U.S. arms buyer eyes consequences if BAE breached law

By Jim Wolf

WASHINGTON (Reuters) - BAE Systems (BAES.L) would face consequences if found guilty of having violated U.S. anti-bribery laws in an arms sale to Saudi Arabia in the 1980s, the Pentagon's top weapons buyer said on Thursday.

"Concerned about it," John Young, the Defense Department's acquisition chief, said when asked about a U.S. Justice Department investigation of BAE disclosed by the company a year ago.

"I don't know what will come of the investigation," he told a small group of reporters. "We'll have to find a way to remedy if someone's done something illegal ... I've got to hold people accountable."

Penalties for violation of the U.S. Foreign Corrupt Practices Act of 1977 could include a company being suspended or barred from doing business with the U.S. government.

For years, BAE, now the Pentagon's sixth-ranking supplier by sales, has denied allegations it made illegal payments in the mid-1980s to Saudi royals and others to clinch a deal worth up to $80 billion (40.1 billion pounds) for its Tornado fighter jets and other military hardware.

Pressed on his stated concerns in this matter, Young said: "I'm concerned in general when people are doing things that are illegal. This is not a unique case."

The U.S. investigation took a dramatic turn last month when BAE disclosed that Mike Turner, BAE's chief executive, and Sir Nigel Rudd, a non-executive director, had been served with subpoenas on their arrival in U.S. airports.

Based in Farnborough, England, BAE won $9.2 billion in fiscal 2007 Pentagon prime contracts, up from $4.7 billion in 2006.