Andreas Whittam Smith: Lord Goldsmith's unanswered questions

The Attorney General has stated the shocking notion that the rule of law can be set aside

The statement in the House of Lords by the Attorney General, Lord Goldsmith, announcing the ending of the inquiry into whether British Aerospace had bribed Saudi officials to obtain large orders, was confusing. While almost every phrase was technically correct, the announcement as a whole left many difficulties.

Let us start at the beginning. The Attorney stated that "the director of the Serious Fraud Office has decided to discontinue the investigation into the affairs of BAE Systems as far as they relate to the Al Yamamah defence contract". He added that the decision had been taken by the director "not under pressure in any sense".

There are quite a few problems with this. Why did the Prime Minister state the next day that he accepted "full responsibility" for ending the inquiry if it had been a matter for the director alone to determine? Furthermore, not even the director himself, Robert Wardle, appears fully in agreement with Lord Goldsmith's account. Mr Wardle told a Sunday newspaper it was not possible to reach such a firm view until an investigation was over. "There is no guarantee that charges will be brought until you have completed the investigation so I had perhaps a different vie ... a shade of difference."

If we remember that the director is appointed by and accountable to the Attorney General, then we can see Mr Wardle's words as a sort of half-strangled cry of protest from inside government to anybody outside who might be within earshot. "It wasn't me" was, I believe, Mr Wardle's muffled message.

In any case, it is implausible that the director would halt his inquiries at just this point. For his investigators were about to gain access to files held in the offices of the Swiss federal prosecutor in Berne. The contents are believed to comprise print-outs of BAE's recent offshore banking transactions.They were expected to show whether members of the Saudi royal family were receiving pay-offs, whether any offences were committed under British law and whether BAE had obtained export insurance cover on a false basis. Given the relevance of the material in Switzerland, and the difficulty of persuading the Swiss government to override strict laws protecting banking secrecy, it is hard to think of a less likely moment when the director of the Serious Fraud Office would want to abandon the case.

Lord Goldsmith went on to say it had "been necessary to balance the need to maintain the rule of law against the wider public interest". The word "necessary" raises questions. For the relevant piece of international law which Britain has ratified, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, makes no mention of "public interest" as a reason for not proceeding. Indeed, Article 5 of the Convention is at pains to leave no such loophole.

It is also worth noting in passing that the Attorney has stated the shocking notion that the rule of law can be set aside whenever the Government so decides. The Attorney General also piously claimed that "no weight has been given to commercial interests or to the national economic interest". Strange, then, that the Prime Minister, in commenting on the discontinuation of the fraud enquiry, should have done so in these terms: "leave aside the effect on thousands of British jobs and billions-worth of pounds for British industry ... our relationship with Saudi Arabia is vitally important etc.".

But if everything was exactly as Lord Goldsmith stated, then the Prime Minister, in reply to reporters' questions, should not have mentioned economic considerations at all. He should have said merely that the decision was entirely for the director of the Serious Fraud Office and he had nothing further to add. I think Mr Blair, like all decent people who find they are beginning to mislead others, experiences such discomfort that he often cannot prevent the truth entering his discourse if only to be denied.

The reason why Lord Goldsmith was at pains to dismiss commercial interests as a consideration is that OECD Convention expressly rules them out. Article 5 states that investigation and prosecution of the bribery of a foreign public official "shall not be influenced by considerations of national economic interest".

But Article 5 doesn't stop there. It goes on to forbid further considerations. Nor shall investigation and prosecution, the Convention states, be influenced by "the potential effect upon the relations with another state or the identity of the natural or legal persons involved". Yet Lord Goldsmith said he had obtained the views of the Prime Minister and the Foreign and Defence Secretaries on such matters, and that they had expressed the opinion that continuation of the investigation would cause "serious damage to UK/Saudi security, intelligence and diplomatic co-operation". This in turn would have "negative consequences" for the United Kingdom public interest.

So how did the Attorney General square this with the OECD Convention? He admitted that he and the Serious Fraud Office are precluded from taking into account the potential effect upon relations with another state and then he assured the House of Lords - presumably with a straight face - that "we have not done so". When faced with such a contradiction, one always wonders whether one has heard or understood correctly, or whether one is missing something for surely in a parliamentary statement no minister would assert that black was white and white was black. But another member of the House of Lords, Lord Thomas, who was present, must have been as puzzled as I am for he told the Attorney General that the two statements were indeed "contradictory".

Occasionally when his actions are challenged, Lord Goldsmith will write to newspapers to provide a justification for his course of action. In light of this, I hope he might answer these two questions. One: how is he able to satisfy himself that pleading the public interest in maintaining co-operation with Saudi Arabia in security, intelligence and diplomatic matters is not in contradiction of the Article 5 exclusion of "relations with another state"? Two: given that in national emergencies, legislation can be rapidly strengthened or new measures introduced, what are the circumstances when the rule of law itself may be set aside, as has happened in the BAE case?

If the Attorney General cannot answer the first question satisfactorily , then members of the House of Lords would be entitled to ask whether they had been deliberately misled. And if he cannot provide reassurance in reply to the second, then people might conclude that the continuation of Lord Goldsmith in office is not in the interest of law-abiding citizens.