Margaret Thatcher held secret Saudi arms talks, archives show

Margaret Thatcher used a private lunch with King Fahd to discuss the prospects of an arms deal, the papers show

Margaret Thatcher held secret talks with Saudi rulers in 1985, leading up to the UK's largest arms deal, newly released official documents show.

The then prime minister met King Fahd five months before the first instalment of the £40bn Al-Yamamah deal was agreed to sell Tornados and other aircraft.

At the time, officials said the meeting focused on peace in the Middle East.

But Foreign Office papers indicate the visit was actually intended to "smoke out" the Saudis over arms contracts.

Newly declassified documents from the mid-1980s give a fresh insight into the Thatcher government's immense efforts to sell British Tornados and other aircraft to Saudi Arabia.

The Al-Yamamah arms deal, first agreed in September 1985, has been worth at least £40bn to defence giant BAE Systems and their partners, securing thousands of jobs.

Arms competition

But it has also been tainted by allegations of slush-fund payments to members of the Saudi royal family.

Secrecy has always played a large part in arms sales, and the papers from 1985 newly released by the National Archives include letters between senior civil servants in Downing Street and the Ministry of Defence (MoD) that highlight the need for secrecy as the UK pressed the Saudis to opt for the British Tornado fighters over intense competition, particularly from France.

The sale of Tornados and other aircraft to the Saudis remains controversial 30 years on

At the centre of the correspondence is a crucial visit the prime minister made to see the Saudi King Fahd on 14 April in the Saudi capital, Riyadh, brokered by Prince Bandar bin Sultan Al Saud - then Saudi Arabia's ambassador to the US.

Marked secret

One of the newly released files contains a letter Margaret Thatcher's private secretary and foreign policy adviser, Charles Powell, wrote to the Foreign Office on 1 April, marked: "Secret".

He wrote: "We should not add anyone to the prime minister's party for the visit to Riyadh. To include someone from MoD sales would only serve to draw attention to the Tornado aspect (given that there will be 25 journalists aboard the aircraft)."

The prime minister's letter to the Saudi ruler hints at the other matters that were discussed

At the end of the letter, the now Lord Powell wrote: "I am copying this letter to Richard Mottram (Ministry of Defence). It is classified secret because of the Tornado aspect."

Mr Mottram, private secretary to the then Defence Secretary Michael Heseltine, replied: "It seems unlikely that Prince Bandar would seek to engineer such a meeting unless something positive was likely to come out of it: otherwise he runs the obvious risk of embarrassing both the prime minister and King Fahd."

'Precise and explicit'

The stopover in Saudi Arabia to see King Fahd, following an official visit to South East Asia, was later explained publicly as an opportunity to discuss recent developments in efforts to find peace between Israel and the Palestinians.

But a briefing document from the Foreign Office to Downing Street stressed the real priority.

"To date, we only have Prince Bandar's word for it that the king has decided to buy Tornado," it said.

"We need to get this made more precise and more explicit.

"Tackling the king in person is probably the only way of smoking the Saudis out."

The documents have been released under the UK's declassification policy

It seems the meeting between the king and the prime minister was successful.

The official record makes no mention of Tornados or an arms deal, but in her thank-you letter the following day, Mrs Thatcher wrote: "I was glad that we were able to discuss a further matter privately over lunch.

"I look forward to receiving your majesty's personal envoy soon, in order that we may conclude this matter successfully."

Five months later, in September 1985, the UK and Saudi defence ministers signed a memorandum of understanding in London for 72 Tornados, 30 Hawk training aircraft and a whole range of weapons, radar, and spares as well as a pilot-training programme.

It was the first instalment of the massive Al-Yamamah deal that remains so controversial more than 30 years later.

BAE has denied any wrongdoing in connection to the deal and in 2006, Tony Blair's government stopped a corruption investigation by the Serious Fraud Office, arguing that continuation would cause "serious damage" to relations between the UK and Saudi Arabia.

His Attorney-General, Lord Goldsmith, said the decision had been made "in the wider public interest", which had "to be balanced against the rule of law".