BAE Systems was accused yesterday of being unco-operative with the American investigators who are examining whether Britain's biggest defence company bribed officials for Saudi Arabian arms contracts.

BAE acknowledged yesterday that the US Department of Justice (DoJ) had detained Mike Turner, the chief executive of the company, and Sir Nigel Rudd, a non-executive director, at two American airports last week while they examined electronic equipment belonging to both men and issued new subpoenas.

Mr Turner was stopped by officials at Houston airport while travelling on business and Sir Nigel was stopped at Newark airport in New Jersey while on holiday. It is believed that each was detained for about 20 minutes.

The company, which has denied any wrongdoing, is the subject of an inquiry in the United States into whether it breached the Foreign Corrupt Practices Act, legislation that can lead to the fining and imprisonment of executives for bribery. It can also block a company from competing for US government contracts.

BAE issued a statement yesterday asserting that “the company has been and continues to be in discussion with the DoJ concerning the subpoenas served in the course of its investigation”. However, one American legal expert suggested that such humiliating behaviour by the DoJ was unusual because most companies co-operate with regulators.

Alexandra Wrage, president of Trace International, a non-profit group that specialises in anti-bribery cases, said: “For the DoJ to have behaved like this, for them to have issued subpoenas in a US airport - this probably wouldn't have happened if a company was co-operating fully.”

She added: “The vast majority of companies co-operate with the Government, which makes detentions and subpoenas unnecessary. Typically, a company would sit opposite the DoJ and there'd be a dialogue. It can be very civilised.”

A BAE spokeswoman declined to comment on the level of co-operation by the company regarding the inquiry. However, BAE said in its statement: “The company confirms that last week the DoJ issued a number of additional subpoenas in the US to employees of BAE Systems plc and BAE Systems Inc as part of its ongoing investigation, which the company has previously announced.”

The Serious Fraud Office (SFO) in Britain dropped an investigation into allegations that BAE had a multimillion-dollar “slush fund” offering sweeteners to officials from Saudi Arabia in return for lucrative contracts. The High Court ruled this year that the SFO had failed in its duties and found that dropping the case, at the behest of top officials in the Government, was illegal.

The High Court said that the investigation had been halted only after a threat from Prince Bandar bin Sultan, of Saudi Arabia, to cancel a multibillion-pound contract for the Eurofighter Typhoon. In September BAE signed a £20 billion deal with Saudi Arabia for 72 Typhoons.

The Ministry of Defence, the US Department of Justice and the US Department of Defence all declined to comment. The DoJ investigators are trying to determine whether BAE paid bribes to Saudi officials, including Prince Bandar, the former Saudi Ambassador to the US, as part of the al-Yamamah arms agreement, which has earned BAE £43 billion. Like BAE, Prince Bandar has denied any wrongdoing. The DoJ is believed to have requested information on al-Yamamah from those involved since sales began in 1985.

Systems are go

£38.6bn
BAE’s total global order book last year

£1.2bn
Total value of US Army contracts. These contracts include building Bradley Fighting Vehicle, the M88 Hercules and M113 fighting vehicles

Source: Times archives

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