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| Version 2 | Version 3 |
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| US to probe BAE over corruption | US to probe BAE over corruption |
| (28 minutes later) | |
| UK defence firm BAE Systems has said it is the subject of an anti-corruption probe by the US Department of Justice. | UK defence firm BAE Systems has said it is the subject of an anti-corruption probe by the US Department of Justice. |
| According to BAE, the probe will look at its compliance with anti-corruption laws including its business "concerning the Kingdom of Saudi Arabia". | According to BAE, the probe will look at its compliance with anti-corruption laws including its business "concerning the Kingdom of Saudi Arabia". |
| BAE is facing allegations that it ran a multi-million pound slush fund to help it win a giant plane and military equipment order from Saudi Arabia. | BAE is facing allegations that it ran a multi-million pound slush fund to help it win a giant plane and military equipment order from Saudi Arabia. |
| BAE has always argued that it acted lawfully at all times. | BAE has always argued that it acted lawfully at all times. |
| The allegations of illegal payments by BAE date back to the 1980s and the £43bn ($85bn) al-Yamamah deal that supplied Saudi Arabia with Tornado jets and other military equipment. | |
| Analysts said that the probe in the US could damage BAE's business in North America. | |
| BAE has been looking to expand its US business and is in the process of buying Armor Holdings, a maker of armoured vehicles, for $4.1bn ($3bn). | |
| Last week, the US Treasury found that the takeover did not pose any security threat, and BAE hopes to conclude the deal later this year. | |
| BAE's shares fell 7.5%, or 33 pence, to 409.25p in London following news of the investigation. | |
| Bigger headache | |
| Earlier this month, the BBC and the Guardian newspaper reported that BAE had made payments worth hundreds of millions of pounds over a number of years to Prince Bandar, a leading member of the Saudi royal family. | Earlier this month, the BBC and the Guardian newspaper reported that BAE had made payments worth hundreds of millions of pounds over a number of years to Prince Bandar, a leading member of the Saudi royal family. |
| The reports said the payments were discovered during a Serious Fraud Office (SFO) investigation, though that probe was halted in December 2006 on grounds of national security. | The reports said the payments were discovered during a Serious Fraud Office (SFO) investigation, though that probe was halted in December 2006 on grounds of national security. |
| It will be a decision for the Ministry of Defence, not BAE, whether to disclose the details of the deal BBC business editor Robert Peston | |
| Prince Bandar, who is the son of the Saudi defence minister, served for 20 years as US ambassador and is now head of the country's national security council, has "categorically" denied receiving any improper payments. | Prince Bandar, who is the son of the Saudi defence minister, served for 20 years as US ambassador and is now head of the country's national security council, has "categorically" denied receiving any improper payments. |
| The SFO is still investigating BAE contracts in Africa, Eastern Europe and South America. | |
| "The Saudis will not be overjoyed that the Department of Justice is apparently taking up where the serious fraud office left off," said BBC business editor Robert Peston. | |
| He added that the US probe is "a much bigger headache" for the UK government than for BAE, and it will be Gordon Brown's first big diplomatic dilemma as prime minister. | |
| The BBC's business editor explained that the al-Yamamah contract was between the British and Saudi governments, not between BAE and Saudi Arabia, and that BAE was only the contractor. | |
| "So it will be a decision for the Ministry of Defence, not BAE, whether to disclose the details of the deal," he said. | |
| Coming together | |
| In an effort to reassure policymakers that the company has not indulged in corrupt practices, BAE asked Lord Woolf, the former Lord Chief Justice of England and Wales, to head an independent review of its business practices. | In an effort to reassure policymakers that the company has not indulged in corrupt practices, BAE asked Lord Woolf, the former Lord Chief Justice of England and Wales, to head an independent review of its business practices. |
| BAE's chairman Dick Olver and the firm's non-executive directors are said to want independent confirmation that BAE behave properly when winning contracts. | BAE's chairman Dick Olver and the firm's non-executive directors are said to want independent confirmation that BAE behave properly when winning contracts. |
| The review, which is expected to involve other high-profile appointments, will not focus on previous deals with Saudi Arabia. | The review, which is expected to involve other high-profile appointments, will not focus on previous deals with Saudi Arabia. |