The arms giant dogged by corruption claims

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The Independent Online

BAE Systems will hope today's settlements with UK and US authorities have finally put to bed corruption claims that have dogged the British arms giant for years.

The firm - which makes everything from British Army kit to warships and planes - has faced probes over its business practices in countries across the world.

Until today, BAE has always strenuously denied any suggestion of wrongdoing in its business dealings.

One of the biggest investigations centred around the mammoth £43 billion Al-Yamamah contract to supply more than 100 fighter jets to Saudi Arabia.

There were allegations that the firm ran a multimillion-pound "slush fund" offering sweeteners to Saudi royals and shady intermediaries in return for lucrative contracts.

A Serious Fraud Office investigation into the deal was launched in 2004 but dropped two years later after political pressure from both the British and Saudi governments.

From the moment it was signed by Saudi defence minister Prince Sultan and then defence secretary Michael Heseltine in 1985, the Al-Yamamah deal was mired in controversy and dispute.

Anti-arms trade campaigners were initially appalled that Britain was supplying military hardware to a regime with a reputation for human rights abuses and torture, and allegations began to emerge that the contract had been won through bribery.

In 1992, a National Audit Office report into the deal was suppressed - an unprecedented step - amid fears its publication would offend the notoriously sensitive Saudis, jeopardising continuing trade relations.

Nevertheless the allegations continued and, after a change in the law which made the payment of bribes on overseas deals a criminal offence, in 2004 the Serious Fraud Office launched its investigation. That was dropped in 2006 after intervention by then prime minister Tony Blair.

BAE announced in June 2007 that the US Department of Justice was probing its compliance with anti-corruption laws, including business concerning Saudi Arabia.

The SFO upped the pressure on the firm last October after it called on Attorney General Baroness Scotland to pursue claims that BAE paid out millions of pounds to win contracts in several other countries.

An independent review of practices at the company in 2008 urged BAE bosses to adopt stronger anti-bribery measures and a global ethical code of conduct.

The proposals were among 23 recommendations made by an independent committee headed by Lord Woolf, the former Lord Chief Justice, after a year-long study.

He said: "BAE either becomes an ethical company, which involves refusing to get involved in some contracts, or it does not become a fully ethical company reaching the gold standard that we have identified.

"There are contracts that are not worth having and that will do long-term damage to the company, and the company has to accept that."