The Mark Thatcher Affair: Arms deal triumph for 'Batting for Britain': Steve Boggan examines the history of the biggest weapons agreement ever struck between two countries

IT WAS the biggest arms deal ever struck between two nations. Al- Yamamah, or Dove of Peace, was to cost pounds 20bn and keep 40,000 people in work until the end of the century.

Britain would supply Saudi Arabia with 48 British Aerospace Tornado fighters, 60 Hawk trainer jets, 88 helicopters, mine-hunters and naval and air bases.

For Margaret Thatcher it was a triumph for her policy of 'Batting for Britain'. For the middlemen, the fixers behind the deal, it meant vast commissions. For Mark Thatcher, it allegedly meant a pounds 12m windfall at the age of 31.

Al-Yamamah was born out of Saudi Arabia's need for state-of- the-art weaponry in the early 1980s as part of a rolling programme to counter the growing threat from Islamic fundamentalism in the Middle East. To solve his problems, King Fahd first turned to America, the usual provider of high-tech weaponry to the Saudis, but was rejected.

Since 1981, then-President Ronald Reagan had been encountering fierce opposition from the Jewish lobby to arms sales of arms to the Saudis. Two deals, for five AWACS surveillance planes and 60 McDonnell Douglas F-15 fighters, had fallen foul of the Jewish lobby - one scraping through Congress by only one vote, the other being cancelled altogether - so President Reagan suggested the Saudis look elsewhere.

Britain and France were the obvious choices, with the Americans privately backing Britain. Two rival camps were formed to fight for the deal. On the French side were two wealthy international arms dealers, Akram Ojjeh and Adnan Khashoggi. On the British side was another arms dealer, Wafic Said, a Syrian-born Cambridge graduate whose name, and contacts with the Saudi royal family, were well known to British defence officials.

Mr Said had been brought into the deal by a group of businessmen, financiers and Ministry of Defence officials known as the 'Savoy Mafia' because they held their meetings at the London hotel, led by Alan Curtis, the former chairman of Lotus and a long-time friend of Denis Thatcher. When the Saudi business began looming large, they decided to enlist the services of Mark Thatcher; his name, they believed, would be sure to impress the Arabs.

Sources close to the Savoy group have said Mark Thatcher was attractive to its members because they believed that the Saudis over- estimated his influence over his mother. One senior MoD official said: 'We knew he was involved, and we didn't like it. We wanted a clear run at the Saudis and we were afraid he would get in the way.'

The fortunes of the two groups ebbed and flowed, with the French bid, offering Mirage 2000 fighters, gaining early ground. It is understood, however, that members of the British team, possibly including BAe executives, flew to Geneva at the end of 1983 to persuade Mr Ojjeh to withdraw. It is not clear what form the persuasion took, but it resulted in vain attempts by an abandoned Mr Khashoggi to get on board the British bid, and the French challenge collapsed.

Meanwhile, Lady Thatcher, then Prime Minister, had been wooing the Saudis in secret. During the spring of 1985, she held several meetings with Prince Bandar bin-Sultan, the Saudi ambassador to Washington, at 10 Downing Street, and in Austria and Switzerland.

The Saudis' main concern was that the British should allow them to tie up the deal in their own way. It is believed this involved inviting BAe to over-charge for the weaponry, with the difference between the true price and the inflated price being used to pay 'commissions'. Mr Said's team is reported to have received pounds 240m for arranging the deal.

By September, the first part of the two-part understanding had been signed and Lady Thatcher's son was a rich man.

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