You mean Prince Turki Nasser?
09:04Yes, his lifestyle changed greatly.
09:06All of a sudden he had more jets or more mansions?
09:10Well, there was the long-term building taking place in Beverly Hills, and there were some very nice aircraft that were appearing, and there was a yacht.
09:20Money didn't seem to be tight anymore.
09:23Another thing changed as well.
09:26Gardner was told that from then on, all the bills for his services should be directed to BAE.
09:33I was required to be on call 24 hours a day, year round.
09:37So, if one of the Saudis turned to you and said, we want this or we want that, you had to call BAE for authorization?
09:44The authority had to come from BAE in each individual instance, whether it was a few pounds or half a million pounds.
09:55When someone asked you what you did, how would you describe yourself?
09:59Well, a super-duper valet, I suppose.
10:02The services that we provided had an enormous range. Hotel accommodation, flights, anything.
10:12At one point you had to charter a jet to bring back a Rolls Royce or two?
10:17Well, there was more than one occasion when we shipped cars back to Saudi Arabia.
10:22The Prince is a very keen collector of cars, including vintage cars, so that was not unusual.
10:29Gardner and others would also take care of the Prince's female friends, as well as his family.
10:35As far as the ladies were concerned, they liked to shop, and sometimes there could well be quite a bit of shopping.
10:41We did, in fact, on one occasion, charge a 747 from Los Angeles to take all the purchases back to Saudi Arabia.
10:51Just shopping?
10:52Yes.
10:53A cargo jet full of shopping?
10:56It's the lifestyle that many people would like to have if they could afford it.
11:00It's a little bit beyond that of a film star, because you've got the diplomatic passport with it.
11:06It is very much a different world.
11:09It's very much a private world, as well, usually.
11:14It wasn't just Prince Turkey bin Nasser's family that was benefiting.
11:19When his son married the daughter of Prince Bandar bin Sultan,
11:23it was Gardner's travel agency that made the arrangements for their lavish two-month round-the-world honeymoon.
11:30I went on in advance to set things up.
11:33They knew exactly where they wanted to go.
11:35They wanted to start in Singapore, and then from Singapore they went to Bali, and then afterwards they went to Hawaii.
11:43Who paid for Prince Bandar's daughter's honeymoon?
11:47It was paid by BAE.
11:49Did you ever ask, why is it set up this way?
11:52Why is BAE paying me and not the Saudi royal family?
11:57Well, I did raise the question with BAE, and BAE always made it very clear to us that this was a highly confidential government-to-government contract.
12:06A country-to-country contract, to provide travel services, honeymoons, Rolls Royces, and so forth?
12:16Yeah.
12:21It's unusual.
12:22I had never seen anything like it before, and I haven't seen anything like it since.
12:27It was unique.
12:32For decades, the United States was the only country in the world where it was illegal,
12:37where you could go to jail for bribing an official in another country to get business.
12:42That law emerged out of another era, with revelations of political corruption in the Watergate scandal.
12:48I made my mistakes. Well, I'm not a crook.
12:53During the Watergate hearings, it was revealed that major corporations made payments in cash to President Nixon's re-election campaign.
13:01Did you make a contribution to the President's re-election effort?
13:05I did. I called a controller of one of our companies in the Bahamas, told him I needed $50,000, and he brought it to me.
13:16In what form was the $50,000?
13:19It was in cash.
13:21What sparked my interest was the fact that these were cash payments to the Committee to re-elect the President,
13:26which came directly out of the corporate treasuries.
13:29And I knew that was illegal.
13:31He was soliciting a contribution for President Nixon's campaign.
13:35Stanley Sporkin was in charge of enforcement at the Securities and Exchange Commission, the SEC,
13:41which regulates publicly traded companies.
13:43When you heard them talking about cash, what did you think?
13:48How does Gulf Oil record a transaction of a $50,000 cash payment?
13:52I wanted to know, what account did they charge?
13:55Do they have an account called bribery?
13:57And so I decided to ask one of my investigators to go out and find out how they did it.
14:06Stanley came in one morning, and he was agitated, and he really wanted to know and was asking all of us,
14:13how could this happen? What are we going to do about this?
14:17When we looked into these funds, we found that they were not only being used domestically in the United States for illegal campaign contributions,
14:28but we found that the same monies were being used to bribe officials overseas in connection with the company's business.
14:35Sporkin's investigation found that 500 American companies had spent hundreds of millions of dollars bribing everyone from prime ministers to police overseas,
14:46which, it turned out, was not illegal.
14:49Bribery was something you deducted from your tax returns.
14:54Right. Companies deducted those payments just like any other regular expense.
14:59Bribing a foreign government official wasn't prohibited.
15:02It was something that people could do, and they got away with, and they got business as a result, and so they carried on.
15:08We came up with a voluntary disclosure program, and some 500 or more companies eventually came in and made disclosures.
15:17Hundreds of companies came in and confessed?
15:20Yes.
15:22I found out when I got in office that the Securities and Exchange Commission had gotten testimony from more than 100 corporate executives
15:31that they were involved in what I consider to be criminal activity, that is, bribery.
15:37So I was very eager to see this practice stopped and ran into a hornet's nest
15:41because a lot of corporations claimed that they couldn't sell in competition with the French and British and others overseas
15:48if they didn't bribe officials who were in charge of making the purchases.
15:52Despite strong opposition from corporate America, in late 1977, Congress passed the Foreign Corrupt Practices Act, the FCPA,
16:00making it illegal for any company that uses the United States financial system to bribe to get business.
16:08Around the world, I think everybody looked at the United States and thought,
16:13well, that's great, but not for us.
16:15So you had the statute passed, and Americans went abroad, and they had difficulty doing business
16:20because they knew that they could go to jail if they made payments to those foreign government officials.
16:28Even though the Justice Department aggressively pursued and convicted major U.S. companies like General Electric, Lockheed, and Goodyear,
16:36other U.S. companies continued to bribe.
16:38The culture had not changed. There was undoubtedly a tendency of companies that had been engaged in bribery prior to the FCPA to continue to pay bribes,
16:53but to become more careful in how it was done.
16:57Hell, Tommy, we've all got the Foreign Corrupt Practices Act committed to memory.
17:02I got a little copy of it taped to the wall of my head.
17:07The movie, Syriana, describes U.S. companies' bribing, despite the law.
17:12Corruption? We have laws against it precisely so we can get away with it. Corruption is why we win.
17:20Syriana may be a movie, but it is based on the life experiences of former CIA officer Robert Baer.
17:27You were a briber. I bribed all sorts of people.
17:31That's what I got paid to do. That's what I got trained to do.
17:34Twenty-one years in the CIA, I spent millions of dollars in cash bribing government officials,
17:41bribing golf princes, buying hookers for golf princes.
17:47Were you ever competing with a multinational corporation?
17:50That's who we competed with, because they could pay real money.
17:53I mean, let's face it, the CIA were pikers when it came to this.
17:57It was the big corporations who could out-buy us any day of the year.
18:01And the big corporations were also complaining to Congress.
18:06Because of the law against bribery, they said they were at a competitive disadvantage doing business abroad.
18:11So the US government took the case against bribery to Paris, to the OECD, the Organization for Economic Cooperation and Development.
18:22Swiss prosecutor Marc Piette was an early ally.
18:25I've been giving talks to heads of corporations in France, and they were asking, what do you think you're doing?
18:34Imagine a breakfast room with the CEOs of the top-listed French companies sitting there in a hotel looking at me.
18:44I didn't eat breakfast, they had breakfast, and they're saying, you must be a madman.
18:52And you are messing up the way we do business.
18:58You have to know, and you're basically the slave of the Americans.
19:02The slave of the Americans.
19:04You, a Swiss prosecutor?
19:06In the beginning of the 90s, we started really fighting against corruption,
19:12also by the legal means.
19:15Ava Jolie, then a French magistrate who was leading the largest corruption investigation in the history of France,
19:21was also arguing for an international treaty.
19:24This was quite a revolution, because people in power do not like the investigation to come too close to them.
19:32It took nearly ten years of lobbying before the OECD members finally agreed to a treaty,
19:39known as the Anti-Bribery Convention.
19:42What changed their minds?
19:43I think it's hard to defend corrupt business practices.
19:48I think that those countries who ultimately joined the Convention
19:52realized that this was the only path forward.
19:55I think it was untenable for some of these countries to say, no, thank you.
20:00We'd rather permit our companies to bribe.
20:03It's hard to be publicly in favor of bribery.
20:06Indeed.
20:08Mark Piette was appointed to lead the group.
20:11He knew that even though they had now criminalized international bribery, the practice was not going away.
20:17Companies found themselves in a very awkward situation.
20:21Suddenly, the element of risk rose.
20:23And there's a double risk.
20:26On the one hand, you might be caught.
20:28On the other hand, you might lose out because your competitors are not playing game.
20:34Your competitors are continuing to bribe.
20:36Right.
20:38That's what this man told us he kept doing for one of Germany's largest companies,
20:43the Siemens Corporation, after the Anti-Bribery Treaty was signed.
20:46Paying bribes was customary in nearly all business units of Siemens.
20:53Reinhard Sikacek was in charge of part of Siemens' massive billion-dollar international bribery operations.
21:01I was a true Siemens man, for sure.
21:05I was known as the keeper of the slush funds.
21:08We all knew what we were doing was illegal.
21:11To avoid getting caught, Siemens used secret bank accounts in places like Switzerland and front companies,
21:19plus the age-old method, cash.
21:22For a million euros, you don't need a big suitcase because the bills aren't very big.
21:28A briefcase is enough.
21:30200,000 euros isn't so much that you couldn't carry it in your coat pocket.
21:36And what Siemens was doing was apparently not unique.
21:41Companies like BAE, it seems, didn't say, we better stop doing it.
21:45They said, we better find a safer way of doing it so we don't get into trouble.
21:49British investigative journalist David Lee reported that at BAE headquarters outside of London,
21:56the company had packed up documents.
21:58Documents about the way they conducted international arms deals.
22:02Then they trucked them out of London and out of England.
22:06And BAE reacts by moving these operations to Switzerland?
22:09That's how they react. They move everything to Switzerland, yes.
22:12That's how they react. They move everything to Switzerland, yes.
22:19It's six o'clock on Thursday at the 14th.
22:22Tougher laws come into effect today banning UK nationals from bribing foreign officials.
22:27After Britain signed that anti-bribery treaty, they enacted a new law.
22:31Economic cooperation and development.
22:32The change in the law drove Peter Gardner out of the shadows.
22:36Our lawyers told us, you cannot continue providing the services that you've been provided.
22:42You cannot do it. It would be illegal. You have to stop.
22:46And did BAE say, we also can't do business this way anymore?
22:50We'll have to figure out something else.
22:52They were well aware that things had to change.
22:55They knew they had a problem.
22:56Yes, this was mentioned on several occasions as a very substantial problem.
23:01Part of their problem was that reporter, David Lee of The Guardian, who had been investigating BAE.
23:07Well, you know, people call you up. The phone rings.
23:10They say, I know something about this story you were writing about.
23:14You try and evaluate the person, don't you?
23:18You see whether they're genuine. Try and understand what their motives are.
23:21Peter Gardner became a confidential source for Lee.
23:25Why did you decide to come forward?
23:28Well, at some stage, the authorities, the serious fraud office or the police or whatever,
23:35was going to come knocking on my door.
23:37And that meant I would lose total control over the circumstances and how to handle it.
23:45When it started, he was a scared person. He didn't want his name to come out.
23:51But he did have these documents.
23:54This is just an example, very typical.
23:58Peter Gardner had thousands of documents that backed up his story.
24:02The documents surprised me for two reasons.
24:05One, what they showed was astonishing amounts of money being thrown around in what appeared to be ludicrously extravagant ways.
24:12The other thing was that it's very rare to get documents about this kind of thing.
24:18Gardner showed Lee the receipts for millions of dollars in expenditures.
24:23And then these very simple invoices that the company had him submit each month.
24:28By the time the invoices went to BAE, they didn't tell the truth.
24:31They didn't say, you know, purchase of Rolls Royce for Saudis or payment of flat for girlfriend for an official in the Saudi Air Force.
24:42They were just one sheet of paper providing support and accommodation services.
24:47November, $100,000.
24:50The mountain of invoices would show that BAE paid a total of £60 million, around $100 million, to cover the expense account of Prince Turkey bin Nasser.
25:03It was clear that BAE had a pretty big slush fund, out of which they were paying off the books, using this travel company as a cutout.
25:11It was obviously corrupt and corrupting.
25:17And so David Lee began to write front page stories.
25:20Lifestyles of the rich and famous was basically the theme.
25:24BAE made very little response.
25:28And we were surprised, because normally these global companies, they're pretty litigious, they're pretty aggressive.
25:34They would say, we deny all wrongdoing.
25:35Which is exactly what BAE's then chairman, Sir Richard Evans said, when he was asked about these charges while testifying to the British Parliament.
25:44I think that, you know, business practices have been changed over a period of time.
25:49I mean, I can certainly assure you, I mean, that we and I believe most companies are not in the business of making payments, passing, as you suggest, I mean, large sums of money to employees of governments.
26:00I mean, it is just not the way, I mean, business is done.
26:03And they'd refuse to say anything else.
26:05The reason why BAE never said anything to us, we thought we were clever, we had exposed this slush fund.
26:13They were obviously sitting there thinking, well, thank goodness they don't know the real story.
26:17Because all we had was a tiny little corner of what in the end proved to be an enormous worldwide network of secret cash payments amounting to literally billions of dollars that had gone on for years with the connivance of the British government.
26:33In the United Kingdom, the agency that investigates white-collar crime like bribery is called the Serious Fraud Office, the SFO.
26:45And that's where David Lee and Peter Gardner went next.
26:49The director of the SFO was Robert Wardle.
26:51It's sort of unusual that a journalist comes in to talk to a prosecutor about what evidence...
26:57Well, he had his story at that stage, and he'd printed it.
27:01And having discussed it with him and seen what evidence he had, I took the view that there was sufficient to justify a suspicion that an offence may have taken place.
27:10And we began the process of requiring the company to provide us with information and documents.
27:15And the investigation began to grow and grow, and it was proceeding reasonably smoothly, although it was a very difficult one.
27:24Prosecutor Helen Garlick supervised what would become the first investigation in the United Kingdom of overseas bribery.
27:31The allegation was improper expenses that appear to have been paid by British Aerospace through the medium of this small company run by Peter Gardner.
27:40As the prosecutors dug through thousands of BAE documents and bank records, they confirmed Peter Gardner's story.
27:49And that wasn't all.
27:51How would you describe the original allegations, the Gardner services, to what you found in the end?
28:00They were a drop in the ocean. I think that would be a fair way of describing them.
28:06Over 60 million pounds. Over 100 million dollars was a drop in the ocean.
28:10Yes. Relative to the, you know, the amounts of money that we were dealing with here.
28:14So we were talking about billions of dollars.
28:16Yes.
28:18In the mass of documents and accounts, Helen Garlick's team made another startling discovery.
28:23Some of the money from the Al-Yamama account, around 2 billion dollars, had been sent to Washington, D.C., into the Saudi Ministry of Defense bank accounts, controlled by the man who is credited with making the Al-Yamama deal, Prince Bandar bin Sultan.
28:41As much as 2 billion dollars went to accounts under the control of Prince Bandar bin Sultan in Washington, it's hard for me to believe that you didn't have a reaction when you found out how much money was going west.
28:55The value of the Al-Yamama contract itself was astronomical. It will become slightly relative when you're talking about such vast sums of money.
29:05As part of that 2 billion dollars, funds were sent to support the crew and the fuel for a wide-body Airbus 340.
29:13The A admit that they made a gift of a brand new Airbus to Prince Bandar, which he had painted in the blue and silver colors of the Dallas Cowboys, his favorite team, and has used ever since to fly around the world.
29:28And the British investigators also uncovered a complicated web of intermediaries and front companies.
29:33They also discovered there was a special separate offshore arrangement registered in the British Virgin Islands, which was paying billions of dollars to Swiss bank accounts.
29:44British investigators suspected that those Swiss accounts may have benefited the man who signed the deal, Prince Bandar's father, Crown Prince Sultan, and his business associates.
29:55We believed that we could show, if we got access to the Swiss accounts, whether or not a crime had continued to be committed right up until the present day.
30:07You had evidence already that there were crimes that had been committed?
30:10Yes.
30:11And as I said, this story started on a hunch, really.
30:16The British prosecutors were not the only ones investigating BAE.
30:20At a journalism conference, investigative reporters from Sweden, South Africa, the United Kingdom, and Romania, gathered to talk about their reporting on BAE's international arms deals beyond the Al-Yamama contract.
30:33They were operating an entire network of secret payments to middlemen and politicians and ruling regimes all around the world to cement arms deals.
30:45These journalists discovered evidence of what appeared to be bribery by BAE in places like the Czech Republic.
30:50They go to a country like the Czech Republic, they find out what politicians need to be paid and how much, and they don't just offer it to the government in place right now, they offer it across the whole political spectrum.
31:05And they found evidence of payments in Romania, in Tanzania, and in South Africa, where BAE sold two billion dollars of weaponry to the fledgling ANC government.
31:14In the case of South Africa, you have a country that comes out of something like apartheid, and the West hits them with an arms deal, with arms that they don't need, that they bribed this newly democratic government to buy.
31:28Has any recipient of an alleged bribe gone to jail?
31:32Not a single one.
31:34And in Romania?
31:36In South Africa, has anyone been punished or jailed due to this BAE case?
31:41Not the BAE deal.
31:42In Sweden, has anything happened?
31:44No.
31:48The headlines this morning, the investigation into Saudi arms...
31:52A lot of money, a lot of jobs, a lot of political pressure.
31:54Here in London, BAE was secretly pressuring the British government, sending letters complaining about the Al Yamama investigation.
32:02From quite an early stage, the company made representations that what we were doing was highly injurious to British economic interests, British jobs, to the future.
32:12The pressure escalated to a new level after Helen Garlick's team requested information from the Swiss about those bank accounts.
32:22We were told that the Saudis were making very serious objections, particularly to our following up the money in Switzerland.
32:30What the prosecutors did not yet know was that there had been a visit here to 10 Downing Street, to Prime Minister Tony Blair's office, by Prince Bandar.
32:40With London still on edge after terrorist attacks a year earlier, Prince Bandar delivered a disturbing message.
32:50Tony Blair's chief of staff told Frontline that Prince Bandar brought a letter from his father, Crown Prince Sultan, threatening to cut off cooperation on terrorism, if the investigations of Al Yamama continued.
33:03Well, I received a call saying there were concerns. It was plain that it was serious. Saudi Arabia regarded this as a breach of their privacy, a breach of the privacy of the royal family, if you like.
33:17At first, Robert Wardle and his staff resisted. And then the Blair government lined up everyone, from the British ambassador to Saudi Arabia, to Wardle's boss, Britain's Attorney General, to get him to drop the investigation.
33:31The expression was, you know, this is going to be people dead on the streets. And don't forget...
33:36It's going to be blood on your hands if you go...
33:38Well, yeah, absolutely. If we go forward with an investigation into these accounts in Switzerland, we find we're not going to be able to do what we can do to stop terrorism.
33:47Prime Minister Blair himself sent this personal memo. Quote, these developments have given rise to a real and immediate risk of a collapse in UK-Saudi security, intelligence and diplomatic cooperation.
34:01I was left with a fairly stark choice. Should I continue with this investigation or should I stop it?
34:10But when you heard that it was Prince Bondar, it seems to me that would have set off a whole bunch of thoughts in your mind as to what's going on.
34:17Well, of course. It was unusual, to say the least.
34:21Is this British understatement?
34:23Yes, it's very much British understatement.
34:25In a situation where one of the people who signs on the bank accounts involved in the money is the deliverer of the threats, so why go along with it?
34:37Because it's blackmail, it's not nice, but that's where we are.
34:42Blackmail?
34:43Sure. I accept that. Threats were made and I had to decide whether to give in to them or whether to continue with the investigation.
34:55At the end of the day, much against the grain, much against what I would have liked to have done, I took the view that the risk was too great to continue the investigation and risk the damage being done.
35:11Soon after, Prime Minister Blair was at a G8 summit when he was asked about the controversy.
35:16Were you aware that your government was approving payments to a friend of President Bush's as part of British Aerospace's kickback system, and is that why you suspended a fraud inquiry?
35:31I'm glad you're answering that question.
35:37On the point you asked me, let me make one thing very clear to you.
35:41I don't believe the investigation incident would have led anywhere except to the complete wreckage of a vital strategic relationship for our country in terms of fighting terrorism, in terms of the Middle East, in terms of British interests there.
35:55Quite apart from the fact that we would have lost thousands, thousands of British jobs.
36:01Under our rules, it's absolutely outlawed to stop a case for economic reasons.
36:07That's fundamental.
36:08You cannot say jobs are at risk.
36:12That is a centerpiece of our convention.
36:16Otherwise, our convention doesn't work.
36:18We were all really terrified by this decision.
36:23The oldest democracy in the world said that they will not respect the conventions they have signed and ratified.
36:31So, the OECD convention alone don't change anything.
36:38The treaty itself?
36:40The treaty itself is worth the paper is written on, and sometimes not even that.
36:47Despite repeated requests, neither former Prime Minister Tony Blair nor Prince Bandar or his cousin Prince Turkey bin Nasser would speak with Frontline.
36:56And no member of the British government agreed to be interviewed on camera.
37:02Lord Timothy Bell, however, did agree.
37:06From the beginning, he's been closely involved in the Al-Yamama deal, advising Margaret Thatcher and, at times, BAE and the Saudis.
37:14What's your opinion of that investigation by the serious fraudulent?
37:18I think it was foolhardy to start it.
37:20Everybody got terribly excited and wanted to investigate something that had happened 20 years earlier and prove that it was wrong now.
37:27I think it's all tosh.
37:29I don't actually think any of it's got any real substance to it.
37:31I think certain groups of people set out to smear the Al-Yamama contract, and I think various people wanted to accuse Margaret Thatcher of corruption.
37:41So it's bias.
37:42Prejudice is the word I would use, not bias.
37:45I think bias is a very kind word.
37:47I think prejudice is a harsh word, and that's the word I think belongs.
37:50When people are saying to us, like Mr. Wardle and others, that this was blackmail.
37:55I just don't believe that version of events.
37:58I think the use of the word blackmail is provocative, emotional, and absolutely wrong.
38:04The Al-Yamama contract, when we read about it, appears to be highly unusual because it's so secret.
38:09So, that's the terms and conditions of the contract.
38:13I mean, this is the fundamental point about this.
38:16There is an agreement. People who make all these comments have never seen the contract.
38:20Have you seen the secret agreement, the Al-Yamama contract?
38:23We saw enough of the underlying contractual documentation to satisfy us that we were on the right track.
38:31The confidential nature of the agreement didn't amount to an insuperable case-stopping obstacle.
38:40Didn't give them a blank cheque to do whatever they wanted with this money?
38:43Not as far as we were concerned.
38:45With all due respect, they are the authorities. They were conducting an investigation.
38:48Yes, that's true.
38:51You do have the rule of law.
38:53We certainly do have the rule of law.
38:55And in our rule of law, you require prima facie evidence in order to charge anybody.
39:01And nobody has ever been charged.
39:04And I don't know that they should take any pride in the quality of their investigation.
39:08And in the end, it was stopped.
39:11After that decision, Robert Wardle was let go as director of the Serious Fraud Office.
39:17And then Helen Garlick resigned.
39:24With the investigation of the Al-Yamama deal out of the way, late in 2007,
39:30the King of Saudi Arabia made an official visit to the Queen of England.
39:34There were assurances of cooperation between the countries.
39:38And we also continue to work together against the terrorists,
39:42who threaten the way of life of our citizens in both countries.
39:46Prince Bandar and his father, Crown Prince Sultan,
39:50came along for meetings, where they concluded a new arms contract with BAE,
39:55the successor to Al-Yamama, worth at least $20 billion.
39:59All this had been watched with great interest from Washington.
40:09Today, the Justice Department still has the toughest anti-bribery law in the world,
40:14and the biggest commitment to enforcing it.
40:17Mark Mendelson is the chief prosecutor for international bribery.
40:20The Department of Justice currently has well over 100 cases under investigation,
40:26and over the past two years or so has collected almost a billion and a half dollars in fines and penalties.
40:32Jack, you don't want to say anything?
40:33The biggest fine of all for an American corporation, over half a billion dollars,
40:39involves this man, Albert Jack Stanley, former chief executive of KBR,
40:45then a subsidiary of the Halliburton Corporation.
40:48Mr. Stanley's been cooperating and cooperating...
40:51Stanley was the mastermind of a $180 million bribe paid to Nigerian officials.
40:55He's recently pleaded guilty and agreed to a sentence of seven years.
41:00Can we expect more indictments as a result of Mr. Stanley's cooperation?
41:05The only thing I can say with respect to that is that the investigation is ongoing.
41:10It's not over yet?
41:12It is not over yet.
41:16This morning in federal district court, Siemens AG pled guilty to violations of the Foreign Corrupt Practices Act.
41:25Siemens may be a German company, but because its stock is traded in the United States,
41:30the Justice Department can assert jurisdiction.
41:33And the department just imposed another record fine, $800 million.
41:38And that former manager of the slush funds, Reinhard Sikacek,
41:43he was convicted in a German court for his part in the bribery.
41:47I doubt that Siemens' name has suffered.
41:51Since bribery is very common in many countries, people will only say that they were unlucky
41:58and that they broke the 11th commandment.
42:01The 11th commandment is, don't get caught.
42:04The U.S. government had also opened its own investigation into BAE.
42:12But the British were not cooperating.
42:15So on a Friday evening in May 2008, a secret meeting was called at the Justice Department.
42:20U.S. prosecutors decided to launch an unusual operation.
42:26In a dragnet aimed at BAE Systems in the United States,
42:30they served four executives with grand jury subpoenas.
42:33And on the same day, detained and searched the company's chief executive officer
42:38as he arrived at Houston's International Airport.
42:42No explanation was given to him as to why this was happening.
42:45No charges were laid. And then he was allowed to go about his business.
42:48That's the way you conduct law. It's not the way I believe law should be conducted.
42:52You're busy poking around. It's got nothing to do with you.
42:55Just nothing. You should mind your own business.
42:56What are we doing prosecuting and investigating foreign companies?
43:01If a company conducts business in the U.S.
43:05or takes some step in furtherance of a bribery scheme within the U.S.,
43:10that is the business of the United States.
43:13And those are cases that we're going to investigate and prosecute.
43:18Mendelsohn would not comment on the U.S. investigation of BAE.
43:22But Frontline has learned that the investigation includes BAE's Worldwide Arms Sales Network,
43:28as well as the Al-Yamama deal.
43:31And the Justice Department has secretly spirited at least one witness into the United States,
43:37with documents.
43:39Have they contacted you?
43:41Yes.
43:43Are you cooperating?
43:44Yes.
43:46So you travel to the United States?
43:48I travel to the United States, yeah.
43:49You know, it's an ongoing investigation, and I'm a witness,
43:52so obviously there's not a lot I can say about it at the moment.
43:57U.S. authorities are interested in those documents,
44:00showing how BAE paid for the lavish lifestyle of the Saudi prince.
44:05A good part of that money was spent in the United States,
44:09and that's one reason the U.S. has jurisdiction.
44:11And then there's that $2 billion that was transferred to bank accounts controlled by Prince Bondar in Washington.
44:19We conducted a very comprehensive review and investigation of those accounts.
44:24Former FBI supervisor Dennis Lormel examined those accounts as part of a larger investigation in the wake of 9-11.
44:31FBI agents had then found an unusual pattern of activity.
44:37There was so much interaction among the accounts,
44:41the manner in which they were taking cash out and then paying cash,
44:45it seemed questionable.
44:47It would seem like activities that I would see in money laundering or other types of investigations.
44:52The pattern of activity you identified was kind of a mixture of the personal, if you will, and the professional?
44:56Yeah, it appeared that there were both legitimate Saudi transactions,
45:02embassy-related transactions through those accounts,
45:05and it appeared that there was a degree of personal activity being carried on through those accounts.
45:10According to these suspicious activity reports,
45:14there were transactions that appear to be personal,
45:17for example, payments to an architect in Saudi Arabia for work on a new palace for Prince Bondar,
45:22totaling $17 million.
45:24That's something you don't see in a normal course of business,
45:28an individual moving $17 million from an account, like a business account,
45:33to what appears to be personal.
45:36The $17 million for his residence, quote-unquote, was not his residence.
45:42It's a government-owned property in the Kingdom of Saudi Arabia,
45:47which they make available to senior members of the royal family to live.
45:50After repeated requests, the former director of the FBI, Louis Freeh, who now represents Prince Bondar,
45:58finally agreed to an interview.
46:00...allegations that my client received $2 billion, low, $2 billion in bribes,
46:05and two received for free as a bribe an Airbus 340.
46:09Those allegations are totally false.
46:13In U.S. government documents, the al-Yamama contract is described as off the books of the regular budget of the Saudi Ministry of Defense.
46:24Is that correct?
46:25It's an off-balance, barter deal, oils for plane.
46:30But it was a pile of money, if you will, large amounts of money,
46:33that didn't go through the regular budgetary process of the government of Saudi Arabia.
46:38That's correct.
46:40Freeh has an explanation for the $2 billion that was sent to Washington.
46:42Look at it this way, Lowell.
46:44This was a treaty that was set up to ensure maximum flexibility for the purchase of arms.
46:53If the Ministry of Defense and Aviation wanted to purchase U.S. arms,
46:59U.S. arms could be purchased through BAE and the U.K. Ministry in a way that did not deal with the objection of the U.S. Congress
47:07to the selling of American equipment to the Saudis.
47:12So, proceeds from the oil could be used under this contract to purchase arms from other countries, including the United States.
47:21Of course.
47:23Following this interview, Frontline asked Louis Freeh for a specific example of an arms deal with the U.S. paid for from the $2 billion.
47:32He did not provide one.
47:33Freeh had responded to our questions about that Airbus 340.
47:38Can't you even see that as an indication that there's something funny going on here?
47:43No, absolutely not. Absolutely not.
47:45The plane was assigned to him.
47:47It was owned by the Royal Saudi Air Force, operated by them principally for my client, because he traveled the most,
47:54and was never a gift or a bribe to my client.
47:55Do you know of any other military aircraft that's painted in the colors of the Dallas Cowboys?
48:02Don't know of any.
48:03Sound like a private plane?
48:04No, it doesn't sound like a private plane.
48:06But when is something a government expenditure, and when is something a personal expenditure, when it's a prince like Bandar in the Saudi government?
48:17Let's look at it from their perspective. If his majesty, the king of Saudi Arabia, and the minister of defense...
48:26Who's his father.
48:28Who's his father, and the minister of oil, and the minister of finance, if they all agree and are aware of what's being expended by whom,
48:37how they dispersed it, or how they distributed it, including dividing what was personal or not personal, is really none of the business of the United States.
48:48What happens when the government says,
48:50Oh, well, we knew about that payment. We approved it. Do you still have a case?
48:56Under U.S. law, it's absolutely irrelevant whether a foreign government acknowledges awareness that one of its officials was being corrupted.
49:07Or even endorses or approves of the corruption.
49:12So long as the bribe payment is for a corrupt purpose and goes to personally benefit the foreign official, we can and will bring a prosecution.
49:23But under U.S. law, Prince Bandar and the Saudis cannot be charged if they received a bribe.
49:29The Foreign Corrupt Practices Act only targets the giver of an alleged bribe, in this case, BAE.
49:37BAE refused repeated requests for an interview, finally sending us this statement,
49:42quote,
49:43BAE Systems' view is that the interests of the company are best served by allowing these investigations to run their course.
49:51The British aren't cooperating. The U.S. has requests in with the Swiss, but that's taking a long time. This could go on for years and years and years.
50:02I doubt it. I think it's going to be ultimately not a question of years, but there's going to be something decisive happening in the next year.
50:10This is based on a hunch or...?
50:13A combination of informations.
50:19BAE now employs 40,000 Americans and is a major defence contractor with the Pentagon.
50:26I'm sure observers around the world are waiting to see whether the Department of Justice is also vulnerable to political pressure. We shall have to see.
50:39Many believe that what happens next in the BAE case will determine the future of the decade-old anti-bribery convention.
50:47We are successful in fighting petty corruption. We are successful in fighting probably medium corruption. And sometimes, by accident, we are successful in huge corruption. But it is by accident.
51:03There are one rule for the powerful and other rules for other people. And the rule of law is not complete. There are black zones, black holes.
51:22Look, this is black money. The thing about black money is you can claim it's being used for all kinds of things. These are the evils of black money. These are the evils of money laundering.
51:33You get pots of black money that nobody sees, nobody has to account for, you can do anything you like with. Mainly what happens with black money is people steal it because they can.
51:43There's been secret payments by major multinational companies. Are we in a place where that habit is going to have to change?
51:54Undoubtedly, the convention and the law which was passed will reduce the number of times that happens. But actually, what it will also do is make people much more cunning about how they do it.
52:03Because, depending on your religion and your belief, there is a thing called temptation, which is promoted by the devil, who was a fallen angel. And it's very attractive. And people are seduced by it.
52:15You know what? I would be offended if I thought we had a monopoly on corruption.
52:23Prince Bandar would not give us an interview today, but he did in 2001, when Frontline asked him about corruption and the Saudi royal family.
52:34The way I answer the corruption charges is this. In the last 30 years, we have made, we have implemented a development program.
52:45That was approximately close to 400 billion dollars worth. You could not have done all of that for less than, let's say, 350 billion.
53:00Now, if you tell me that building this whole country and spending 350 billion out of 400 billion, that we had a misused or got corrupted with 50 billion, I'll tell you yes, but I'll take that anytime.
53:16But more important, who are you to tell me this? I mean, I see every time all the scandals here or in England or in Europe.
53:24What I'm trying to tell you is, so what? We did not invent corruption. This happened since Adam and Eve.
53:35I mean, Adam and Eve were in heaven and they had hunky-punky and they had to go down to earth. So, I mean, this is human nature.
53:42But we are not as bad as you think.
53:54This report continues on Frontline's website. Explore more on the world of international bribery.
54:07Read the interviews. On the one hand, you might be caught.
54:10An enormous worldwide network of secret cash payments.
54:14And watch extended portions of the Louis Free interview.
54:17The Saudi government.
54:18But let's look at it from their perspective.
54:20And an interview with Lowell Bergman.
54:21It's going to be blood on your hands if you go for it.
54:23Yeah. Well, yeah. Absolutely.
54:25Watch the program again online and join the discussion at pbs.org.
54:30Next time on Frontline World.
54:44In Pakistan, children forced to choose between extremists and an army waging war on its own people.
54:51It's better to die than to live under the Taliban.
54:54And in South Korea, detox for Internet addiction.
54:56When you go home, will you start using a computer again?
54:59Correspondent Douglas Rushkoff reports from the Digital Frontier.
55:03These stories and more on the next Frontline World.
55:14Frontline's Black Money is available on DVD.
55:18The order online is at shoppbs.org.
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55:26Frontline is made possible by contributions to your PBS station from viewers like you.
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56:20April 22nd.
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56:25Emily.
56:26Youå´” sal bankers.
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