U.S. Investigators Probing BAE Systems

Looking into alleged slush fund for Saudi royal family

U.S. authorities are looking into British arms manufacturer BAE Systems' compliance with anti-corruption laws, including those regarding lucrative Saudi contracts, BAE said June 26.

"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," it said in a statement to the London Stock Exchange.

The group has been accused of setting up a secret $120 million slush fund for members of the Saudi royal family to secure business, and of making illegal payments to those involved in its deals.

BAE strenuously denies the charges. But the company's confirmation of the probe had been widely predicted. Britain's Serious Fraud Office (SFO) had been investigating BAE Systems' 43-billion-pound Al-Yamamah deal in 1985, which provided Hawk and Tornado jets plus other military equipment for the Saudis. But the investigation was shelved last December. The government's most senior legal officer, Attorney General Peter Goldsmith, said to continue could have harmed Britain's national and international interests.

British Prime Minister Tony Blair has supported the move, but the Paris-based anti-corruption watchdog the Organization for Economic Cooperation and Development said it had "serious concerns" about the probe being dropped.

BAE contracts are still being investigated by British justice officials in Africa, eastern Europe and South America.

Copyright Agence France-Presse, 2007

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