This is an extract from ‘Thatcher’s Fortunes – The Life and Times of Mark Thatcher’ by Mark Hollingsworth and Paul Halloran.
“Mark Thatcher was trying to cash in on the Al-Yamamah deal . . . In the arms business we met many people, royal hangers on. We called them ‘Black Princes’ and sometimes they had to be bought off . . . Thatcher was acting in the same way, as a kind of British Black Prince, but it was surely not the proper role for a British prime minister’s son”
Alex Sanson, former managing director of British Aerospace, Dynamics Division
Mark Thatcher loves to travel. It’s almost a compulsion. Soon after his mother entered Downing Street, he was on jet planes – jumbos, Concorde, anything that would propel him to countries that looked favourably on doing business with the son of the British prime minister.
By 1981, he was flying four hundred hours a year, or eight to ten hours a week, and that continued throughout the decade. He used to boast to his Special Branch detectives that he never stayed in the same hotel twice, and his sister, Carol, remarked how her brother always called her from a different airport.
When he arrived in the first-class departure lounge, Mark was always immaculately dressed in a stiff, almost military, style – usually in a dark blazer, a crisply ironed shirt and a colourful handkerchief in the jacket pocket. Airline officials recall that he often drew attention to himself, ensuring he would be recognised. ‘Mark reminded me of a former Sandhurst army officer,’ said one. ‘He talked in that clipped, brisk way and expected everything to be perfect.
One of his habits was to leave the Heathrow executive lounge through a secret route like a catering workers’ exit. He also used the code-name ‘M. Teacher’ when making airline reservations on commercially sensitive trips. Mark usually flew either first or business class. On American Airlines, one of his favourites, he was always upgraded to first class.
On many of his overseas trips he was accompanied by armed Special Branch detectives. Mark had wanted bodyguards as soon as his mother was elected prime minister. On Monday, 7 May 1979, three days after her general election victory, he drove to Scotland Yard, walked into the office for the prime minister’s Special Branch personal protection and slumped into a chair. ‘Well, I know I’m something of a hero,’ he said with a straight face. ‘But I really do think that Scotland Yard should be providing me with some form of personal protection.’
Despite Scotland Yard’s refusal, Mark was insistent and continued to request them. ‘How can I get bodyguards?’ he later asked Barrie Gill, his PR and marketing agent, at a racing meeting. Eventually, in early 1982, the Yard agreed that a Special Branch minder be assigned to him and that he should have the use of a Jaguar or an armour-plated Rolls-Royce saloon.
When he retained bodyguards, the cost was met by the taxpayer. For example, in August 1982 he travelled to New York City for a three-day business trip. Before the visit, a detective travelled to the USA by jumbo jet to make the ‘security arrangements’. Then Mark and another bodyguard flew by Concorde to join him. Thatcher paid his own fare of £1,124. But the total cost in fares and accommodation for the two officers was an estimated £5,000, paid out of police funds. From then on, Mark was escorted by at least two detective sergeants, usually travelling business class.
By early 1983, Mark was being shadowed by three bodyguards and a police car. They seemed to follow him everywhere – when he played golf and even on visits to Annabel’s nightclub. Two dinnerjacketed officers would watch him inside the club while another stayed in a Rover outside. As more detectives were assigned to him, the cost spiralled to about £50,000 a year. MPs’ questions about the rising costs made the government uneasy and uncomfortable. Attempts were made to avoid answering.
This extraordinary level of police attention was illustrated by the 1983 election campaign when he abruptly left the country. There was considerable unease about Mark being around. ‘We felt he was trading too much off his mother’s name,’ recalled one former senior official at Tory Central Office, ‘and so there was a move to keep him under wraps during that election because of the potential damage he might cause the party and her.’
During the first week of the campaign, Mark was accompanied by three Special Branch officers and attended his mother’s adoption meeting in Finchley, north London. He then told startled friends that he was leaving for America and would be away for at least a fortnight. Just over a week later, on 26 May 1983, Thatcher flew out of Heathrow first-class on a Pan Am flight to New York. He was escorted by no fewer than eight plain-clothes police officers to the BA VIP lounge in Terminal 3 and kept away from journalists. When his flight was ready to board, police and airline officials virtually smuggled Mark out of the side exit and down the back steps from the VIP suite – normally only used by royalty, foreign heads of state and cabinet ministers.
As he travelled the world with his bodyguards, Thatcher’s relationship with the Foreign Office and overseas embassies became increasingly frosty and frictional. As soon as he arrived in the Gulf, the Middle East and Africa, Mark walked into British embassies and foreign government offices, expecting VIP treatment to promote his commercial interests. He was, of course, entitled to use the embassy facilities. But several diplomats were concerned about the way he went about it and the extent to which he was allowed to exploit his position. ‘He had no scruples and would do anything that was asked of him to make money,’ one Gulf diplomat told us. ‘He would bring out blank 10 Downing Street notepaper and invite business associates to draft their own letters on it to suit their purpose.’ His favourite approach was to arrive at a British embassy and announce to the senior mandarin, ‘I’ve got some business clients to entertain. I want access to your facilities. It will be good business for Britain.’
This happened in South Africa in the mid-1980s. Mark arrived at the embassy in Pretoria and demanded introductions, immediate access to facilities and information to help his business interests. Soon after the visit, the chairman of a major public company was briefed about the incident by an angry diplomat. On his return to London, the businessman reported this, via his political contacts, to the Conservative Party whips’ office. He also informed Ian Gow, then Margaret Thatcher’s parliamentary private secretary. ‘This needs to be watched,’ the company chairman, who was a Conservative Party supporter, told him. ‘Yes, I know there is a problem,’ replied Gow.
By far the most politically explosive and controversial was Mark’s involvement in international arms dealing. This has always been denied by Thatcher’s friends. Some of them admit he played a role in major defence contracts by acting as an intermediary and providing introductions between manufacturer and customer. But they contend he never actually sold the military hardware as such. ‘He was only involved in those deals indirectly,’ said Rodney Tyler, a close friend of the Thatcher family. However, businessmen on both sides of the Atlantic insist he was more directly involved. This was asserted in the UK by two former senior executives of Astra Holdings plc, an arms and munitions manufacturer. Its former chairman, Gerald James, said that he was told by Richard Unwin, one of his consultants, on more than one occasion, ‘If you want to get on in the defence world, then the one person you need to get hold of is Mark Thatcher.’
It was originally via the Formula One Grand Prix racing scene that Mark acquired his largest sack of gold. Mark Thatcher’s largest commission payment was from the largest arms deal in history. Known as Al-Yamamah (Arabic for ‘the Dove of Peace’), this contract to supply military equipment to Saudi Arabia was negotiated at the very highest level. Batting for Britain was the prime minister, Margaret Thatcher, and for Saudi Arabia, Prince Bandar, Saudi ambassador to the United States and King Fahd’s most trusted envoy.
Mrs Thatcher has always been an enthusiastic exponent of selling
British weapons abroad. She enjoyed dealing personally with Third World kings and presidents, trading in the very symbols and sinews of national power. Usually, the secretary of state for defence was the front man in the negotiations, but Thatcher relished leading the charge and beating the arms drum for Britain. ‘I knew that I had only to ask my office to contact Number 10 to wheel in the heavy guns if they could in any way help to achieve sales of British equipment,’ recalls former defence secretary Michael Heseltine.
Her enthusiasm for selling weapons was apparent in April 1981 when she told Arab correspondents in 10 Downing Street, ‘We are particularly good on aircraft. We have also been very good on tanks and on armour. We are absolutely outstanding on radar, avionics in aircraft, on some aero engines, on carbon fire . . . The development of military jets was ours, radar was ours . . . The Harrier is perhaps the best plane in the world. The Tornado is very, very advanced. The Rapier is quite superb.’
Thatcher herself set up many of the largest and most controversial deals, negotiating directly with King Hussein of Jordan, General Suharto of Indonesia and General Pinochet of Chile. She sweetened and lubricated these contracts by what she called ‘soft finance’ and aggressive use of the export credit guarantee scheme by which her government underwrote the financing of the deal if it collapsed. The Treasury was unhappy about this un-Thatcherite and extravagant provision of credit for weapons sales but Thatcher brushed aside their objections to such lavish subsidies. ‘You must find a way,’ she told Trade and Industry officials. ‘You are accountants and accounting is all about taking a sum of money from one person and giving it to someone else. Sort it out.’
The problem was that the taxpayer was short-changed when some of the countries, notably Jordan and Iraq, did not pay up and HMG was landed with the bill. By 1990, Iraq had defaulted on defence contracts worth close to £2.3 billion. In reality, the prime minister was subsidising British arms firms with vast sums of public money – a policy she noticeably refused to do for other areas of industry.
The contract that most interested her was Al-Yamamah, worth a total of £40 billion. It was originally conceived in the early 1980s when President Reagan tried to sell some F-15s, a strike aircraft, to Saudi Arabia. The Israeli lobby, through Congress, vetoed the deal and so British Aerospace promoted their Tornado, a more advanced and menacing aircraft but also more expensive than the rival Mirage 2000. Conscious that the Saudi princes were easily intimidated and neurotic about threats from neighbouring states, the Ministry of Defence argued that the offensive Tornado would be an effective deterrent. The Saudis agreed and in late May 1985, Prince Bandar, son of the Saudi defence minister, flew to London and negotiated directly and privately with Mrs Thatcher. ‘What do you want?’ she asked Bandar. ‘Planes, ships, tanks? They’re yours. Anything short of nuclear. No problem.’
Prince Bandar, only 36 years old when the negotiations took place, was King Fahd’s favourite nephew, chief diplomatic troubleshooter and an ambassador in more ways than one. He operates at the highest levels – bypassing the foreign ministers and dealing with their principals. His diplomatic secret is that he is bi-cultural. A Koran quoting Muslim, he is extremely adept at making all the right chess moves in the intriguing and conspiratorial world of rivalry between the Saudi princes. Yet at the same time he is a Scotch-drinking, UStrained fighter pilot, who is also a poker player and a graduate of the School of Advanced International Studies, Johns Hopkins University, in Washington, DC. It is a remarkable combination of qualities but he also brought to the negotiations knowledge of commissions to intermediaries on major arms sales. This was largely because of his father’s experience as the Saudi defence minister. Whether such payments were referred to during his often unscheduled and periodic meetings with the prime minister is not known.
But the multibillion-pound order was only awarded to Britain, according to Nihad Ghadry, a former adviser to King Faisal and successive monarchs, once Margaret Thatcher agreed to keep the details of the order secret and to allow the Saudis to handle the contract in their own way. Thatcher’s role was pivotal and she immersed herself in the detail. In August 1985, she interrupted her annual holiday in Switzerland and drove to the house of the British consul in Salzburg, Austria. There to meet her was Prince Bandar, armed with a confidential letter from King Fahd, and a memorandum of understanding was drawn up.
During 1985, she had at least six private meetings with Prince Bandar and made unscheduled stops in Riyadh to discuss the deal. A month later, on 26 September, the contract was signed in London by Bandar’s father, Prince Sultan, and Michael Heseltine, then defence secretary, who said the prime minister’s role ‘cannot be overstated’. But the negotiations then embarked on a mysterious course. Two days before the document was initialled, Britain’s chief of air staff was told that the Saudis were buying not just 48 Tornados but also an extra 24 planes for ‘an air defence role’. And just for good measure, they also ordered an extra 30 Hawk trainer aircraft from BAE. A deal of already awesome proportions had ballooned into something colossal and unprecedented. The final contract was formally authorised in Riyadh in February 1986.
Extreme secrecy surrounded the details. The Saudis were particularly keen on the confidentiality clause and the British government readily agreed, not wanting to jeopardise such a key contribution to its balance of payments. The contract was governed by what is known in the USA as ‘a black defence program’ – whereby commercial information is withheld from the public and parliament – according to a report by the stockbrokers UBS Phillips and Drew. This was later borne out when a three-year investigation of the contract, focusing on secret commission payments, by the National Audit Office, the government’s watchdog on spending, was suppressed in 1992 and has never been published. Details were blacked out in a later ‘strategic marketing’ report by the Defence Export Sales Organisation (DESO) because ‘public interest in the disclosure of this information is outweighed by the risk this could pose to the Al-Yamamah programme’.
One reason why the prime minister played a direct role in AlYamamah was its massive value – eventually £40 billion to its contractor, British Aerospace plc. It was also a government-to-government deal which had diplomatic and political benefits in cementing alliances. This was underlined by David Gore-Booth, the British ambassador in Saudi Arabia at the time. He described the kingdom as ‘easily Britain’s most important partner in the Middle East, whether politically, commercially or militarily . . . We have no intention of depriving our friends of the means to defend themselves.’
‘The Dove of Peace’ developed into a ‘wish-list’ of defence equipment for the Saudi armed forces, with priorities and delivery varied to suit their requirements, plus the availability of funding.42 The first order was for 48 Tornado GR1 strike fighter bombers, 24 Tornado F3 air-defence aircraft, 30 Hawk 60 series advanced training aircraft and 30 Pilatus PC9 basic training aircraft. The second stage, three years later in 1988, was secured by the prime minister at a stopover in Bermuda on her way to Australia. The Saudis agreed to buy another 48 Tornados, 60 Hawks, 6 minehunters (from Vosper Thornycroft), 88 Black Hawk helicopters (from Westland) and a large air base and an air-defence command and control system.
Al-Yamamah was a gold mine for British Aerospace, as it was paid mainly in oil, although there were substantial multimillion-dollar cash payments as well. But it was not a pure barter arrangement – the equivalent of exchanging two goats for a pig. Under the contract, the Saudis delivered to British Petroleum (BP) and Shell 600,000 barrels of oil per day. They then refined it and sold it on the open market. The proceeds were paid on a monthly basis into a special London bank account administered by the Ministry of Defence, with BAE as the custodian. The account was then drawn on by British Aerospace as the arms were delivered.
‘This, in effect, was a general slush fund for the Saudi Ministry of Defence,’ Chas Freeman, former US ambassador in Riyadh, told us. ‘They could debit anything they wanted against this account and BAE would do the procurement. And it was not subject to public scrutiny in either country. It was not part of the Saudi defence budget. It was off budget and because it was out of sight, it was peculiarly susceptible to corruption . . . The fact is that if you have an essentially limitless trust fund, you can buy anything you want from anyone you want with no one the wiser; no matter how honest or patriotic your initial instincts might be, the temptation for abuse would be large.’
The contract was a huge commission-generating machine. A large proportion of British Aerospace’s hardware and spare parts were sold at a high premium – or a ‘friendship price’ as the Saudis like to call it. The difference between the ‘normal price’ and the ‘friendship’ version were distributed in various tranches to Saudi defence officials, members of the royal family and intermediaries. ‘The opportunities for rake-offs were very large,’ said Freeman. Former CIA officer Robert Baer claimed, ‘Most of the commissions went to Prince Sultan, his family and a legion of middlemen’.
Numerous sources calculate the secret payments accounted for 30 per cent of the contract. British Aerospace files on pay-offs are held in a vault in a Swiss bank. But documents obtained by The Guardian in 2003 disclosed a £60 million BAE slush fund that was used to pay Prince Turki bin Nasser, head of the Saudi Air Force, during the latter stages of AlYamamah. ‘Commission contracts are often written so that no one party can remove them from a bank,’ said Major-General Kenneth Perkins, former British Aerospace marketing director for the Middle East. ‘The contract requires both parties to be present before it can be removed. Any party can go in and make photocopies of the contract. But the party has to cut off any letterheads and signatures before he can take the photocopies out of the bank’. A former executive of the arms company BMARC, David Trigger, confirmed that such payments were paid while giving evidence in the High Court during an unrelated court case. ‘Commission was obviously paid but my understanding is that all my work connected with that contract [AlYamamah] is governed by the Official Secrets Act.’
There is, of course, nothing unusual in intermediaries playing key roles in major arms deals. Quite the reverse, in fact. Business in the Arab world is often conducted on the basis of personal trust and recommendations. Many contracts are sealed with a handshake not a fountain pen. All the Saudi princes have their own agents, although they are often little more than chiefs-of-staff. In the West, the brokers are more sophisticated: they bypass the formal channels of communication and structures between the contractor and the governments. In Saudi Arabia, the role is performed by a front man and a large share of the commission is routed to members of the royal family – usually through a less visible Prince or a trusted individual. The difference with Al-Yamamah is that the son of the British prime minister who negotiated the multibillion-pound contract was one of those middlemen who benefited financially.
Mrs Thatcher’s contribution ‘cannot be overstated’, said her defence secretary Michael Heseltine. The origins of Mark Thatcher’s involvement lay in his friendship with Mansour Ojjeh, a wealthy American-educated Saudi businessman and fellow racing fan. They met in 1980 when Mark was invited to the Frank Williams base at Didcot, Oxfordshire, and was introduced to Mansour, whose family sponsored the Williams Formula One racing team. The two became friends. Mark would visit Mansour at his home in Monaco and in turn invite his fellow car enthusiast to Lotus promotional events. Mansour introduced Mark to his father, the late Akram Ojjeh, then procurement agent for the Saudi royal family on all key military contracts.
Born in Syria, brought up in Iraq and educated in France, the picaresque Akram Ojjeh established his first arms-trading company in Switzerland in 1956. By that time he had also set up Saudi Arabia’s first weapons factory.46 The next decade saw Ojjeh base himself in Paris and represent French defence firms like Dassault, selling their Mirage jets and Matra’s missile systems in the Middle East, and he hired the legendary Saudi arms dealer Adnan Khashoggi as a consultant. Often under scrutiny by the French authorities, he created a new business vehicle in 1977 – the Geneva-registered TAG Group, otherwise known as Technique d’Avant Garde or the Trans-Arabian Group. By that stage, Akram Ojjeh had unrivalled access to and influence with the Saudi royal family on major defence projects. His main channel and entrée to the royal family was Khalid bin Abdul Aziz Al-Ibrahim, an unofficial advisor to King Fahd and the brother of his favourite wife. Ojjeh was particularly close to Prince Sultan, the defence and aviation minister. Such connections brought vast wealth – enough to own the QE2, a large ranch in Paraguay, houses in Paris and Monte Carlo and to give £1 million a year to the Frank Williams racing team as sponsorship.
After meeting Mark Thatcher, Ojjeh cultivated him as a useful contact and lent him a car from the Saudi racing team. From 1980 onwards, the prime minister’s son acted as a TAG introductory agent, flying on their BAC1–11 private aircraft to Haiti, among other places. He was seen as potentially useful in 1983, when a major contract became available in Saudi Arabia for the construction and equipping of two hospitals for the National Guard, in Riyadh and Mecca. The staffing and equipment orders were handled by the British Ministry of Defence and they entertained bids from interested firms. Ojjeh was interested in acting for any of the bidding contractors and dispatched young Thatcher to work on the project. He approached Christopher Chataway, the former Conservative minister who was chairman of United Medical Enterprises UK (UME). At Mark’s invitation, Chataway flew to Paris for a meeting with Ojjeh to discuss the tender but nothing came of it.47 Instead, UME hired the Saudi-based Project Development Company. Unperturbed, TAG represented a rival prospective contractor, American Hospitals International Inc.
Ojjeh then used Mark Thatcher to lobby the Ministry of Defence on his behalf. This was not a wise move as the civil servants resented being approached by the prime minister’s son acting on behalf of an American company. Despite the fact that UME secured the order, there was considerable disquiet inside the MoD about the episode. When asked about his business relationship with Akram Ojjeh a year later (in 1984), Mark admitted meeting him on four occasions but played down the association. ‘I know his son and he likes the same things I do, like cars,’ he said.
What Thatcher did not mention was that his friend Akram Ojjeh played a pivotal role in the crucial early stages of Al-Yamamah on behalf of British Aerospace. Ojjeh was in a very powerful position because of his long-standing record as a procurement agent for the Saudi government and royal connections. But his relationship with British Aerospace deteriorated when it was disclosed he was also the agent for the French company Dassault, a competitor on the deal. This was discovered by Alex Sanson, managing director of British Aerospace’s Dynamics Division, who saw it as a conflict of interests. Ojjeh was sacked by Aerospace but was paid some compensation through Lebanese sources.
The person who benefited most from Ojjeh’s removal from the Dassault contract was Wafic Said, a flamboyant, wealthy Syrian financier who was the UK director of Ojjeh’s TAG company. He succeeded his former boss both as a key middleman on the AlYamamah deal and as the chief courtier to the House of Saud. ‘It [replacing Ojjeh] put Wafic in an embarrassing position but then he was really the master of ceremonies,’ said Sanson. He also became very close to Mark Thatcher, who was his principal contact at 10 Downing Street.
Born in Damascus in 1939, Wafic Mohammed Said comes from a prominent Syrian family of pharmacists and traders. His father, Dr Redha Said, was an eminent eye surgeon and the education minister in the Syrian government. Wafic was only six years old when his father died after a long illness. It was a turbulent upbringing as much of the family wealth was lost in the mid-1950s when their business was nationalised.
Despite being brought up as a Muslim, he received a European education: he attended a Jesuit school in Beirut and then read economics at St John’s College, Cambridge. But he was not a gifted student and his prospects were not promising. He moved to Geneva to work as a banker but the highlight of his time there was meeting an 18-year-old English Catholic girl, Rosemary, who had just left Cheltenham Ladies College and was in Switzerland to improve her French. Despite the clash of cultures and religions, they fell in love. Both families were strongly opposed to the marriage. It took six years to win them over and the wedding took place on 14 June 1969, though their parents only attended after some angst. Rosemary has since converted to Islam.
At the time, Wafic was drifting and spent most of his days helping his brother Rafic run Caravanserai, a restaurant in Kensington High Street, decorated like an Arab tent with Lebanese dancers. A meeting place for Arab students, Caravanserai operated more like a club than a business. ‘It was terribly fashionable,’ recalled Wafic, ‘but most of the customers were friends who did not pay their bills.’ But it was there that he met two fun-loving young Saudi princes, Bandar and Khalid, sons of Prince Sultan. It was a crucial connection. Wafic’s first break was in 1969 when an old family friend, Dr Rashad Pharaon, arranged a job for him in the Saudi government. Pharaon had been the personal doctor to King Saud bin Abdul Aziz, the founder of Saudi Arabia, and headed an influential Syrian clique.
Reunited with Prince Sultan’s sons, Wafic prospered in Saudi Arabia, working long hours in the Ministry of Municipalities, responsible for construction and maintenance operations. His link-up with fellow Syrian-born businessman Akram Ojjeh was Wafic’s next smart move. In 1973, he became president of TAG Systems Construction SA in Paris and was soon brokering major building deals for defence-related projects. He was the agent for Raytheon, the US company that makes advanced anti-missile systems. Wafic’s involvement with arms contracts was confirmed to us by Alex Sanson, the former corporate marketing director of British Aerospace. Sanson recalls having lunch with him at Harry’s Bar, an exclusive Mayfair restaurant in South Audley Street. ‘Wafic told me he had a personal relationship with Prince Sultan,’ he said, ‘and that they had completed a large contract with Raytheon for the supply of Hawk missiles to Saudi.’
Financially, Wafic’s real coup was in 1979, when he secured a $200 million subcontract for TAG Liechtenstein from the US firm Litton Industries Inc. to construct the infrastructure for a command and control system for the Saudi Ministry of Defence. He was on his way. Wafic saw financial power as a passport to social and political respectability. ‘I understand the value of money,’ he said. ‘I believe it is like a two-edged sword which can be used either for good or for destroying people.’
His wealth was derived largely from well-placed investments in the early 1980s. His chief corporate vehicle was Saudi (later Strategic) Investment and Finance Corporation (SIFCORP), which he formed with Ziad Idilby, a fellow Syrian banker. SIFCORP was registered in Bermuda and controlled by the Said Trust, Wafic’s holding company based in Luxembourg. One of his investments was a 30 per cent controlling stake in Aitken Hume International plc, the financial services company, whose founder and deputy chairman was Jonathan Aitken, the former Tory MP.
Aitken was also, until April 1992, a director of Al Bilad (UK) Ltd, a subsidiary of a Saudi parent company ‘which received payments from contracts with Saudi Arabian royal family interests and government agencies’. He became minister for defence procurement in April 1992, and two years later was made chief secretary to the Treasury.
But it was Wafic’s close friendship with Saudi princes that elevated him into the inner circle of influence. A measure of this was the award of Saudi citizenship in 1981 – a rare honour. That year, an incident took place that Arab observers claim cemented Wafic’s relationship with the royal family. Wafic and his family went to Prince Sultan’s home in Riyadh for the ceremony at which the citizenship award was made. Just before the ceremony, Karim, Wafic’s ten-year-old son, drowned in the prince’s swimming pool in a tragic accident after the security door suddenly snapped shut. According to Islamic custom, a death in such circumstances incurs a moral obligation on the part of the host. It was claimed that in this case the moral debtor was the defence minister, the creditor was Wafic, and this created an extra bond between the Syrian financier and the Saudi princes. Wafic finds this analysis ‘offensive and entirely misplaced’. He said, ‘This fabrication is as insulting to my Saudi host as it is to me. What happened was a tragic accident, no more and no less. My friendships in Saudi Arabia date back to the early 1960s and have nothing to do with that accident.’
But it had a profound impact on Wafic. ‘Before he had been a devout Muslim who talked about philosophy and culture and was generous to his family, friends and employees,’ said his former aviation manager. ‘Then he became just another greedy aggressive rich Westernised businessman.’ What is not in dispute is that the Syrian financier became a confidant of key members of the royal family.
By the early 1980s, Wafic had taken over the personal and financial affairs of Prince Khalid and Prince Bandar, their wives and their 19 brothers and sisters. But he was much more than a moneyman, handling all their investments and properties. Wellmannered, engaging and sophisticated, Wafic became indispensable as their social envoy in London and Paris. But his relationship with their father, Prince Sultan, was more subservient. ‘Wafic was virtually a servant to Sultan,’ recalled a British defence consultant. ‘I was at a dinner party at his house in Holland Park and he suddenly announced in the middle of dinner that he was leaving. Sultan had called and wanted to see him immediately. He already had a bag packed and he just left us and caught a plane at Heathrow. He was very sycophantic towards Sultan and would laugh uproariously at his weak jokes, slapping his knee as if it was the funniest thing he had ever heard.’
The smooth-talking, good-humoured Syrian became known as a man of influence. From that moment, the defence contractors began calling and knocking on Wafic’s door. He had direct access to the defence minister and nothing was more valuable. In that context, Wafic was never an arms dealer. ‘I have never even sold a penknife,’ he protested.
But he was very much the facilitator. When the titanic battle between Britain and France to supply the Saudis with military planes intensified, he was the crucial intermediary. It was Wafic who arranged Prince Sultan’s letter of intent and persuaded the Saudis to buy British. That was why Sir Dennis Walters, the influential former Conservative MP and well-connected Arabist said that he ‘made a great contribution to British interests in Saudi Arabia’. The Syrian middleman also liaised directly with Prince Bandar, who was negotiating with Margaret Thatcher. An indication of their closeness was that Wafic helped Bandar purchase Glympton, a vast estate-village in Oxfordshire, for £8 million from the bankrupt Australian businessman Alan Bond. It is just a few miles from his own 2,000-acre estate, Tusmore House, near Banbury, where he hosts pheasant-shooting parties.
One person who knew both the Syrian financier and the Saudi ambassador well at the time is Luther H. Hodges, former chairman of Washington Bankcorp while Wafic owned 27 per cent of that bank’s holding company stock. ‘I would bet anything on the strength of that relationship,’ recalled Hodges. ‘I was involved with Wafic Said and Prince Bandar in Washington on a few occasions. I think they were extremely close. Wafic saw Prince Bandar every time he came to Washington and at some points that would be with some regularity . . . In fact, the first time I myself ever met Prince Bandar was when Wafic Said took me to the embassy and introduced me to him to get some Saudi Arabian business for the bank.’
Hodges is convinced that Wafic played an intermediary role on Al Yamamah: ‘While I was visiting Wafic’s home in Marbella, I had conversations with people as to why he was in London. What was it that was so important? It became my understanding that it was the arms transactions between the British government and Saudi Arabia that he was working on.’ Wafic acknowledges that he was an adviser on Al-Yamamah, but maintains he was active only in the £2 billion offset programme. This involved British Aerospace reinvesting 25 per cent of the contract’s value in ‘offset’ joint-venture industrial projects in Saudi.
Based on his experience in the Saudi building industry, Wafic advised British Aerospace on this scheme. His participation was verified by Mike Rouse, managing director of Aerospace’s Systems and Services Division, which oversees the Al-Yamamah project. But Rouse said his company has no ‘direct link’ with Wafic and refused to comment further. But the Syrian facilitator was more involved in Al-Yamamah than has so far emerged. ‘He did all the contract work,’ said his former aviation director at the time.
During the deal’s infancy, Wafic also met Sir Richard Evans, the British Aerospace assistant marketing director for Saudi Arabia and later chairman, at his home in Regent’s Park (a property later owned by Prince Bandar). In 1986, the Syrian flew to Warwick, where the Tornados were being built for another private meeting with the British Aerospace executive. A year later, Sir Richard moved into a luxury penthouse apartment in Roseberry Court, Charles Street, Mayfair, which was owned by a Panamanian company controlled by Wafic. It was run from his head office at 49 Park Lane, Mayfair. For ten years the British Aerospace executive paid rent but the council tax was paid by Wafic’s accountants. The flat, worth an estimated £800,000, was made available to Sir Richard, who refused to say how much rent he paid. ‘Wafic Said had the keys and I knew him to be the owner,’ Charles Allworth, the concierge for the block, told The Observer. ‘He used to come in a big car accompanied by bodyguards. To my knowledge, he never spent a night there. Mr Said told me that Mr Evans would be living in the flat. The two men were obviously good friends.
Wafic Said has always denied that he received a commission payment from this arms deal. ‘I did not receive any commissions from the Al-Yamamah programme and nor am I an agent for British Aerospace,’ he said later.60 ‘The agent for British Aerospace is the British Government and the contract was a government-to-government project. King Fahd and Lady Thatcher were responsible and we played a secondary role in trying to ensure that everything went smoothly . . . Due to my extensive contacts in Saudi Arabia, I played a very small role. The big role was played by Lady Thatcher.’
Indeed it was, and just a few steps behind her was her son, Mark, and it was his extremely close association with Wafic Said that enabled him to act as a broker on Al-Yamamah. Mark Thatcher first met Wafic in 1984 through their mutual acquaintance Akram Ojjeh, who at the time was still lobbying the Saudis on arms deals. They became ‘good friends’ through the racing circuit, said Wafic.62 But it was more than a social acquaintanceship. ‘Wafic was using Mark for intelligence,’ said Adnan Khashoggi, the international arms broker who was also involved in Al-Yamamah. ‘His value to Wafic was his name, of course, and that whenever he needed a question answered, Mark could go directly to his mother for the answer. He would pick up things unofficially.’ This was confirmed by Mark’s closest associates. Wafic and Prince Bandar needed direct access and a back-door channel to the prime minister. They wanted to bypass the official Foreign Office route and so they would ring Mark, who set up the meetings, either dinner at Chequers or a daytime meeting at 10 Downing Street. ‘I know for a fact that on one occasion Wafic rang Mark, who then arranged for him to fly to Chequers by helicopter to see Margaret,’ said Rodney Tyler, a friend of the Thatcher family. ‘Mark was useful to ensure his mother was onside,’ said a former British Aerospace consultant and friend of Wafic. ‘If the negotiations were going slowly, BAE would tell Wafic who called Mark who would nag his mother and tell her to keep batting for Britain. The irony is that Mrs Thatcher’s role was useful but the deal was already done because Wafic had already persuaded the Saudis to buy British.’
Wafic, who has given nearly £300,000 to the Conservative Party, was a fervent admirer of Margaret Thatcher and kept her picture on the wall of his office at 49 Park Lane, Mayfair, opposite the Dorchester Hotel. He first met her on 19 March 1987 at the premiere of the film The Fourth Protocol, based on the novel by Frederick Forsyth, which the Syrian businessman helped finance. Mark Thatcher and his wife also attended, two days after returning from their honeymoon. Three months later, in the early hours of 12 June 1987, Wafic was to be found in an emotional state in Aspinall’s, the exclusive gaming club in Curzon Street, Mayfair, celebrating Mrs Thatcher’s third successive election victory. Every time a Conservative constituency victory was flashed on to the television screen, an ecstatic Wafic raised his glass and cried out loudly, ‘Bless you, Maggie. Bless you!’
Three years later, he was in a more sombre mood when his heroine was ousted from 10 Downing Street. Sitting in his private Boeing 727 jet, he broke down and cried his eyes out when he heard the news on BBC Radio 4. The period after the 1987 election triumph was a busy time for AlYamamah. Negotiations were renewed about a further supply of Tornado combat aircraft. Eventually, on 21 October 1987, George (now Lord) Younger, then defence secretary, signed an agreement for extra Tornados worth £7 billion – the largest single export order ever secured by the British aerospace industry.
Two days earlier, on the night of 19 October, Margaret Thatcher had been guest of honour at a special dinner in Dallas organised by Mark. In attendance were many of the top American tycoons. Only eight of them sat at the prime minister’s table. One of them was Wafic Said. Despite the 1987 agreement, the full requirements of Al-Yamamah 2 were still to be finalised. This involved further supplies, including aircraft, ships and military installations. Largely because of the sheer size, complexity and value of the contract, negotiations dragged on for another 18 months. And it was during this period that Wafic Said and Mark Thatcher met regularly. They would lunch together at Harry’s Bar or have dinner at Claridge’s. Sometimes they were alone, occasionally in the company of mutual friends like the Duke and Duchess of Kent.
Mark was also a house guest at Wafic’s palatial home in Marbella and would fly by helicopter to Glympton, his Oxfordshire estate, for a day’s pheasant shooting. ‘Their meetings and links were encouraged by Margaret Thatcher,’ said Wafic’s aviation director during this period. ‘It was at her insistence.’ However, it was the purchasing of Mark’s first British house that demonstrated that his relationship with Wafic was more than social. In the autumn of 1987, Mark instructed two London estate agents to find him a suitable property in Mayfair. He told them he could afford to spend about £1 million.
Two months later, he bought a house at 34 Eaton Terrace, Belgravia, for £800,000. He wanted to spend another £300,000 but was persuaded not to. Mark paid for the property using an offshore company called Formigol SA, registered in the Bank of America building in Panama and incorporated on 19 October 1987 (ironically the same day as the famous dinner in Dallas). Formigol’s registered office in London was the fifth floor of 49 Park Lane, London W1. This was Wafic Said’s business address and the head office of one of his companies, Safingest Services UK Ltd. The connection was strengthened further as the payment for the household bills at 34 Eaton Terrace was arranged by the law firm of Simmons & Simmons, then also representing Wafic. They helped settle Mark’s domestic expenses by arranging for them to be paid by a client account, which was funded by a Swiss bank. It was certainly a strange way to pay the gas, electricity and telephone bills! The solicitor who handled this arrangement was William Heard, who then left to become Wafic’s lawyer and financial adviser, based at the 49 Park Lane office, and work for Safingest Services UK Ltd. ‘Heard is very close to Wafic,’ said a former executive. ‘He was his trusted adviser and always on call. He also travelled with him to the Middle East.’
Heard’s former employers, Simmons & Simmons, later became Mark Thatcher’s solicitors. As for 34 Eaton Terrace, Mark lived there for barely two years. In March 1990, he sold it for £1.3 million, claiming it was ‘a little too poky’ for his tastes. Almost immediately, Wafic’s short-lived Panama company, Formigol SA, was dissolved. But his dealings with Mark continued. The Syrian financier gave the prime minister’s son a £14,000 Rolex watch, presumably to express his appreciation of his friendship. More significantly, Wafic was one of the businessmen who placed funds in one of Thatcher’s pooled investment schemes controlled by his Grantham Company in Texas. One person who knows Wafic well is Ghassan Zakaria, editor of Sourakia, an Arabic-language magazine based in London. He recalled that in April 1988, he was returning from the United States and happened to be on the same flight as Wafic. They chatted away amiably enough. But when they arrived at Heathrow airport and walked off the plane, Wafic was greeted by Mark Thatcher and two bodyguards, who whisked him through the VIP lounge while Zakaria was obliged to go through Customs.
The summer of 1988 was a crucial time for Al-Yamamah. On 13 June 1988, Prince Sultan met Mrs Thatcher for an hour and a half at 10 Downing Street to review the contract. During his four-day visit to Britain, he also saw Lord Trefgarne, minister for defence procurement, to discuss the problems surrounding the offset aspects of the original deal. The Saudis were concerned about the slow pace of UK investment in their country. But this seemed to be resolved in July 1988, when the prime minister and her secretary of state for Defence, George Younger, flew to Bermuda to agree terms on Al-Yamamah 2.
This new agreement, worth £10 billion-plus, dubbed ‘the arms sale of the century’, was dependent on the offset programme being implemented. Apart from establishing a missile-engineering facility in Saudi Arabia, British Aerospace had also agreed to invest in an aluminium-smelting plant.68 For Wafic Said, business was thriving. On 24 June 1989, his wealth was extravagantly displayed with a lavish party at his £10 million home in Cornwall Terrace overlooking Regent’s Park. Friends and business associates were amazed by the house’s opulence, particularly the paintings by Renoir, Picasso and Monet. ‘I must have passed £30 million-worth on the way to the drawing-room,’ said one.69 Among the 150 guests at the party, which cost £50,000, were Mark Thatcher, Frederick Forsyth, Sir Mark Birley (owner of Harry’s Bar), several British Aerospace executives and two arms-dealing Arab middlemen, Baha Bassatne and Yashir Kutay. He later sold this house to move to an opulent apartment at 100 Eaton Square, Belgravia, and has since acquired two palatial villas in Marbella, Spain, a suite at 27 Avenue Princess Grace, Monte Carlo, and a 2,000-acre estate in Oxfordshire. Then there are the obligatory private jets – a Boeing 727, then a Gulfstream 2 and finally a Boeing Business jet.
Meanwhile, progress on ‘the Dove of Peace’ was slow. In its early stages, Al-Yamamah was ultra-profitable for British Aerospace and resulted in considerable cash surpluses. This was due largely to oil revenues exceeding deliveries of military aircraft and interest income accrued from the pre-payments. But then there were production problems with the Tornados and British Aerospace began to face serious cash shortfalls. Oil revenues were running behind their requirements by several hundred million pounds and so, in December 1989, the Saudis injected a special £2 billion payment.
However, this seemed to be only a short-term solution. From the spring of 1991, refinancing again became a problem because of low oil prices and the cost of the Gulf war to the Saudi exchequer, estimated at $6 billion. Protracted negotiations continued through the rest of the year and British Aerospace’s share price was adversely affected by the delay. Eventually, on 3 April 1992, six days before the general election, John Major helped salvage Al-Yamamah. Major had intimate knowledge of the arms deal as chief secretary to the Treasury (1987–9), then foreign secretary for three months, and then chancellor of the exchequer until November 1990. He announced that British Aerospace would receive an extra £1.5 billion cash instalment from the Saudis. This was arranged, almost uniquely, as a 15-month loan through a consortium of Saudi banks, rather than as a direct payment from government funds.
The contract was effectively rescued by this funding, although Al-Yamamah 2 was not formally signed until 28 January 1993, after John Major visited King Fahd in Riyadh. For the Saudi princes, the fact that the prime minister’s son was a middleman on Al-Yamamah was not unusual. Most Arab countries are run by families. Their allegiance is quite often to their relatives rather than to their nation state or social class. So Mark was perceived as a Crown Prince and his role did not raise any eyebrows in the House of Saud. For them, his involvement was a source of comfort and reassurance that it was a real deal. An insight into the Saudi approach was furnished by Nihad Ghadry, a former adviser to the royal family. In February 1987, he visited Prince Bandar at the Saudi embassy during one of his regular trips to Washington, DC. Ghadry raised the subject of Al-Yamamah and the large commissions. ‘Only a few people, including myself, know the whole truth,’ replied Bandar. ‘As in politics, in order to successfully complete commercial deals, you need to communicate directly with the Head of State . . . I myself delivered a personal and confidential letter from King Fahd to the prime minister, Mrs Thatcher. I told her that this deal is between us directly, between the two countries. It should go no further. Whatever is related to us is our concern and no one else’s . . . I also told her that we are a royal family and around us are a lot of people and a lot of responsibilities. My conversation with Mrs Thatcher ended with her understanding what I meant.’
The prime minister’s instinctive understanding of Prince Bandar’s carefully chosen words was born out of her long-held views. ‘There is no such thing as society,’ she said while she was prime minister. ‘There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves. It’s our duty to look after ourselves and then to look after our neighbours.’
Given that philosophy, perhaps it was not surprising that Mark Thatcher made money out of the largest arms deal in history. It was Thatcherism in action. Evidence of her son’s commercial involvement in Al-Yamamah comes from multiple sources. Mark’s former business partner, Steve Tipping, described it in characteristically earthy terms. ‘I specialise in defence,’ he told former business associate Gary Smith over lunch at the Savoy Grill. ‘But I was never involved in Saudi Arabia. That was Mark’s business. In the world of defence, Saudi Arabia is an essential market because you can make the silly ragheaded buggers buy anything.’
An equally compelling source is Alex Sanson, who was managing director of British Aerospace’s Dynamics Division during the AlYamamah period. An Armenian Turk, he had joined the company’s guided-weapons section in 1977 and rose through the executive ranks to be group sales and marketing director. In 1983, Sanson was promoted to be Aerospace’s corporate marketing director under Admiral Raymond Lygo. But it was as MD of the Dynamics Division – the prime contractor for Al-Yamamah – that he became intimately involved in the deal. For example, he was responsible for the first sale of Tornado aircraft. We interviewed Sanson, who has retired to Biddenden, Kent, four times over the telephone. He was guarded but decisive in his remarks. When asked about Mark Thatcher in general terms, he said, ‘Well, he was involved in the Tornado deal.’ ‘How was he involved?’ we enquired. ‘Well, when we [British Aerospace] realised that he was sniffing around in the classic way as he has done before, we simply made it clear [to him] that he get out of it. But I don’t think he ever did because that’s where he made all his money. The amazing thing is that he has survived all this time.’ ‘Whom was he representing on Al-Yamamah?’ ‘Let’s face it, he managed to climb aboard . . . He was very close to Wafic Said and Prince Bandar, the indestructible ambassador for Saudi Arabia, who is, by the way, a very, very fine chap . . . A number of people were aware that he [Mark Thatcher] was involved. He is bad news. He was a user of people to make connections. I don’t think there is any doubt about it. That was his technique and with the image of his mother at the time it was a useful asset at the time.’ ‘What was the attitude of British Aerospace towards Mark Thatcher?’ ‘We were very guarded but that did not stop the fact that he had got his fingers in there with certain Saudis and there was no getting out of it.’ ‘So he was working for the Saudis?’ ‘Oh, yes, yes, definitely, once he got his connections there.’
Documents relating to Mark Thatcher’s commercial involvement
were compiled by the Saudi Arabian intelligence agency, Istakbarat. In 1984, during the early stages of the Al-Yamamah negotiations, they secretly recorded telephone conversations between some of the leading participants – arms dealers and agents representing the Saudi royal family. Translated transcripts of those discussions were shown – but not given – to the Sunday Times by Mohammed al-Khilewi, a senior Saudi diplomat. He was a first secretary at the United Nations in New York until June 1994 when, disillusioned with the Saudi regime, he defected, taking with him thousands of documents.
The taped conversations took place at a time when the Saudis were monitoring and analysing the various bids by Britain, France and the United States to supply the weapons. They focus on the prospective merits of two influential British middlemen with inside knowledge and government connections. One was referred to as ‘John’. The other was Mark Thatcher. The first discussion was between Abdel Aziz al-Ibrahim, King Fahd’s brother-in-law and his chief agent in major arms deals, and an unnamed Arab middleman.
The prime minister’s son had a rival in ‘John’ as the Saudis’ intermediary to the British government. ‘Don’t forget to tell him we are already in contact with John in Britain,’ said al-Ibrahim, ‘through Prince Turki bin Nasser [chief of the air force] and Manquour [Nasir Hamad al-Manquour, then the Saudi ambassador in London] and John’s offer is excellent and the cost is less than Mark is offering us.’ The Arab arms broker replied, ‘I think you are right, but Mark is more in power and he has influence with the military group and the government.’ He added, ‘These people will sell their families for money.’
The two Saudis concluded by agreeing that the commission payments should be deposited into either a Swiss or a Saudi bank. Al-Ibrahim then consulted Prince Turki bin Nasser. ‘I think Mark has connections regarding the military equipment . . . [but] we can’t compare it with John’s connections,’ said the Prince. Al-Ibrahim responded, ‘Yes, but Mark has excellent connections with the government and he has good information.’ He later observed, ‘We have to make a decision quickly because we can’t keep dealing with both of them at the same time. And Tawil al-Omar [King Fahd] is more comfortable with Mark.’
The King’s choice for facilitating the biggest arms deal in history was decisive. The Saudis chose the British crown prince, the son of Queen Thatcher. Mark Thatcher’s commercial interest in Al-Yamamah was also being monitored in the United States. One senior government official who did this was Howard Teicher, head of the National Security Council’s (NSC) Near East Section from March 1982 until May 1986. He then became the NSC’s senior director of political and military affairs until his departure in March 1987. Teicher was a specialist on the Middle East and responsible for monitoring arms sales to that area. ‘Any application of military power and arms sales to the Middle East was a responsibility of mine,’ he said. ‘It was incumbent upon me to coordinate the positions of the disparate US government agencies in an effort to work out a common position on when, what and how to sell in terms of major weapons systems to our friendly countries in the Middle East.’
Between May 1986 and March 1987, Teicher read several documents, classified intelligence cables and diplomatic dispatches from US embassies in Europe that included details about the activities of middlemen in Al-Yamamah. ‘They were arms dealers who were not necessarily known to us, but obviously individuals who made their living selling arms and living off the commissions on the transactions,’ he recalled. ‘It was quite clear to me that this group believed that their ability to make the sale to the Saudis would be enhanced by the involvement of a political member of the group like Mark Thatcher.’
Detailed data on Thatcher’s commercial participation in the arms deal were contained in diplomatic dispatches by the defence attaché at the US embassy in Saudi Arabia. The information was also contained in CIA and Defense Intelligence Agency reports from Saudi Arabia and Europe, and in diplomatic cables from other European capitals. ‘I considered these dispatches totally reliable and totally accurate,’ Teicher told Channel 4’s Dispatches programme. ‘I did not think that people would loosely accuse the son of the prime minister of being involved in such a transaction unless they were certain that it was the case. Also, the fact that I saw his name appear in a number of different sourced documents convinced me of the authenticity of at least the basic information regarding some measure of involvement on Mark Thatcher’s part. When I say “involvement” I mean a business involvement. He was clearly playing some sort of business role to help facilitate the completion of a transaction between the two governments.’
Interviewed in Washington, DC, Teicher reaffirmed his assessment to us. ‘He was playing an active role in the arms transaction and it was unambiguous that he was involved in a business capacity,’ he said. ‘He seemed to have no specific role except that he was suggesting that he could get the job done. In my view, there was no way he was doing it for the love of his country.’ He added, ‘I surmised that his role was to facilitate the communications between the UK manufacturer and the buyer in Saudi Arabia. The role that someone like him would play typically would be to ensure that the buyer was confident that the other side was genuine, legitimate and able to deliver the goods. I had no reason to believe that Mark Thatcher had any particular expertise with advanced weapons systems or Tornados.’
After reading the intelligence and diplomatic documents, Teicher went to the British embassy in Washington to talk to two diplomats about young Thatcher’s activities. ‘They just looked at the ceiling,’ recalled the former senior NSC director. ‘They were very polite and diplomatic but were not happy to talk about it. Their view seemed to be “You are not surprised, are you?”’
Teicher then discussed the issue with a fellow member of the National Security bureaucracy in the US Defense Department: ‘I asked him if he was confident that Mark Thatcher was actually playing a role. He said that he was quite confident that Thatcher was involved and that this showed him that the British were extremely serious about selling these aircraft.’
These claims were later partly corroborated by a former insider of the US National Security Agency (NSA) which eavesdrops on international communications. The former employee disclosed that the NSA intercepted and monitored phone calls by Mark Thatcher which showed his involvement in Al-Yamamah.
The prime minister’s son has been typically bullish in his denials. ‘The idea that I run around peddling Kalashnikovs or second-hand MiG jets is ridiculous,’ he told Today newspaper in 1994. When asked point blank whether he had received any payments in any way from the sale of weapons, he replied: ‘No, I haven’t even sold a penknife . . . There were allegations of CIA documents to say that I had been involved and subpoenas were flying around. At the end, absolutely nothing happened. Nothing at all . . . My position on the supposed Al-Yamamah agreement is that the people I am supposed to have been involved with – that is to say Mr Said – have denied, on any number of occasions, that there’s any link.’
More specifically, he said: ‘Merely because I know this man [Wafic Said] does not mean to say that he is going to pay me £12 million because I am a nice guy.’ But privately he did refer to his role in Saudi Arabia during business meetings with Gary Smith, the international oil trader. In April 1987, when asked about business prospects in Saudi Arabia, Mark Thatcher replied, ‘I have a perfect channel there [a favourite euphemism for ‘connection’]. He is A1 and tops for me.’ He did not elaborate.
But eight months later, on 4 December 1987, he was more forthcoming. ‘It [Saudi Arabia] is a backward, feudal country,’ he told Smith over dinner at Harry’s Bar in Mayfair. ‘But it’s paradise for doing defence deals, because spare parts have no limits in a country where commissions have no limits.’ The precise amount the prime minister’s son was paid is not known. Even Mark’s friends admit it was considerable. ‘I was told it was an enormous amount of money, an eight-figure sum,’ said one. ‘It was certainly at least £10 million,’ said a former BAE consultant and a friend of Wafic. ‘The agreement specified that Mark Thatcher received a 6 per cent commission,’ said Wafic’s former aviation director.
The fee was not paid directly by British Aerospace or the Saudi Arabian government. It was channelled through one of the seemingly countless Al-Yamamah middlemen and brokers who received lucrative pay-offs. Our sources state that Mark’s share was an estimated £12 million. Evidence for the payment is in a transcript of the taped conversation between al-Ibrahim, King Fahd’s agent, and an unnamed Arab middleman in Riyadh, the Saudi capital. ‘The important thing is that they [the British companies bidding for the order] have to do it by our conditions,’ said al-Ibrahim. ‘Also to agree with us to increase the costs of the bills.’ This meant increasing the cost of the contract to accommodate the commissions. The Arab intermediary agreed: ‘I’ll talk to Mark today and I will confirm to him the money will never be more than $500 million [£400 million at 1984 exchange rates] for him and his group.’
It is perfectly legal in Britain for a defence contractor or foreign government to pay a commission to an individual on an arms deal – unlike in the United States where it is a criminal offence under the Foreign Corrupt Practices Act. In the Arab world commissions are part of commercial life and are always spread widely. This is why the size of the contract is often astronomical to those who do not understand this simple economic fact. On Al-Yamamah, the commissions – estimated at between 10 and 30 per cent of the contract’s total price – were so huge that they created cash-flow problems and delayed delivery of the weapons and aircraft.
Indeed, one reason for Al-Yamamah’s spiralling £20 billionplus ‘value’ was the inflated kickback fees that were added on top of the actual cost of the equipment. For example, it was claimed that the Tornados were sold at £25 million each, about double their real value, allowing for extra money to be distributed to middlemen. Excessive shipments of oil for sale on international markets were also favoured. This activity took place alongside those genuine oil exports which were used to pay for the Al-Yamamah weapons.
The British and Saudis have always insisted officially that no commissions were paid on Al-Yamamah. It was such a sensitive issue that the Ministry of Defence was even asked by Saudi Arabia to write a letter denying their existence. They claimed that as it was a government-to-government deal, there was no need for kickbacks. It is true that senior cabinet ministers and diplomats did negotiate the contract.
But it was also indisputably the case that Al-Yamamah was in a constant state of uncertainty and it took no less than eight years for the deal to be officially signed and sealed. A more compelling argument that commissions were paid is the simple reality of doing business in the Middle East. ‘When you sell to Saudi Arabia, you are really selling to the Saudi royal family – a limited company with 200 shareholders,’ said one senior executive involved in Al-Yamamah. ‘It is quite simple. In some countries you pay import duties of 30 per cent, in others you pay commissions.’
Mark Thatcher knew, at the very least, many of these advisers. Apart from Wafic Said, one of his closest associates was Jean-Pierre Yonan, a Lebanese-born businessman based in Paris. Fabulously wealthy, Yonan has homes in Beaulieu in the south of France, Rio de Janeiro and Geneva. In the 1970s, he had a powerful commercial presence in Oman and then became close, like Wafic, to the Saudi royal family. Yonan was part of the bridgehead between the UK government, British Aerospace and the Saudis on Al-Yamamah 1. He once laid on an impressive fleet of cars for Sir James Blyth, then head of defence sales, on his arrival in Riyadh. The Lebanese arms broker also flew with the prime minister’s son on his private 727 jet to Saudi Arabia as a way of impressing on the Saudis the fact that he was well connected. ‘Yonan knew [Mark] Thatcher very well,’ recalled Alex Sanson, British Aerospace’s former marketing director.
The crucial political factor, of course, was whether the prime minister knew that her son had enriched himself on the back of the epic arms deal which she promoted and negotiated. It was an issue she had consistently and repeatedly refused to answer over the Oman University contract. And on Al-Yamamah, she adopted the same approach. In October 1994, she said she was ‘absolutely satisfied that the Al-Yamamah contract was properly negotiated . . . and proud that, after a great deal of hard work by ministers and officials, it brought thousands of jobs and billions of pounds to this country.’
Lady Thatcher has always declined to say whether she knew her son was paid a commission. However, her private office staff were certainly told – and were duty-bound to inform her – because British Aerospace executives became very concerned about what they called Mark’s ‘meddling’ in the arms deal of the century. They knew that if his role was publicly exposed, the consequences would be disastrous. The Saudis, renowned for their distaste for public scandal and embarrassing publicity, might cancel the whole deal and negotiate instead with the French or the Americans.
Senior British Aerospace executives discussed the potential crisis. They decided that the prime minister needed to be informed in what, in a reference to Macbeth, was nicknamed the ‘witches’ warning’. And so Admiral Raymond (later Sir Raymond) Lygo, the company’s chief executive and chairman, and Alex Sanson, corporate marketing director, went to see Clive (later Sir Clive) Whitmore, permanent secretary at the Ministry of Defence from 1983 until 1988.
During this period Lygo met Whitmore regularly at the MoD to brief him on Al-Yamamah’s progress and at one of their meetings talked to him about Mark Thatcher’s ‘interference’. Whitmore was especially close to the prime minister, having been her principal private secretary from 1979 until 1982, so it was perhaps easier for him to talk to Mrs Thatcher about her son in a ‘nudge-and-a-wink way’. Admiral Lygo told Whitmore that Mark’s business interests in the Middle East were ‘dangerous for British industry’ and asked him to inform the prime minister about the company’s anxieties. ‘This happened because we got very concerned about Mark Thatcher’s interference in the Saudi Tornados deal,’ Sanson told us. ‘It was felt that if this matter came out, it could be exceedingly damaging to the prime minister.’
The ‘witches’ warning’ was duly delivered but Whitmore’s former boss refused, as usual, to address herself to the problem. When asked about this, Lygo confirmed meeting Whitmore ‘at least once a month’ but denied discussing the prime minister’s son. ‘I remember Mark Thatcher being mentioned in the office but whether that specific meeting took place, I couldn’t really say,’ he said. Sir Clive, later a director of Morgan Crucible plc and NM Rothschild, declined to comment. ‘I do not believe there is anything I can do to help you,’ he said.
Howard Teicher, the US National Security Council’s former director of political and military affairs for the Middle East, confirmed that, at the very least, her senior and closest civil servants knew. ‘I find it difficult to believe that Margaret Thatcher would not be aware that he [Mark] might have been playing a role,’ he said. ‘Certainly the senior officials in the British Ministry of Defence and the British arms industry would have been aware of the role that he was playing. Is it possible that she might somehow be insulated from that kind of information? It’s possible . . . Over a period of years Mark Thatcher’s involvement, in my mind, certainly seemed to be something that officials in London would have been aware of.’
Mrs Thatcher’s friends often argue that she might have been informed about her son’s business activities but she would have disbelieved the information. She was often in denial. ‘Oh, that could not have happened,’ she once responded after receiving a report about Mark, according to a family friend. However, the difference with Al-Yamamah was that Mark helped arrange meetings for her with Wafic Said and Prince Bandar. So she could hardly shut her eyes and ears to that reality. Indeed, according to Wafic’s former aviation director,
Mark’s dealings with the Syrian middleman were ‘at Mrs Thatcher’s insistence’. As with Cementation’s contract in Oman, her son was a shadowy figure one step behind her while she helped British Aerospace to secure the contract in Saudi Arabia. Al-Yamamah was the payday that Mark Thatcher had been looking for.