A financial executive who blew the whistle on millions of pounds of corrupt payments in an arms deal secretly recorded his conversations with his managers as they dismissed his concerns, a court has heard.
Mike Paterson said he grew more and more uncomfortable with the unexplained payments and refused to approve them in his role as the financial controller of a British arms firm.
On Tuesday and Wednesday he gave evidence at the trial of two men accused of funnelling corrupt payments worth £9.7m to senior Saudis between 2007 and 2012.
The pair are being prosecuted by the Serious Fraud Office (SFO), which alleges that the bribes were used to secure a lucrative arms contract from the Saudi military for the British firm, GPT. The SFO alleges that the bribes were channelled to a Saudi prince, Miteb bin Abdullah, and other senior Saudi officials.
The arms deal involves the supply of military communications equipment to a Saudi military unit that at one time was headed by Miteb. The deal, which was initiated in 1978, is still running.
On trial are Jeff Cook, GPT’s former managing director, and John Mason, who worked for a firm that is accused of sending the bribes to the Saudis. Both have told the trial that the payments to the Saudis were approved by the British government, which oversaw the contract.
Paterson told the trial at Southwark crown court in London how he repeatedly raised his concerns with his superiors over a number of years but was rebuffed.
He said he became increasingly uncomfortable that a large slice of the arms deal – about 16% of its value – was regularly being paid to unknown recipients who appeared to be doing nothing in return.
In July 2007 he raised his discomfort at a meeting with one of his superiors. Later that year he refused to sign off the next round of the payments and instead requested that his superiors put their name to them.
At a testy meeting with three of his superiors in December 2007, Paterson was told that the payments had been running for 23 years. Paterson replied: “Yeah, it does not make it any more legal,” according to the recording that was played to the court.
Paterson continued to complain about the payments. In an email to a superior in December 2008, he said he believed that the payments, which were going to a company in the Cayman Islands, “may be illegal”.
In 2009 he reported his concerns to an internal unit that was responsible for ensuring that GPT acted legally. The unit was run by Airbus, the European aerospace group that owned GPT.
The compliance unit asked Paterson to send a file of his evidence. He told the court that the file was intercepted after he put it in the GPT courier system and replaced with 150 blank pages, and then sent on to the compliance unit.
Paterson told the court that his managers in effect removed him from his post but required him to still come into the office for nine hours a day, even though he was not given any work to do.
Asked by the SFO prosecutor Mark Heywood what he did during those hours, Paterson replied “nothing”, adding that he surfed the internet and killed time.
The trial continues.
