An investigation by the Serious Fraud Office (SFO) into BAE Systems’s dealings with the South African Government is focusing on £75 million that is alleged to have been paid to middlemen acting for the defence company.

The SFO is looking into a £1.6 billion deal to sell Saab Gripen fighter jets to South Africa in 2001.

BAE, which owns 20 per cent of Saab and helped to sell the Gripen aircraft, used middlemen to secure the deal. BAE describes these individuals as advisers.

The SFO is understood to be trying to establish whether the middlemen subsequently bribed South African officials and government ministers in order to win the contract and whether BAE had any knowledge of any such actions.

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The SFO is cooperating with Swedish investigators, who are looking into the Saab side of the deal. The SFO is also working with German investigators, who are examining allegations of corruption in the sale of frigates and submarines to South Africa. The consortiums responsible for selling the frigates and submarines are alleged to have paid commissions of $25 million and $15 million, respectively.

The frigate and submarine sales are not linked to BAE, but the SFO and the Swedish and German authorities are understood to be cooperating to advance their separate inquiries.

German prosecutors recently met SFO officials in London before a trip to South Africa last week by Helen Garlick, who is leading the SFO inquiry.

An SFO spokesman said: “We have undertaken a process of making official requests to the South African authorities for information and, while we are going through that, we cannot comment further.”

A BAE spokeswoman said: “As with all aspects of our business, we regularly audit these arrangements [with advisers] to ensure that no impropriety is taking place and that we are receiving value for money for the advisers’ specialist knowledge.”

The SFO is looking into allegations of corruption in six contracts signed between BAE and foreign governments. Last December the UK Government shut down an investigation into BAE’s dealings with Saudi Arabia.

The South African allegations stem from South Africa’s decision to modernise its defence forces at the end of the last decade.

It bought four frigates from a German consortium that included Thyssen Rheinstahl and three submarines from another German consortium. The Gripen deal was for 28 fighters and 24 Hawk trainers.

–– Lord Woolf, the former Lord Chief Justice of England, is expected to confirm today that he will head an independent inquiry into BAE ethics. Critics will be waiting for him to establish his inquiry’s parameters. Attention will focus on whether BAE gives him a remit to focus on the past as well as the future.

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