UK's Blair faces legal challenge to Saudi probehalt

LONDON, Dec 19 (Reuters) Anti-bribery campaigners said today they would take the British government to court over its decision to drop a corruption probe into dealings between Saudi Arabia and BAE Systems as part of a huge arms contract.

The legal challenge comes as the opposition Liberal Democrats are preparing a request for a debate in parliament that could force the government to publish a long-buried report about the multi-billion-dollar deal.

The Serious Fraud Office said last week it had dropped its investigation into dealings between Saudi officials and BAE representatives in relation to the so-called Al Yamamah contract after ''representations'' from the British government about the need to safeguard national security.

Blair said he took full responsibility for stopping the probe and that Britain's relationship with Saudi Arabia was crucial for counter-terrorism and West Asia peace.

Campaign groups The Corner House and Campaign Against Arms Trade said on Tuesday the government's action was in breach of the Organisation for Economic Co-operation and Development's Anti-Bribery Convention.

JUDICIAL REVIEW The convention came into effect in 1999 and requires signatories to criminalise the payment of bribes to foreign public officials in international business transactions.

''The decision was based on considerations of potential damage to relations with Saudi Arabia. This is expressly forbidden under the OECD's Anti-Bribery Convention,'' the campaign groups said in a statement.

''The advice given by the prime minister amounted to a direction to discontinue the investigation, which is an unlawful interference with the independence of prosecutors under domestic and international law.'' Lawyers for The Corner House and Campaign Against Arms Trade wrote to Blair, Attorney-General Lord Goldsmith and Robert Wardle, director of the Serious Fraud Office, saying the groups would formally seek a judicial review unless the government reversed its decision by January. 2.

Separately, a Liberal Democrats spokesman said the party was finalising a demand for a vote to force the government to publish a 1992 National Audit Office (NAO) report on the Al Yamamah contract.

It is the only NAO report never to have been released in public, he said.

''It's our belief that this report was commissioned in the name of parliament and parliament has a right to see what it says,'' the spokesman said.

The original Al Yamamah deal was struck in the mid-1980s between the British and Saudi Arabia governments, when BAE was appointed prime contractor. The Liberal Democrats said BAE and its predecessor British Aerospace had earned 43 billion pounds (.40 billion) in 20 years from the contracts.

REUTERS PDM PM1822