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Last Updated: Sunday, 10 June 2007, 11:28 GMT 12:28 UK
BAE 'to appoint ethics committee'
A Tornado aircraft
The Al-Yamamah deal included the sale of Tornado aircraft
BAE Systems is reported to be setting up an external ethics committee to look into how it conducts its arms deals.

Weekend newspapers are reporting the plans as part of BAE's attempts to draw a line under allegations about its dealings with Saudi Arabia.

The allegations relate to payments made as part of the Al-Yamamah arms deal, which was signed in 1989.

A Serious Fraud Office (SFO) inquiry into the deal was stopped in 2006 by the attorney general Lord Goldsmith.

An external committee would follow the lead set by BP, which appointed former US secretary of state James Baker in 2006 to investigate the circumstances that led to an explosion at a Texas refinery that killed 17 people.

A spokesman for BAE Systems declined to comment on the reports of an external committee, except to say that "our board periodically reviews our processes and policies relating to the conduct of our international businesses".

Liberal Democrat leader Sir Menzies Campbell wants an inquiry into the allegations surrounding the Al-Yamamah deal.

He is particularly concerned about allegations that the attorney general concealed from investigators from the Organisation for Economic Cooperation and Development (OECD) that payments were being made over a decade to a Saudi Prince.

"What general advice does the SFO have from the attorney general?" he asked on the BBC's Sunday AM programme.

"Were there any conversations between anyone in the attorney general's office and the Serious Fraud Office and Number 10 about what was to be done in relation to the OECD?" he added.

Lord Goldsmith has denied the allegations and BAE Systems has repeatedly denied any wrongdoing.

Q&A: The BAE-Saudi allegations
07 Jun 07 |  Business

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