Arms giants lobby minister over Saudi

Britain's biggest defence companies are writing to the Government to warn that tens of thousands of jobs and orders worth billions of pounds are at risk unless a fraud investigation into an arms contract between BAE Systems and Saudi Arabia is resolved soon.

The letter from the chief executive of Rolls-Royce, Sir John Rose, acting in his capacity as chairman of the Defence Industries Council, is due to go to the Trade and Industry Secretary Alistair Darling today or tomorrow.

Concern is growing among UK defence executives that the Saudis will cancel a £10bn order for Eurofighter Typhoon jets if the investigation by the Serious Fraud Office is not brought to a conclusion soon. There are fears the order may instead go to the French, who are attempting to sell the Rafale to the Saudis.

The DIC represents hundreds of UK firms but its leading members are BAE, Rolls, the warship builder VT, Qinetiq, Thales and the helicopter manufacturer Agusta Westland.

The SFO investigation began two and a half years ago and concerns allegations that a £60m slush fund was used to bribe members of the Saudi royal family involved in the Al Yamamah arms-for-oil deal between Britain and the kingdom which dates back to the 1980s.

Although BAE is the main contractor on the arms deal with the Saudis, many other UK defence firms could be affected. Rolls, Cobham and Smiths Group all supply parts for the Eurofighter and VT is bidding for up to £1bn-worth of work to supply the Saudis with additional minehunter naval vessels.

The Government is anxious not to be seen to be applying pressure on the Attorney General Lord Goldsmith, who is ultimately responsible for the SFO, in response to threats from the Saudis. But several ministers are keen to see the SFO make up its mind and either press charges or drop the investigation.