The Chancer: Negotiating BAE's First Saudi Deals (1963–66)

Fifty years ago, Saudi Arabia was for businessmen with a pioneer spirit. Britain's Ambassador remembered when it was untouched by the modern world, known by diplomats as a land of 'sandy wastes and rocky wilderness'. Just after the Second World War, he recalled, Jedda, halfway down the Arabian peninsula on the Red Sea coast and nowadays Saudi Arabia's second largest city, sat behind 'an ancient wall sheltering the cluster of tall coral houses'. Water 'came from a rusty "condenser" which reluctantly took the salt from the sea water, the finished product being delivered to us in old petrol tins by sweating porters'. Riyadh, the capital, was a place of 'mud houses and forts and ... crenellated towers', only reached 'by desert track ... [in] five days by car'.

The discovery of oil in 1938 changed the country. By the early 1960s, Jedda was 'sleepily emerging into the twentieth century'. It now had 'broad roads, tree-lined avenues, modern villas, flats and offices which have herded back the old town into an untidy heap in the middle'. Riyadh had 'wide avenues, flanked by modern buildings housing the various Ministries'. The Saudis kept alive centuries-old traditions with 'flowing robes ... endless cups of bitter coffee and their fierce bedouin retainers'.

Ibn Saud, after whom Saudi Arabia takes its name, conquered Arabia's desert tribes in the first decades of the twentieth century. His sons have ruled Saudi Arabia since his death.

The Saudi Princes saw the kingdom as their 'fief'. As one British Ambassador put it:

I doubt if there are any among them, not even King Faisal himself, who have seriously questioned the inherent right of the [Saudi Royal Family] to regard Saudi Arabia as a family business, or to regard the promotion of the interests of the family business as taking priority over everything else.

After Ibn Saud's death in 1953, the Saudis lived lavishly on oil money, spending their new riches on 'pleasure, palaces and Cadillacs'. The rule of the new King, Saud, 'a man of the utmost folly', left the country almost bankrupt by 1958.

Years of austerity began. King Saud's (half-)brothers forced him to give real power to his younger half-brother, Feisal. Feisal cut back Princely allowances by two-thirds over six years. In Riyadh visitors noticed palatial houses abandoned half-built. To maintain their lifestyles the Princes needed new sources of income.

At the same time, Saudi Arabia, with few educated people, could not develop without help from foreign companies. But the country was not an easy place with which to do business.

In 1963, there were only six British businessmen in Saudi Arabia. Few could face dealing with the 'truly massive incompetence' of the Government bureaucracy. Saudi officials were 'more often than not inefficient, idle and corrupt' whose working day lasted, London was told, an average of 45 minutes. Doing business was made even harder by 'the inefficiency of the mails, the telegraph office and Saudi Arabian Airlines'.

Saudi Arabia was ready for a big arms deal. In 1962 in neighbouring Yemen, Army officers inspired by the Egyptian leader General Nasser overthrew the ruling Imam. Nasser hated Arabian sheikhs, blaming them for the Arab world's backwardness. He sent troops to prevent the Imam returning to power. The Saudi Princes took fright because they 'suddenly found themselves confronted with a Power on their borders ... devoted to the overthrow of monarchical régimes'. They now wanted modern weapons. With Saudi oil revenues growing at over 10 per cent per year, they could afford them. The senior Princes could also use bribes from arms deals to restore and increase their incomes.

Geoffrey Edwards

To win a major deal in Saudi Arabia, British arms companies needed a business agent to work in the shadows. Then, as now, many companies looking for a deal in a country where they were not already well established, used agents. Agents could fulfil a number of legitimate roles. One British Ministry of Defence official pointed out they could

lobby officers and officials ... find out about the availability of funds and perhaps suggest to people that availabilities might be created; they sniff out the activities of our competitors and they sing the virtues of our equipment and our services.

However, often they were also central to bribery schemes.

Even today, it is often impractical for a company to monitor the activities of its agents abroad closely, and it certainly was in Saudi Arabia in the 1960s. So, rather than paying for their time, most companies paid agents a 'commission' – a percentage of the final selling price – as an incentive to work hard. These were, in effect, 'no win, no fee' arrangements.

British arms companies needed a chancer, someone who knew the territory, willing to endure the hardships and able to deal with Princes. That man was Geoffrey Edwards. In 1961, aged 40, he left St Aubin, Jersey, and rented a house in Jedda. Edwards, a heavy drinker, was likely to find this trying. While diplomats could smuggle alcohol into this dry Muslim country in the diplomatic bag, unfortunately, an agent of the British Aircraft Corporation warned, businessmen caught carrying alcohol would be 'sent out of the country on the next aircraft' and 'they DO search your bags'.

In Saudi Arabia, the King and his (half-)brothers made all the important decisions. Straight away, Edwards got chummy with the senior Princes – 'the only real way', said British diplomats, 'of doing business in the country'. He developed a close relationship with the Minister of Defence, Prince Mohammed bin Saud and his successor from 1962, Prince Sultan. British companies seeking contracts in Saudi Arabia learned about Edwards's excellent contacts, and a number hired him.

Edwards and the Thunderbird Missile Deal

In early 1963, the senior Princes were afraid of bombing by Egyptian aircraft based in Yemen. They toyed with stationing a mobile missile system, for shooting down aircraft, around Riyadh, Jedda and Taif (a resort in the mountains near Jedda, where the Saudi Royal Family rested during the hottest summer months).

At that time, the British Aircraft Corporation (BAC – now called BAE Systems) manufactured a mobile missile system called Thunderbird, used by the British Army. Edwards...