BAE Systems names former law official to chair ethics committee

London: Former top English law official Lord Harry Woolf will chair an ethics committee reviewing business practices at BAE Systems, which denies making wrongful payments to a Saudi prince in connection with Britain's biggest arms export deal.

"The board of BAE Systems has today announced the creation of an external, expert committee to review and evaluate the company's policies and processes - and their application - relating to ethics and business conduct," BAE said in a statement yesterday.

Woolf, the former Lord Chief Justice, will chair the committee, BAE added.

BAE Systems has denied any wrongdoing in response to reports that it paid £1 billion over a decade to Prince Bandar Bin Sultan in connection with the Al Yamamah deal, under which it sold aircraft and equipment to Saudi Arabia.

Prince Bandar, former Saudi ambassador to the US and now Secretary-General of the Saudi National Security Council, has called the reports a fabrication, saying the funds involved were transfers between official Saudi bank accounts. However, BAE said that the Al Yamamah deal would not be part of the ethics review.

Case closed

"It's been exhaustively investigated and there's no benefit, nor indeed is there any possibility of reopening what's already been done by the appropriate authorities," Chairman Dick Olver told a news conference.He emphatically denied the review was a "figleaf".

BAE has said that as Al Yamamah was a government-to-government agreement, all payments involved were made with the express approval of both the Saudi and British governments.

Solicitors for Bandar have said the US bank accounts at Riggs Bank into which the funds were paid were in the name of the Saudi Arabian Ministry of Defence and Aviation. While Prince Bandar was an authorised signatory on the accounts, any monies paid from them were exclusively for ministry purposes.

BAE said it had not received and was not expecting to receive any contact from the US Department of Justice.

British media reports have said the Department of Justice is virtually certain to call an investigation into funds paid by BAE into US accounts.

Olver said that the company would notify the stock exchange if it were to be contacted by the Department of Justice.

In December last year, Britain's Serious Fraud Office dropped an inquiry into the Saudi deal, for which BAE has been the prime contractor, providing Tornado fighter jets, Hawk trainer aircraft and other defence equipment along with support and maintenance services.

Prime Minister Tony Blair said at the time that pursuing the inquiry would have harmed national security and relations with Saudi Arabia, which he called crucial for counter-terrorism and Middle East peace.

He defended the decision last week, saying pressing on with the investigation would have led to the loss of thousands of British jobs and "the complete wreckage of a vital strategic relationship to our country".

Britain's Ministry of Defence has declined to comment on the latest allegations, saying this would mean disclosing confidential information on Al Yamamah.

BAE Systems said last week: "We deny all allegations of wrongdoing in relation to this important and strategic programme."