SFO extends Saudi deal inquiry to include BAE

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The Independent Online

The Serious Fraud Office has widened its investigation into suspected false accounting in connection with £20bn worth of defence deals with Saudi Arabia to include BAE Systems.

The Serious Fraud Office has widened its investigation into suspected false accounting in connection with £20bn worth of defence deals with Saudi Arabia to include BAE Systems.

The defence giant said it had learned only yesterday that it was now included in the SFO inquiry that began earlier this month into contracts between BAE and two other companies relating to Saudi defence deals. At the time, BAE issued a statement insisting it was not the target of the investigation, and was itself a victim of a possible fraud.

In a statement issued after the market closed yesterday, BAE said it would give its "full co-operation" to the investigation. A spokesman said BAE's most senior directors are expecting to be questioned. "We are assuming that the SFO will want to talk to the people who were involved," he added.

The BBC documentary series, The Money Programme, recently alleged that BAE chief operating officer Steve Mogford signed off slush fund invoices.

The SFO investigation centres on an alleged £60m slush fund used to provide the Saudi royal family and officials with luxury cars, holidays, gold and prostitutes. The two other companies involved, Robert Lee International and Travellers World, arranged travel and visa arrangements for BAE.

Two men, one of whom is understood to be a former BAE employee, were arrested and interviewed after a series of raids carried out by the SFO, the Ministry of Defence Police and the City of London Police on eight separate locations. They were later released. A spokesman for BAE said no premises had yet been searched and BAE had not been asked for any information as of last night.

"There have been lots of allegations made against BAE for many years. That is why we welcome the SFO's investigation, because it will put these matters to rest," the spokesman said.

The inquiry comes as BAE is nearing closure on a £3bn deal to upgrade Tornado aircraft bought in the original deals in 1985 and 1992. The Saudi royal family is reported to have warned that it would not deal with UK defence groups again if its members are embarrassed by the inquiry.

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