U.S. seeks tighter UK laws after Saudi case

WASHINGTON Wed May 2, 2007 9:16pm BST

A formation of three Eurofighter military aircrafts flies during an airshow in a file photo The United States said on Wednesday it hoped to help tighten UK anticorruption laws amid reports of a possible U.S. criminal probe into alleged bribery of Saudi officials by BAE Systems Plc, Britain's top military contractor. British investigators halted a two-year-old inquiry into a multi-billion-pound Eurofighter deal with Saudi Arabia after Prime Minister Tony Blair's government said the probe could undercut national security. The reversal followed reports that Saudi Arabia had threatened to cancel orders for 72 Eurofighter Typhoon jets from BAE. REUTERS/Arnd Wiegmann

A formation of three Eurofighter military aircrafts flies during an airshow in a file photo The United States said on Wednesday it hoped to help tighten UK anticorruption laws amid reports of a possible U.S. criminal probe into alleged bribery of Saudi officials by BAE Systems Plc, Britain's top military contractor. British investigators halted a two-year-old inquiry into a multi-billion-pound Eurofighter deal with Saudi Arabia after Prime Minister Tony Blair's government said the probe could undercut national security. The reversal followed reports that Saudi Arabia had threatened to cancel orders for 72 Eurofighter Typhoon jets from BAE.

Credit: Reuters/Arnd Wiegmann

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WASHINGTON (Reuters) - The United States said on Wednesday it hoped to help tighten UK anticorruption laws amid reports of a possible U.S. criminal probe into alleged bribery of Saudi officials by BAE Systems Plc BA.L, Britain's top military contractor.

"We have been in discussions with the UK about this case," State Department spokesman Terry Davidson said, referring to Britain's dropping of its own investigation in December.

The United States has been in touch as a signatory of an anti-bribery convention of the Paris-based Organisation for Economic Cupertino and Development, he said.

Washington also was acting as a member of an OECD working group on bribery, Davidson said, which outlined what it called "shortcomings" in British anti-bribery legislation in March.

"We look forward to working with the OECD and the United Kingdom to help the UK strengthen its antibribery laws," he added, without elaborating on changes sought.

British investigators halted a two-year-old inquiry into a multi-billion-pound Eurofighter deal with Saudi Arabia after Prime Minister Tony Blair's government said the probe could undercut national security.

The reversal followed reports that Saudi Arabia had threatened to cancel orders for 72 Eurofighter Typhoon jets from BAE. The Times on Wednesday quoted Mike O'Brien, Britain's solicitor-general, as saying the UK's Serious Fraud Office had met U.S. Justice Department officials to discuss "case-related matters." It said a formal U.S. probe could follow.

The U.S. Justice Department had no comment on the report, said Bryan Sierra, a department spokesman.

Bob Hastings, a BAE Systems spokesman in Rockville, Maryland, said: "We are unaware of any investigation by the U.S. government into BAE Systems' dealings in Saudi Arabia."

The OECD Working Group on Bribery said in a March 14 statement it would seek to find out if "systemic problems" explain the lack of foreign bribery prosecutions and other, unspecified matters raised by the halt of the UK investigation.

Lawyers said if a full-fledged U.S. Justice Department investigation began, it likely would go beyond any issues that might fall under the U.S. Foreign Corrupt Practices Act, which bars bribing foreign officials to boost business.

"You'll see money laundering, USA Patriot Act, tax and maybe securities law reporting issues come into (Justice Department) files," said Charles Bruce, a London-based partner of Moore & Bruce LLP, who is familiar with U.S. compliance law.

David Isenberg of the British American Security Information Council, a private research group, said U.S. actions in the matter served largely to promote the interests of BAE's U.S. rivals such as Boeing Co. (BA.N) and Lockheed Martin Corp. (LMT.N).

The issue is complicated because the United States needs continued British support on Iraq, Afghanistan and global antiterrorist efforts, said Isenberg, a former member of the Defence Trade Advisory Group, which advises the State Department on arms-sale issues.

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