BAE rocked by fraud investigation

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By Rhys Blakely, Times Online

BAE, Europe's largest arms company, was today rocked by allegations of false accounting made in relation to its contracts with the Saudi Arabian Government.

Shares in BAE plunged more than 5 per cent on the news that two men were arrested overnight by officers from the Ministry of Defence police and the Serious Fraud Office. The arrests were part of an investigation into contracts for services between Robert Lee International Ltd, Travellers World Ltd and BAE.

Travellers World and Robert Lee International were subcontractors who dealt with travel arrangements for business associates of BAE. Travellers World went out of business last year.

Searches were conducted at eight locations in London and the south of England. Two men, aged 73 and 66, were arrested and will be interviewed, the SFO said in a statement.

More:
http://business.timesonline.co.uk/article/0,,9067-1342425,00.html

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1. BBC coverage:

SFO to investigate BAE contracts


The SFO's investigation was triggered by allegations made by the Guardian newspaper and the BBC's Money Programme about the existence of a £60m slush fund at BAE designed to facilitate defence contracts.
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"The Serious Fraud Office has commenced an investigation into suspected false accounting in relation to contracts for services between Robert Lee International, Travellers World and BAE in connection with defence equipment contracts with the government of Saudi Arabia," the SFO said in a statement.

The SFO's decision to launch a formal investigation comes less than a month after the BBC's Money Programme conducted an investigation into BAE's use of cash, gifts and personal services to 'sweeten' Saudi officials overseeing major arms deals. ...................

Beneficiaries included Prince Turki bin Nasser, a leading member of the Saudi royal family who was responsible for overseeing the massive al-Yamamah arms deal between Saudi Arabia and the United Kingdom, which made billions of pounds for BAE.

More:
http://news.bbc.co.uk/1/hi/business/3978703.stm