Sydney, November
20: The UK Sunday Times is reporting that Saudi Arabia is threatening to suspend diplomatic ties with Britain unless Downing Street intervenes to block an investigation into a 60 MLN GBP "slush fund" allegedly set up for some members
of its royal family. They have repeated their threat that they will terminate payments on a defence contract that could be worth 40 BLN GBP and safeguard at
least 10,000 British jobs.
According to the Times report, the Saudis are furious about the criminal investigation by the Serious Fraud Office (SFO) into allegations that BAE
Systems set up the "slush fund" to support the extravagant lifestyle of members
of the Saudi royal family. The payments, in the form of lavish holidays, a fleet
of luxury cars including a gold Rolls-Royce, rented apartments and other perks,
are alleged to have been paid to ensure the Saudis continued to buy from BAE
under the so-called Al-Yamamah deal, rather than going to another country. Al-
Yamamah is the biggest defence contract in British history and has kept BAE in
business for 20 years.
Saudi Arabia is a very large investor into UK assets, but the article doesn"t
mention that they too might be under any threat. In any case, the report could
have negative implications for the GBP if the report is accurate. --
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