The UK Ministry of Defence paid millions of pounds to a company later alleged to have been a conduit for secret payments to high-ranking Saudi Arabian officials including a member of the royal family.
The MoD payments, worth £8m, were made under a contract codenamed Project Arrow that ran until at least 2017, according to documents that surfaced in a criminal trial.
The contract was signed amid a scramble by MoD officials to keep on track a £1.6bn defence deal for the supply of military communications equipment to the Saudis.
That deal, called Sangcom, was at the time under investigation by the anti-corruption agency, the Serious Fraud Office (SFO), which was investigating payments to a Saudi prince, Miteb bin Abdullah, in an earlier period between 2007 and 2010.
It was Prince Miteb who, in the midst of the SFO investigation in 2014, directed the MoD to sign the £8m Project Arrow contract with a Saudi company, Arab Builders for Telecommunications and Security Services (ABTSS), a court heard. Despite concerns among senior defence officials about the relationship between ABTSS and Miteb, the MoD signed the contract in August 2014.
The defence secretary at the time the MoD was considering whether to make payments to ABTSS was Philip Hammond, who later became chancellor under Theresa May. Lord Hammond was briefed shortly before a meeting with Miteb, then head of the Saudi Arabian national guard (Sang). The details of the briefing are unclear.
Three years later, in 2017, Miteb was one of the highest profile Saudis detained in the Ritz Carlton hotel in Riyadh during Crown Prince Mohammed bin Salman’s “anti-corruption” purge. He was later released after reportedly agreeing to a $1bn settlement, although it is not known precisely what he was accused of.
Documents revealing the MoD contract with ABTSS surfaced during the trial of the business executives Jeffrey Cook and John Mason. Both were accused by the SFO of paying bribes to officials, including Miteb, as part of the Sangcom deal during an earlier period, between 2007 and 2010.
The case focused on payments made by a British company, GPT Special Project Management, which had been contracted by the MoD to supply equipment to Sang – the military unit run by Miteb. GPT had made payments through third parties to ABTSS, which the SFO alleged was at the time a key conduit for payments to Miteb.
In 2021 GPT pleaded guilty to corruption charges and paid penalties of £30m.
On Wednesday Cook and Mason were acquitted by a jury and cleared of wrongdoing in relation to the payments. They had accepted that the payments took place but said they had been made with the approval of the government.
After the SFO launched its investigation in 2011, the payments from GPT were stopped. In the trial of Cook and Mason, their lawyers alleged that the MoD understood that the payments to the Saudis needed to resume if the defence deal was to survive.
Documents shown in court revealed how officials at the department sought ways to keep the Sangcom deal on track including discussions about Project Arrow. On 19 March 2014, a senior MoD official, Brig Tim Watts, emailed colleagues to warn them about a “fast ball” he had received from the Saudis directing the department to agree a contract with ABTSS worth £8m.
In the email aired in court Watts said the instruction, originating from Miteb, would be “difficult/impossible to turn down”, and that “conversely it is a real opportunity to build influence and reputation with the one person we, HMG, really want to reach”.
There was, however, unease within the department. Alan Richardson, another MoD official, wrote in an email shown to the court that “whilst I recognise the opportunity this offers, we will need absolute clarity over pricing to ensure that there can be no accusation, either real or perceived, of any impropriety. Especially considering who owns the companies involved.”
That was a reference to the Fustoks, the family of Lebanese business people behind ABTSS. The Fustoks’ relationship with Saudi royals dates back to the 1950s.
One of the Fustoks, Mahmoud, later became a fixer for Prince Abdullah, the son of the founder of Saudi Arabia, arranging for western companies to bid for contracts from the Saudi government. In return, both he and Abdullah would pocket a cut, according to British government documents.
When Mahmoud died in 2006 his younger brother Salah took over the family’s relationship with the Saudi royals, the court heard.
Salah Fustok was accused by the SFO in the recent trial of being a middleman who took a slice of payments. Abdullah became king in 2005 and his son Miteb later took over the national guard, a role that would give him oversight of the Sangcom deal. Miteb established his own relationship with the Fustoks, the court heard.
Officials told the court that by the time the MoD agreed the Arrow deal, Miteb was suspected or rumoured to be benefiting from corruption.
Hammond was briefed about Project Arrow prior to a meeting with Miteb in April 2014, the court heard. Shortly before the meeting, Watts wrote in an email that he had “just been with SofS for breakfast”, and that “he had read carefully the brief and is prepared for the Miteb meeting in a couple of hours”.
The briefing memo was not among the documents shown to the jury. Precisely how much Hammond, who now sits in the House of Lords, was told, or what he discussed with the Saudi prince, is unclear. Hammond was approached for comment.
The day before Hammond’s meeting with Miteb, Watts advised colleagues that “this is not something we should – or could – refuse to take on except in the most extreme circumstances”. He also acknowledged that “ABTSS’s owners are very close to Prince Miteb”.
In court Watts denied that Project Arrow had been set up to enable payments to members of the national guard, and said he would have been “extremely alarmed” had such a notion been suggested.
It is not known what has happened to Miteb since his detention at the Ritz Carlton in 2017. While corruption among Saudi royals is well established, critics have said that the “anti-corruption” purge in which he and others were detained was an extrajudicial effort by Prince Mohammed to eliminate rivals.
Although understood to relate to computers, the MoD has refused to provide any further details about Project Arrow or what it delivered. It also said it would not be practical to say whether the MoD had signed any other contracts with the Fustok family.
During the trial of Cook and Mason, Mark Heywood KC, the SFO’s barrister, described Project Arrow as a legitimate contract for military equipment.
Dr Susan Hawley, the director of Spotlight on Corruption, said: “The MoD’s apparent decision to contract directly with a Saudi company at the heart of the SFO’s criminal investigation, at the direct request of the Saudi official implicated in the allegations, is deeply shocking.”
ABTSS did not respond to questions from the Guardian. Fustok declined to comment.
