When NEWSWEEK reported on these documents, Tom Rose, a British lawyer for Bandar, denied that the Saudi prince had received "improper secret" commissions. He said the BAE funds were actually being paid into a Saudi Defense Ministry account over which Bandar had signature authority, but any payouts from those accounts "were exclusively for purposes approved" by the ministry. A BAE spokesman said, "We deny all allegations of wrongdoing."

In recent months Bandar's role inside Saudi Arabia has been substantially reduced. When Bush visited Saudi Arabia in mid-January he asked after the former ambassador. "Where's my pal Bandar?" Bush said at one high-level meeting, according to a source close to the Saudis who requested anonymity discussing sensitive matters. The president was told that Bandar was unavailable. When Vice President Dick Cheney visited Saudi Arabia last month, Bandar "was nowhere to be seen," said the source. "He is no longer the central actor in U.S.-Saudi relations that he was for 20 years," said Nat Kerns, the editor of Foreign Reports, who closely tracks developments in the kingdom.

Last week's British High Court ruling is scathing in its description of both Bandar's behavior and the Blair government's alleged capitulation to the prince's threats. Quoting from internal British government documents, the judges said that professional investigators at the Serious Fraud Office initially resisted pressure from elected members of Blair's government to curb its Bandar-related investigation, suggesting it would be inappropriate for the British government to take seriously threats from a person who, like Bandar, was himself under investigation.

Though it turned over a considerable amount of internal documentation to the courts, the judges said the British government refused to make public precise details of the threats Bandar and other Saudi officials allegedly made to British authorities. Last June the London Sunday Times reported that Bandar allegedly told Jonathan Powell, a top adviser to Blair, that a big Saudi-U.K. arms deal could be stopped and "intelligence and diplomatic relations would be pulled" if the British didn't pull the plug on the investigation. According to a witness statement submitted to the court, Robert Wardle, the prosecutor in charge of the British Aerospace probe, was told in a September 2006 letter that the Saudi ambassador to Britain had warned a U.K. official that "British lives on British streets were at risk" if the investigation was allowed to continue.

Terror Watch appears weekly on Newsweek.com

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