London, 12 Mar 2007 – OECD doubts over Saudi arms deal inquiry

Officials are to be questioned in Paris by the Organisation for Economic Co-Operation and Development.

The news comes as ministers prepare to unveil a major crackdown on fraud in the next few days, including a national authority, more police resources and a hotline to report cases.

Officials from the Foreign Office and Serious Fraud Office, and the Ministry of Defence Police and City of London police are likely to attend the meeting in Paris, which starts today.

The conference follows a gathering in January when the OECD voiced “serious concerns” about the Government's decision to drop the probe on grounds of national interest in mid-December.

The 36 member countries of the OECD's anti-bribery group are likely to press the officials on why Britain appeared to ignore the OECD's 1997 Anti-Bribery Convention when it halted the probe.

One source said: “I don't think it is going to be an easy meeting. The most important thing will be the observation of the convention.” The convention stresses that investigations should not be “influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved”.

The group is also likely raise the issue of the dual role of the Attorney General, who is effectively head of Britain's prosecuting service while also sitting alongside the Prime Minister in the Cabinet. Separately, in an interview with The Daily Telegraph, the head of the Serious Fraud Office, Robert Wardle, said it was understandable if people questioned the position of Lord Goldsmith.

“The problem is not what actually happens but what is perceived to happen,” he said. “Peter Goldsmith is a very effective lawyer, he is a very experienced barrister, a man of great integrity. I have got no problem with how he acted throughout this case. But it is quite difficult, isn't it? For the man in the street, they see the guy, he sits in Cabinet, he is the Government's legal adviser, appointed by the Prime Minister, and yet being asked to make independent decisions or decisions independently.”

Britain's image had been damaged by the Saudi case, Mr Wardle conceded. But critics had to “get over it”.

“If you are actually there seeing it happen, it's all right,” he said. “But I can understand that from the outside it looks bad… I don't know what the answer is but I think one of the things one has to try to do is get over the fact that he can act independently.”

Lord Goldsmith is to unveil a major crackdown on fraud on Thursday. According to Whitehall sources, the measures will include a national authority, a hotline, an increase in maximum fraud sentences from 10 years to 14 years and more resources for police to tackle the crime.

The Home Secretary, John Reid, announced plans last week to update the archaic foreign corruption legislation. Previously prosecutors have had to rely on legislation dating from 1906 and 1889 to bring corruption charges.

Last week a police sponsored report said fraud cost the nation almost £14 billion a year – £330 for every Briton.