Did Saudi officials threaten Britain with terror attacks?

Widely thought to be the fountainhead of Islamist terrorism, a report in today's Daily Mail suggests that Saudi Arabian officials claim the ability to turn the tap on and off at will.

Investigators working on the fraud probe into Saudi arms deals were told they faced "another 7/7" and the "loss of British lives on British streets" if they continued the inquiry, secret papers reveal.

Saudi Arabia's rulers threatened to make it easier for terrorists to attack London unless the corruption investigation by the Serious Fraud Office (SFO) was stopped, according to documents shown to the High Court.

The previously secret files reveal the warning by the Saudis that they would go ahead and cut off intelligence links with the UK about potential terror strikes and suicide bombers.

It was alleged in court that Prince Bandar, the head of the Saudi national security council, was behind the threats to withold information.

During the hearing, he was accused of flying to Britain in December 2006 and issuing the warning which forced Tony Blair to call for an end to the investigation into alleged bribery and corruption involving deals between British arms firm BAE Systems and Saudi Arabia.

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It also emerged that 24 hours after Foreign Office officials met Prince Bandar, a Saudi national security adviser, No 10 informed the Attorney General they wanted to make further representations on the case.

Three days later Mr Blair wrote to the Attorney General.

Helen Garlick, assistant director of the SFO, told the court that officials from the Foreign Office had told her that "British lives on British streets" were at risk.

She said: "If this caused another 7/7 how could we say that our investigation, which at this stage might or might not result in a successful prosecution, was more important?"

At the time, Tony Blair was pilloried by the press for rolling over for business interests by halting the investigation. At first glance, stopping the investigation in order to protect lives on the streets seems a less contemptible motive. But is it really?