Summary: a historic bribery case involving Saudi Arabia and an Airbus subsidiary comes before a UK court threatening a much more recent Airbus deal masterminded by MbS.
Last month a London court heard how a senior executive and associate of an Airbus subsidiary paid £9.7mn in bribes to Saudi Arabian military officials to secure lucrative contracts for the UK government.
The case, which was first exposed by Private Eye in 2016, relates to a UK government deal to provide communications services to the Saudi Arabian National Guard (SANG) which were delivered by a now defunct unit of Airbus called GPT Special Project Management.
The Serious Fraud Office, which brought the case, claims GPT paid other companies which were then used to bribe senior Saudi officials, including Prince Miteb bin Abdullah bin Abdulaziz, former head of SANG, in order to secure the contracts.
Opening the defence case at Southwark Crown Court Barrister Ian Winter QC described the structure of the government-to-government deal, which dates back to the late 1970s, as a “fiddle” that enabled members of the Saudi royal family and the British government to “deny having any knowledge of [the payments] at all”.
“This indictment does not begin to plumb the depths of what the UK government has been involved in since the late 1970s,” said Winter. The case promises not only to cast new light on the depths of UK-Saudi relations, but also to overshadow a much more recent deal with Airbus struck by Crown Prince Mohammed bin Salman for the exclusive benefit of himself and his line of the family.
Little public information is available about how the Salman clan runs its business empire.
MbS is believed to oversee it personally and his full brother Turki and mother Fahda bint Falah bin Sultan al-Hithlayn are also involved. Fahda, who is never seen in public, was restored to Saudi society without comment in 2018 after being locked up by MbS for two years. Turki’s main role is introducing Western companies to the crown prince and he deliberately keeps in the background.
Outside the Kingdom the family controls three Luxembourg-registered companies – Safason Corporation, Valburton Investments S.A. and Folabin – about which very little public information is available. Inside Saudi Arabia, their principal business vehicle is Tharawat Holding Company of which Turki bin Salman is the chairman.
Tharawat Holding Company has business interests inside Saudi Arabia in diverse sectors including construction, real estate, health, education, sports development, food and beverage, aquaculture, telecommunications and natural resources management. It is also suspected of having made a fortune out of defence contracts linked to the Yemen war. Before he was kidnapped and returned to Saudi Arabia against his will a dissident Saudi prince told Arab Digest when the war started Tharawat diversified its foreign partnerships into military materiel and the Salman clan enriched itself immensely via inflated arms contracts arranged by Turki.
“[Salman’s branch] are behind things inside the country and the Saudi public knows about it” said the prince. “MbS operates his business by bringing his special people and he is in control of the Royal Court. The younger brothers are making money, especially Prince Turki bin Salman. He has no official position – just a businessman – but MbS gives his brother some deals. Turki works for them.”
In September 2015 an anonymous grandson of Ibn Saud published a letter calling for the downfall of the King in which he warned that large sums of money are being embezzled by the inner circle of the royal family. The letter stated that US$160 billion (SAR 600 billion) is taken by the leadership with a further US$100 billion (SAR 375 billion riyals) allegedly going directly to Mohammad bin Salman and his brothers, Turki, Khaled, Nayif, Bandar, and Rakan.
The dissident prince also said Turki told him MbS intends to change the system of succession in the Kingdom to one based on primogeniture so MbS’s own son will inherit the throne after him.
“Turki told me we will be like Bahrain and Jordan where MbS will be King and then his son will be his successor’” said the prince.
“When MbS becomes king he wants to put one of his children as crown prince, he wants it in his family, Salman’s family, so he will appoint his son as crown prince although he is only a little baby. He has one son called Salman. He wants to put him like the King of Morocco, Bahrain, Jordan, or England, to keep it in his blood. Either he will put his son directly or he will momentarily put one of his brothers and then his son.”
One business deal the Salman clan are known to have been involved in is arranging the financing for a new fleet of Airbus planes for Saudi Arabian Airlines, the flag carrier of Saudi Arabia.
In 2018 the WSJ published an investigation into how the clan use businesses connected to the government to make their fortune and it explains in detail how when MbS came to power he helped re-engineer the original plan – that the kingdom’s Public Investment Fund (PIF) would purchase 50 new planes directly from Airbus for Saudi Arabian Airlines – in favour of a far more complex deal involving a newly established company called International Airfinance Corp (IAFC), which manages an Islamic finance fund called ALIF and is part-owned by an Islamic bank based in the Dubai International Financial Centre called Quantum Investment Bank, in which Tharawat acquired a 54% stake and MbS’s brother Turki is the chairman.
Despite concerns being raised about the deal, especially as Saudi Arabian Airlines did not solicit bids from any other companies and the SFO in London was at that time already investigating an Airbus subsidiary for corruption involving the Saudis, Airbus agreed to invest $100 million in ALIF if the fund bought only Airbus planes. On June 23, 2014, Airbus and IAFC held a “signing ceremony” in London to announce the new fund, hosted by Prince Turki bin Salman, International Airfinance said in a press release.
Then in 2015, after King Abdullah died, the plan changed again into an even more convoluted chain of transactions which would see the jets, rather than being sold directly to the Saudi government, being sold to ALIF instead which would in turn rent them to state-owned Saudi Arabian Airlines (subsequently rebranded as Saudia) with Tharawat ending up as a beneficiary. As one government official quoted by the WSJ put it, “at the end it went to Tharawat, who got others to finance it, and made huge profits without risking any of their money.”
On 5 August 2015 the anonymous opposition Saudi Twitter account Mujtahidd tweeted that the list price for thirty A320 and twenty A300-330 Airbuses was US$8 billion or SAR30 billion, but the amount budgeted was US$12 billion or SAR 45 billion, fifty percent more, with US$4 billion going into the pocket of Turki bin Salman. The original tweet is no longer available as Mujtahidd was hacked a month later and all his tweets were erased. Mujtahidd also wrote that MbS financed the deal through world banks with a Saudi government guarantee, on condition that Saudi Arabian Airlines paid Tharawat 150% of the agreed price.
The deal was finalised by MbS during a 2015 visit to France and not long after, at a gathering in a Saudi palace, he took credit for the transaction explaining how it showed his success in balancing the state’s financial interests with his family’s. “I am the mastermind behind this deal,” he reportedly said. Depending on what happens next with the Serious Fraud Office case now unfolding in Southwark Crown Court, it could yet come unstuck.