Page last updated at 10:27 GMT, Thursday, 1 October 2009 11:27 UK

Profile: BAE Systems

Hawk jet, which is manufactured by BAE Systems
BAE Systems has previously come to the attention of the SFO

It is the UK's biggest manufacturer, employing about 105,000 people and making everything from nuclear submarines to tanks and fighter jets.

BAE Systems has also proved hugely controversial, having been dogged by persistent accusations of corruption.

Now it has been caught up in what BBC business editor Robert Peston describes as "the most explosive investigation into a British company that I have ever encountered".

For the world's second-largest defence contractor - the biggest in Europe - such attention will prove extremely unwelcome.

Ethical standards

The company was founded in 1999 following the £7.7bn merger of British Aerospace and GEC Marconi.

It enjoyed an illustrious history, with its predecessors having produced the likes of Lee Enfield rifles, Spitfire jets and Concorde supersonic passenger planes.

Based in Farnborough, Hants, BAE says its 2008 sales exceeded £18.5bn, with customers in more than 100 countries.

Its chief executive since 2008 has been Ian King, a long-standing senior figure in the boardroom.

Its workforce numbers 32,000 in the UK, 46,900 in the US, 6,100 in Australia and 4,400 in Saudi Arabia.

But by the company's own admission, it has not always met the highest ethical standards.

In 2008, a report drawn up by Lord Woolf acknowledged that it did not pay sufficient attention to ethics in the way it conducted business.

Now the Serious Fraud Office (SFO) has announced that it wishes to see the defence giant prosecuted for alleged bribery.

BAE is facing bribery charges and a possible confiscation of between £500m and £1bn.

The case against BAE Systems, which has involved years of investigations, relates to millions of pounds paid out to win contracts from a number of countries, including Tanzania, the Czech Republic, Romania and South Africa.

BAE says it is co-operating fully with the inquiry, but has strongly denied operating a secret slush fund to sweeten deals.

A BAE spokesman said the firm was working with regulators to help bring the investigation to an end, "providing access to people, information and premises whenever requested".

'Slush fund'

In January 2007, a South African newspaper published details of another investigation by the SFO into payments allegedly made by BAE systems.

The Mail and Guardian accused the firm of developing "a web of influence" in South Africa regarding an arms deal worth $4.5bn (£2.3bn).

And in a move that attracted widespread criticism, the SFO dropped another long-running BAE corruption probe into the huge al-Yamamah arms deal with Saudi Arabia.

The company was accused of operating a £60m slush fund to secure the deal in the 1980s.

Reports said the Saudis had threatened to pull out of a new BAE deal unless the probe was brought to an end.

BAE has consistently denied any wrongdoing relating to both of these investgations.



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