US defence contractor paid commissions to Saudi firm later alleged to be conduit for bribes

One of the largest military contractors in the US paid commissions to a Saudi company later alleged to have been a conduit for bribes for the kingdom’s royal family.

A document disclosed in a UK criminal trial revealed that Harris Corporation, now L3Harris, paid commissions to the Saudi company for over two decades for services in the kingdom.

The Saudi company that received the payments was run by the Fustoks, a Lebanese family that has had a close relationship with one branch of the Saudi royal clan for decades, according to court documents.

Members of the Fustok family and their company, Arab Builders for Telecommunications and Security Services (ABTSS), were alleged by British anti-corruption prosecutors to have handled or received bribes between 2008 and 2010 in a defence deal.

The Serious Fraud Office (SFO), which investigates and prosecutes corruption in the UK, said the payments were made to ABTSS and another company “as an inducement or reward” for the awarding of contracts by the Saudi Arabian national guard. The principal recipient of the payments, according to the prosecutors, was Prince Miteb bin Abdullah, a prominent Saudi royal who was once a contender for the throne.

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 of what he was accused. It has been suggested by critics of the crown prince that the purge was a crude means to eliminate political rivals.

The documents emerged in a long-running British criminal prosecution against a UK company, GPT Special Project Management, and two individuals. In 2021 GPT pleaded guilty to involvement in the making of corrupt payments to Miteb through ABTSS and other intermediaries between 2008 and 2010. GPT paid penalties of £30m.

Last Wednesday the two individuals were cleared by a jury of wrongdoing over their role in the payments, including those made via ABTSS, after arguing they had taken place with the approval of the British and Saudi governments.

Documents disclosed to the court provided details of the longstanding business arrangement between ABTSS and Harris.

In January 2013 Saudi officials instructed Britain’s Ministry of Defence to sign a direct contract with Harris worth $93m, according to court documents.

Details of the goods or services Harris would provide in exchange for the money were not disclosed in court, but they were paid for using Saudi funds held by the MoD for spending on a UK-Saudi defence deal, called Sangcom.

Under Sangcom, Britain provided military communications technology and training to the national guard. Its commander at the time, and according to the documents the source of the instruction for the contract to be signed with Harris, was Miteb.

Three months later, Gary Robson, the company’s sales director in the Middle East, wrote to the MoD to inform it of a “commission that will be payable as a result of Harris entering into the contract”.

“Harris has in place a longstanding agency agreement with ABTSS … for representation of Harris within the kingdom,” he wrote in a document provided to the court. Under the terms of that agreement, which he said had been in place for 22 years, Harris paid commission “on all Saudi Arabian national guard business concluded by Harris within KSA [the Kingdom of Saudi Arabia]”.

Robson said standard procedure was for a “contingent fee” on any contract with Miteb’s national guard to be “required” by ABTSS, deductible from Harris’s profits rather than included in the price of the contract. Commission paid by Harris to ABTSS on the $93m contract would be $14m.

Robson said that Harris would receive a list of “important value-added services” in exchange for the cash, including “logistics, key liaison language and cultural guidance and services”, “general managing support” and “documentation and visa support”.

During the recent trial defence lawyers said those descriptions of the payments between Harris and ABTSS were “suspiciously vague”. However government lawyers observed that Harris had provided the MoD with compliance documents, including a 2013 due diligence review of ABTSS by a law firm.

It is not known whether Harris knew of any connection between ABTSS or the Fustoks and Miteb.

ABTSS is owned by Salah Fustok, who was described in court as Prince Miteb’s “business manager”. Neither ABTSS nor Fustok were charged in relation to the SFO investigation. ABTSS did not respond to questions from the Guardian. Fustok declined to comment.

L3Harris declined to answer questions from the Guardian, including a request to clarify whether it still had a relationship with ABTSS. A company spokesperson said: “L3Harris has a robust and long-established compliance programme. We remain committed to the work we performed on behalf of the UK’s Ministry of Defence and the government of Saudi Arabia.”