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Wed 2 May 2007 03:53 PM

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BAE Systems probe refuses to die

The British may have ended an investigation into BAE's Fighterjet deal with Saudi Arabia, but the US may now revive it.

Last year, the British Serious Fraud Office dropped its investigation into irregularities in a deal between BAE Systems and the Saudi Arabian government for 72 Eurofighter jets.

The instruction to drop the probe came directly from the British Prime Minister's office, which argued that the continuing investigation was damaging relations between Saudi Arabia and Britain, and was counterproductive to ongoing efforts to fight global terrorism.

It also stated that there was insufficient evidence to warrant further investigation.

The British government was widely criticised for the decision, which was said to undermine the country's reputation for a transparent and apolitical judiciary.

But allegations of corruption have failed to go away for BAE Systems. The Serious Fraud Office (SFO) has six ongoing investigations into the defence company. Contracts won in South Africa, Chile, Romania, Tanzania, Qatar and the Czech Republic are all ongoing.

The United States Department of Justice is also now reported to be considering launching its own inquiry into BAE Systems practices, and has met British SFO officials to discuss its options.

Mike O'Brien, Britain's Solicitor General, confirmed that talks had take place with the US DoJ. But there has been no confirmation that the Saudi Arabian Eurofighter jet deal will be part of any US investigation.

An investigation by the Organisation for Economic Co-operation and Development (OECD) is also continuing to investigate whether the UK complied with international anti-corruption laws.

Saudi Arabia is understood to be delaying any further orders for British defence equipment as embarrassing allegations continue to make headlines.

The Kingdom's publicity-shy government, according to a report in today's The Times newspaper, is waiting for quieter times before continuing with deals that include two Type 45 destroyers worth $1.6 billion each.

A $2 billion deal for Hawk trainer jets is also said to be on hold.

Defence experts say they expect contract negotiations to pick up pace again once the OECD investigation concludes at the end of this year.

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