BAE wants review of SFO inquiry

By Robert Peston
Business editor, BBC News

BAE sold Tornado and Hawk jets to Saudi Arabia under the deal

BAE Systems is urging the Serious Fraud Office (SFO) to review its abandoned investigation into the company's £43bn arms deal with Saudi Arabia.

BAE chairman Dick Olver said he wanted the SFO to seek senior legal advice on whether it could mount a successful prosecution against his company.

Mr Olver told the BBC he believed a review of files would show there was little chance of success in the case.

The SFO dropped its inquiry over fears it would threaten national security.

High Court ruling

It abandoned its probe of the al-Yamamah deal with Saudi Arabia 18 months ago following representations from the government.

Ministers feared failure to do so would increase the risk of a terrorist outrage - because Saudi Arabia was threatening to withdraw security cooperation.

Last month, the High Court ruled it was unlawful for the SFO to abandon the case on those grounds - though the SFO has since appealed to the House of Lords.

But Mr Olver wants the evidence in the al-Yamamah case reviewed whatever the outcome of the appeal - because he fears the reputation of his company will otherwise be indelibly stained by the insinuation that it has something to hide.

In an exclusive interview with the BBC, he also said that he was committed to implementing the recommendations of the former Lord Chief Justice, Lord Woolf, on cleaning up the way BAE conducts business.

Jet deal

He added that creating a deep-seated ethical culture in a company employing 97,000 would not be quick or easy - though he would have no hesitation about sacking anyone who breached the new code of conduct.

The al-Yamamah deal with Saudi Arabia was first signed in 1985 but ran into the 1990s and involved BAE selling Tornado and Hawk jets, other weapons and long-running maintenance and training contracts.

BAE was accused of illegal payments to Saudi officials, but the defence company has always maintained it acted lawfully.

In December 2006, the then Attorney General, Lord Goldsmith, announced that the SFO was suspending its inquiry into the deal, saying it would have caused "serious damage" to UK-Saudi relations and, in turn, threatened national security.