U.S. justice department to probe BAE's Saudi Arabia deal

U.S. justice department to probe BAE's Saudi Arabia deal
LONDON: British weapons contractor BAE Systems Plc said Tuesday the U.S. justice department has ordered an investigation into the company's arms sales to Saudi Arabia.

The company, Europe's largest arms maker, said the department wants to ascertain whether the company violated corruption laws while executing a 43-billion-pound arms export contract from Saudi Arabia.

A brief statement by the company said, "BAE Systems has been notified by the U.S. department of justice that it has commenced a formal investigation relating to the company's compliance with anti-corruption laws including the company's business concerning the Kingdom of Saudi Arabia." A spokesperson for the company declined to give any further details.

The prime minister's office too refused to be comment on the report.

Britain's prime minister Tony Blair had admitted earlier he had stopped a government investigation into the deal, called Al-Yamamah contract, as such an investigation would have affected the cordial relations between the two countries.

The admission came in the wake of British Broadcasting Corporation and the Guardian newspaper publishing reports saying BAE made secret payment of one billion pounds to a Saudi prince, Bandar bin Sultan, who was Saudi ambassador to the United States and now secretary general of the Saudi national Security Council. The reports quoted investigation by the U.K. Serious Fraud Office. BAE had denied any wrongdoing, while Bandar said the reports were fabricated.

Earlier, the Serious Fraud Office had abruptly dropped an investigation into allegations that illegal payments have been made by BAE following a review by the country's attorney general. Blair too had intervened to stop the probe.

BAE is now on a major expansion program in the U.S., where it is a major supplier to Pentagon. It has recently sold its stake in Airbus for 2.75 billion euros and the amount is expected to be used for the U.S. program. It had acquired U.S. armored vehicle maker Armor Holdings Inc. in May for $4.14 billion.

The company had been a supplier of aircraft and surveillance systems to Saudi Arabia and the British and Saudi governments have been engaged in discussions on a contract to provide Eurofighter Typhoons to Saudi Arabia.

The company had appointed former Lord Chief Justice of England and Wales, Lord Woolf as head of a panel to look into the company's ethical standards following the news reports. However, the panel is not expected to look into the Saudi arms deals.

BAE shares fell as much as 50.25 pence to 392 pence.