Lord Garden: My Lords, I remind your Lordships of my participation in the Transparency International project on the prevention of corruption in the official arms trade.

Corruption is corrosive to both society and the individuals engaged in it. It takes two parties to engage in corrupt practices: those who do the bribing and those who modify their actions having received the bribes. Once corrupt practices become accepted at any level of any Government, they are extraordinarily difficult to eliminate. Corruption undermines the relationship between officialdom and the citizen, and is an attack on democracy. Thus, when we claim a role in promoting democratic values around the world, we have a special responsibility to prevent corruption.

When I look at the security aspects that are central to the Attorney-General’s arguments, I have deep concerns. The European Union recognised the real security threat corruption poses when, in the global strategy document of December 2003, the member states, including the United Kingdom, said:

• “The best protection for our security is a world of well-governed democratic states. Spreading good governance, supporting social and political reform, dealing with corruption and abuse of power, establishing the rule of law and protecting human rights are the best means of strengthening the international order”.

That EU strategy was all about dealing with the threats we face in the years ahead, including terrorism. It was therefore astonishing to me, as it obviously was to other noble Lords who have spoken in this debate, when on 14 December—when, again fortuitously, I was in the Chamber—the noble and learned Lord came to argue the reverse case. He told us that the national interest with respect to security from the terrorist threat outweighed concerns about the rule of law.

Whether or not the allegations against BAE Systems ultimately would have proved well founded, the suspension of the investigation on the grounds of national security interests raises for me deep concerns about our long-term strategy for combating terrorism. There are a number of adverse effects in this case. First, we know that the extreme form of Islamic militancy that has led to al-Qaeda has its roots in Saudi Arabia. One of the methods of gaining support among the wider population is to bring to the notice of the people the claim that the Saudi leadership is corrupt. The way that this investigation has been stopped will reinforce those perceptions, whether they are right or wrong.

Secondly, it is suggested that the Saudi Government have threatened to withdraw intelligence support to help us combat terrorism. If that were the case, would it not in effect mean that they were threatening us with terrorism? That allegation is hardly conducive to good UK-Saudi relations. In any case, many of those close to the intelligence world would argue that Saudi Arabia is a net gainer in terms of intelligence exchanges about terrorist threats. It needs our support in order to meet its very real terrorist problem.

Thirdly, there is the question of the lesson other countries will take from all of this. They can presumably now assume that they can demand from the British Government illegal concessions in totally unrelated areas by squeezing the intelligence flow. Does that not put us at greater risk as well?

Fourthly, around the world corruption will increase, as our example of claiming national security interest is followed by others. That corruption in turn will undermine the development of democracy, lead to more conflict and, in the longer term, rebound on us through terrorism.

I would argue that it cannot be in the national security interest to appear to turn a blind eye to the possibility of corruption. We explored the issue at some length in the debate on the DfID White Paper on 11 January. I asked some questions that were not answered, and I will repeat one of them, which I hope the noble and learned Lord will be able to answer. What now is the position for British companies operating in Saudi Arabia today? Can they confidently bribe with the blessing of the British Government? They need to know what their position is in the light of this decision.

Many in the defence field believe, rightly or wrongly, that it was not primarily a security issue, but a question of the continuation of the lucrative Al Yamamah project. If commercial interests were a factor in the decision, the reaction in the City of London, the United States and South Africa—and it is spreading further—now indicates that British business may be the loser in the long term rather than the winner. Not only that; think about BAE Systems. Our major aerospace company is left tainted by allegations that have not been resolved. We find ourselves criticised by the OECD, and I do not doubt that when the Global Corruption Index is next published we will find ourselves rather lower in the pecking order.

The British Government are the prime customer for the UK defence industry. They can and must use that power to enforce the necessary anti-corruption measures. A letter dated 17 January from an extraordinary range of international non-governmental organisations to the Prime Minister concluded by saying:

• “Given the devastating impacts of corruption on democracy, sustainable development, human rights and poverty, we call upon the UK Government to re-open the investigation of the [Al Yamamah] case”.

I have a final question for the noble and learned Lord the Attorney-General. In the light of all that has happened since his Statement on 14 December, is it not time to think again where the national interest lies? The national interest is to promote the rule of law and re-establish the United Kingdom’s international reputation.