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Thursday, April 17, 2014
- The recent collapse of the British Serious Fraud Office court case against Victor Dahdaleh has left the Bahraini prime minister’s reputation for corruption intact.
The case has been widely covered in British media reports, including the Guardian, the Financial Times, and the Independent. Reuters has also reported extensively on the case.
Without going into the details, suffice it to say the case collapsed before any witnesses were called, sparing Prime Minister Sheikh Khalifa bin Salman al-Khalifa the public spectacle of being presented in the trial, at least virtually, as the most vivid face of corruption in Bahrain. He escaped that for now, but this is a Pyrrhic victory.
The SFO mishandling of the case, the Bahraini government’s admission that illicit payments were made to the state-run aluminium company ALBA with the prime minister’s knowledge and approval, the changing testimony of key witnesses, and the refusal of others to testify all contributed to the prosecutor’s inability to proceed against the defendant.
Having his uncle and prime minister saved from public humiliation, in British courts no less, King Hamad cannot possibly pretend that all is well with his prime minister or some of the family ministers who were tainted by the case. The formal admission by one of the prime minister’s deputies presented in a letter to the British court that the multi-million-dollar payments were made with Khalifa’s knowledge and approval will have serious, long-term implications for the ruling family.
According to media reports, this admission corroborated the defendant’s claims that he made the payments in response to the request of ALBA’s board chairman at the time. The chairman, Shaikh Isa Al Khalifa, was the minister of oil and is a close relative of the prime minister.
In fact, according to British media, the court case focused on the Bahraini government culture of “Pay for Play” and on the prime minister’s role in promoting such practices. Simply put, if a foreign businessman intended to do business in Bahrain on a large scale, he would have to pay. The bigger the “Play,” the higher the “Pay,” and the more senior the official involved.
Although the court cleared the defendant of all charges, the Bahraini prime minister has cast a long shadow of corruption on the case. The defendant will walk free, but the prime minister will be saddled by this story for years to come. The Bahraini public do not need to look at leaked diplomatic cables to know about the private life of the prime minister. As his deputy’s letter alluded to, it’s all out there in the public record.
Most observers believe there would have been no way for ALBA’s board chairman to receive such illicit payments from an international businessman without Prime Minister Khalifa knowing about it. Most successful Bahraini businessmen, Sunni and Shia, who hail from the country’s prominent Sunni and Shia families, knew of Khalifa’s practices.
They all agreed that Khalifa drove, practiced, and benefited from the “Pay for Play” insidious culture. They often disagreed on whether to call him “Mr. 10%”, “Mr. 30%” or “Mr. 50%.”
Businessmen told me over the years that several office buildings and hotels were known as “Shaikh Khalifa’s buildings.” His claim to ownership of reclaimed lands, which are dredged at public expense, is another sorry tale of corruption.
At the very least, the case has undermined the legitimacy of Al Khalifa rule, especially at this juncture when the king is touting the family’s “conquest” of the island over 200 years ago.
If the king hopes to retain a modicum of credibility, he should jettison his prime minister and clean up the corrupt culture that has underpinned the ruling family’s business practices at the highest levels. As the king is feverishly trying to endear himself to the British government, in an apparent snub to Washington, his efforts will be severely undermined by Khalifa remaining in the post of prime minister.
Bahraini law does not condone “Pay for Play” practices, but high-level official practices have trumped the law and set up a shadowy system of illicit financial transactions. If the king wishes to encourage international businessmen to invest in his country without violating their countries’ laws on corruption, he should clean up the system in word and in deed.
Under the 1906 British Prevention of Corruption Act, which covered Dahdaleh’s case, if the defendant could prove the payments were made with the knowledge and approval of senior government officials, he could be acquitted of the charges. New anti-corruption laws in Britain and the U.S., however, do not allow potential defendants such a luxury.
It’s somewhat ironic that the prime minister’s downfall could be brought about by corruption rather than repression and abuse of power. Dahdaleh’s case offers a clear lesson to multinational corporations and businessmen and to justice departments in Western and other countries that do not condone corrupt practices. The lesson should also be equally clear to the Bahraini king.
Emile Nakhleh is a former Senior Intelligence Service Officer, a Research Professor at the University of New Mexico, and author of A Necessary Engagement: Reinventing America’s Relations with the Muslim World.