By Jonathan Russell, and Angela Monaghan, Daily Telegraph

A Cayman Islands company alleged to have received millions of pounds in bribes from an arm of defence giant EADS is suing the subsidiary after its contract was terminated.

Duranton International, which is understood to be one of two offshore vehicles alleged to have received bribes, has decided to take legal action against EADS’s junior operation GPT for breach of contract, it can be revealed.

Allegations that GPT paid millions of pounds to Saudi generals and a member of the Saudi royal family are at the centre of a Serious Fraud Office investigation. The probe was announced in August this year following months of revelations about multi-million pound sweeteners and gifts of luxury cars paid to the Saudi establishment.

In an extraordinary twist, The Daily Telegraph can reveal that Duranton International is claiming damages against GPT after its contract was terminated.

The alleged corruption relates to a contract held by GPT to supply communications equipment to the Saudi National Guard. Internal GPT documents suggest a trail of millions of pounds flowing from GPT, through a New York branch of HSBC, to the Cayman Islands.

The emails showed insiders at GPT repeatedly warned the company that the payments, which topped £10m, might be seen as bribes.

In December 2008 a senior GPT executive was warned: “Payments to the Cayman Islands may be illegal.” The email went on to say: “It may be better to phone me in future rather than extend the email trail, and copy in your fellow directors, on an issue where I am flagging up to you a possible illegal transaction.”

The SFO is understood to be investigating millions of pounds of sweeteners paid to Saudi generals and royalty, as well as gifts of luxury cars and lavish hospitality.

The identity of individuals behind Duranton International and Simec, another Cayman Islands company alleged to have received bribes has never been revealed. However, well-placed sources have linked both companies with the Saudi establishment.

The investigation into EADS comes after a similar SFO investigation into alleged BAE bribes in Saudi Arabia was ditched after political pressure was brought to bear by the Tony Blair administration.

The current probe was given the green light by the former solicitor general Sir Edward Garnier, a decision that is understood to have infuriated the Prime Minister David Cameron and Foreign Secretary William Hague.

Sir Edward was shuffled out of his ministerial position, and the Government, shortly after the SFO announced it was to investigate GPT.

GPT accounts published over the weekend show the company turned over Saudi Riyals 424.7m (£71m) in 2011.

It made a profit of £640,000 down from £12m in 2010. The accounts also show auditors KPMG have issued the company with an “emphasis of matter” warning regarding the possible financial effects of the SFO investigation.

KPMG said no provision had been made in the accounts as “the ultimate outcome of these matters could not presently be determined”.

A spokesman for EADS said: “We will continue to fully and constructively engage with the SFO but in view of the investigation will not be commenting further.”

For more on this story go to:

http://www.telegraph.co.uk/finance/financial-crime/9626494/EADS-subsidiary-GPT-sued-by-bribery-allegation-company.html

See also story in today’s iNews Cayman “EADS and tales of Whistleblowers”

Footnote:

The European Aeronautic Defence and Space Company N.V. (EADS) is a global pan-European aerospace and defence corporation and a leading defence and military contractor worldwide. The group includes Airbus as the leading manufacturer of commercial aircraft, with Airbus Military covering tanker, transport and mission aircraft; Eurocopter as the world’s largest helicopter supplier; Astrium, the European leader in space programmes from Ariane to Galileo; and Cassidian as a provider of comprehensive and integral systems solutions for aerial, land, naval and civilian security applications. Through Cassidian, EADS is a major partner in the Eurofighter consortium as well as a key stakeholder in the missile systems provider MBDA. In 2011, the EADS generated revenues of €49.13 billion and employed 133,115 personnel. EADS was formed on 10 July 2000 by the merger of Aérospatiale-Matra, DaimlerChrysler Aerospace AG (DASA), and Construcciones Aeronáuticas SA (CASA). Overall, the company develops and markets civil and military aircraft, as well as communications systems, missiles, space rockets, satellites, and related systems.

Source: Wikipedia