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Last Updated: Monday, 4 December 2006, 17:44 GMT
Probe 'threat' to British firms
Robert Peston
By Robert Peston
BBC business editor

Image of Eurofighter seen from the front
The Typhoon deal could be at risk from the SFO inquiry
Top British defence and manufacturing firms have written to the government to warn that billions of pounds could be lost in contracts with Saudi Arabia.

The Defence Industries Council says the UK stands to lose out as a result of a breakdown in Saudi-British relations.

The DIC's letter is the latest twist in the row over an inquiry into bribes allegedly paid in the huge Al-Yamamah arms deal won by BAE Systems.

Saudi Arabia's government and BAE deny any wrongdoing.

The council - which represents the UK's biggest defence businesses - warns that the impact of the deterioration of relations with Saudi Arabia goes much wider than the possible loss to BAE of a 10bn contract to supply Eurofighter Typhoon jets.

It says the threat extends to the UK industrial base and to British security.

And it goes on to say that billions in orders, which the UK would have been in a strong position to win, are now in danger of going to other countries.

The companies urge that the Serious Fraud Office (SFO), whose inquiry has now gone on for two and a half years, should make up its mind whether or not to bring prosecutions.

By this time, the letter argues, the SFO should be in a position to judge the likelihood of whether a case can be brought.

The letter was signed by Sir John Rose on behalf of the Defence Industries Council.

It was sent to Alistair Darling, the Secretary of State for Trade and Industry, and copied to other members of the Cabinet.

BAE Typhoon fighter jets in action

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