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Tuesday, February 12, 2008       Free Headline Alerts

Hold placed on funds to high-flying former Saudi envoy to U.S.

WASHINGTON — A former Saudi ambassador, with close ties to several U.S. presidents, has been linked to a major arms bribery scandal and prevented from withdrawing revenues from the United States.

Prince Bandar Bin Sultan, Saudi ambassador in Washington from 1983 to 2005, has been hampered by a class-action lawsuit linked to alleged bribes by BAE Systems in the 1980s and 1990s. Bandar has acknowledged that he handled more than $2 billion in BAE payments in connection with the Al Yamamah program, Middle East Newsline reported.

"Whilst Prince Bandar was an authorized signatory on the accounts any monies paid out of those accounts were exclusively for purposes approved by MODA [Ministry of Defense and Aviation]," Bandar said. "In addition, the accounts in question were audited on an annual basis by the Saudi Arabian Ministry of Finance on behalf of MODA."

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On Feb. 5, U.S. District Judge Rosemary Collyer issued a temporary restraining order against Bandar — today the national security adviser of Saudi Arabia — from transferring the proceeds of any property sales from the United States. Ms. Collyer cited a suit by the City of Harper Woods Employees' Retirement System in September 2007, which accused BAE directors of breaches of fiduciary duties in connection with the alleged bribes to Saudi Arabia.

Bandar, former Riggs Bank of Washington and its successor, PNC Financial Group, were named as defendants by Harper Woods, a community outside Detroit. The Saudi Defense and Aviation Ministry maintained an account at Riggs.

The suit asserted that Bandar, the son of Crown Prince and Defense Minister Sultan Bin Abdul Aziz, transferred the purported bribes from BAE to purchase at least $300 million worth of property in the United States. They included a Colorado ranch and the former William Randolph Hearst mansion in California.

The judge did not rule on the merit of the suit. But Ms. Collyer said the case raised serious questions of law that warranted a temporary order against Bandar.

"It [restraining order] may, of course, be terminated or modified upon application to the court by Prince Bandar," the order read.

The judge scheduled a Feb. 14 hearing on whether to extend the temporary order. Under the judge's ruling, Bandar would not be prevented from "selling real property...[the order] only interferes with his ability to invest and/or deposit any sales proceeds in a minimal way."

The restraining order comes amid a Justice Department investigation of an alleged BAE slush fund for Saudi princes involved in Al Yamamah, which brought an estimated $86 billion worth of British aircraft, ships and military services to the Arab kingdom since 1986. In December 2007, the British police closed an anti-corruption investigation of BAE, a leading contractor to the U.S. military.

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