Ministry of Defence drawn into corruption claims because of ‘revolving door’ with GPT
By Frederika Whitehead and Mark Watts | 13 March 2013
Whitehall faces increasing pressure over its part in the affair because the evidence shows the extent of the so-called “revolving door” of staff between the MoD and EADS, the European defence group.
It comes as the Serious Fraud Office (SFO) investigates a UK subsidiary of EADS, GPT Special Project Management, over claims that it paid bribes to help secure a deal to overhaul the Saudi national guard’s communications systems under the ‘Sangcom project’.
Exaro has published a series of revelations about the deal, beginning in May last year with the disclosure from whistleblowers that GPT transferred more than £14.5 million as part of the Sangcom project between 2007 and 2010 to two mysterious offshore companies that did not appear to carry out any sub-contracting work.
Further disclosures have shed increasing light on the partners behind those offshore companies.
One senior figure to make the switch from the MoD to the EADS group was Simon Kershaw. After 37 years in the MoD, Kershaw left his position as leader of the Defence Procurement Agency Satellite Acquisition Integrated Project Team at the Abbey Wood complex in Bristol in July 2011 to join EADS Astrium and become a GPT director.
At the MoD, Kershaw was leader of the Skynet 5 programme for a new generation of military satellites, developed under a 2003 deal between the ministry, EADS Astrium and Paradigm, another of the group’s units.
In an e-mail to friends and colleagues sent shortly before he left the MoD, Kershaw wrote: “Just to let you all know that I am leaving government employment. From August 1, I am taking a private-sector job as head of Astrium Telecommunications Services.
“I shall be running a group of telecommunications companies that specialise in providing services to governments.
“The really hard bit (joke) is that I shall be based in Paris, although I expect to be travelling a great deal.”
Kershaw became a GPT director in September 2011. He later also went on the boards of Paradigm Services, which owns GPT, and another Paradigm company in the EADS group.
When Kershaw arrived at the EADS group to take a job that included overseeing GPT, he must have felt a sense of déjà vu because, insiders reveal, he was reunited with several former MoD colleagues.
Sources told Exaro that four members of Kershaw’s MoD team from Bristol were already working at GPT – even with the same hierarchy in place.
One person who reported to Kershaw at both places was Jeff Cook, who had already become GPT’s managing director by the time his former boss arrived at the EADS group.
According to a former colleague, Cook had been a middle-ranking civil servant in Kershaw’s MoD team in Bristol and went to the EADS group in 2006. Cook was promoted to become GPT’s managing director after EADS bought the company in early 2007, and enjoyed a far higher salary than in his MoD days.
In his MoD role, according to the former colleague, Cook frequently visited the Sangcom project’s GPT offices in the al-Faisaliah-Tower in the Saudi capital of Riyadh to audit the accounts for the ministry.
Exaro disclosed last month that Cook was leaving GPT in the first part of a management shake-up at the troubled company.
The MoD already faces questions over its role, following Exaro’s revelations that it knew about the offshore transfers and warned that the ministry was unlikely to approve them in future, although payments continued for at least another 19 months.
When the Sangcom deal was first negotiated back in 1976, the MoD’s then permanent secretary, Frank Cooper, approved the inclusion of “agency fees” of 15 per cent. The initial contract was valued then at £150 million, but the latest 10-year phase is reportedly worth £2 billion.
Neither EADS nor the MoD is commenting on the Sangcom project, citing the SFO investigation.
Meanwhile, further evidence uncovered by Exaro underlines the close relationship between the MoD and the EADS group.
It includes how the MoD’s former Sangcom project director joined EADS to help oversee the same contract.