BAE investigated in US

Last Modified: 26 Jun 2007
By: Sarah Smith

The defence firm BAE is investigated by the Americans over bribery allegations.

All it took was one short and simple statement - that BAE is to be investigated under anti-corruption laws in the US - and it saw their share price tumble 10 per cent - wiping £1.6bn off the company's value.

Forty per cent of BAE's business is already with the US military and they stand to make billions building blast resistant vehicles - if they are allowed to buy Armour Holdings in an £2bn deal.

It's not a good time to be investigated for corruption

BAE do not deny paying £1bn into the Washington bank account of Saudi Prince Bandar in connection with the huge Al Yamamah defence contract. Bandar, a close confident of President Bush, denies there was anything illegal about the payments - as do BAE.

So the justice department are now investigating a deal between a company that supplies equipment crucial to US troop safety in Iraq and one of the president's best friends. And they have to do so at a time when they are already in trouble for allowing politics to interfere with their investigations.

The Attorney General has been accused of firing a number of prosecutors who pursued investigations the White House thought were politically unhelpful. Already there are demands that he remove himself from the BAE investigation because it is so politically sensitive

The Serious Fraud investigation in the UK was halted as it would damage relations with the Saudi royal family - and relations with the Saudis are no less sensitive in the US.

It was the £20bn deal to sell Eurofighter Typhoons that was under threat when the British fraud investigation was called off. Today that deal was further delayed - the Saudis want to get to know Prime Minister Gordon Brown a little better before they sign on the dotted line.

Meetings are being scheduled with senior Saudi Royals - while the opposition are asking Brown to re-open the whole investigation

He may not have to if the US authorities seriously pursue the biggest bribery investigation ever to be undertaken in America