Judges: SFO 'acted unlawfully'

Anti-arms trade campaigners have won a significant victory over the government in the high court.

It has ruled that the Serious Fraud Office acted unlawfully when it bowed to government pressure to drop its corruption inquiry into arms deals between BAE Systems and Saudi Arabia.

The then prime minister, Tony Blair, claimed dropping the probe was vital to national security.

But the judges said that both the SFO and the government had failed to stand up for British justice in the face of threats from the Saudis to withdraw co-operation over terrorism if the investigation went ahead.

A further hearing is to take place to decide whether the investigation should now be reopened.

The SFO had been looking into allegations of bribery and corruption in arms deals with Saudi Arabia, involving BAE Systems and two other companies.

A judicial review of the original decision, announced by former attorney general, Lord Goldsmith in December 2006, was allowed in November 2007 after a challenge brought by two anti-arms campaigners, the Corner House research group and the Campaign Against the Arms Trade.

The saga dates back to 1985, when Conservative Defence Secretary Michael Heseltine signed the first phase of the al-Yamamah contract, a £43bn deal to supply 72 Tornado and 30 Hawk warplanes to Saudi Arabia.

Allegations were subsequently made that the deal had been secured through the payment of huge financial "kickbacks" to Saudi royals and others.

The decision to stop the SFO inquiry came after a meeting between Saudi national security adviser Prince Bandar and Foreign Office officials.

After the meeting Prime Minister Tony Blair wrote to his attorney general, Lord Goldsmith, warning that vital Saudi intelligence cooperation in the fight against terrorism was under threat unless the SFO inquiry was halted.

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