The US probe comes after the British government pressured the Serious Fraud Office to drop an investigation into an alleged multi-billion pound slush fund to secure the sale of BAE military equipment to Saudi Arabia in the 1980s, reports Reuters. Outgoing British Prime Minister Tony Blair has been heavily criticised by anti-bribery campaigners and the British media for stopping the investigation on the grounds that it posed potential security risks and was necessary to maintain good relations with Saudi Arabia.

In early June, the BBC and The Guardian reported that BAE had paid hundreds of millions of pounds to a member of the Saudi royal family, Prince Bandar. The US would likely have jurisdiction to investigate the case if any of the payments made to Prince Bandar were routed through US accounts.

BAE has consistently denied making unlawful payments in the so-called al-Yamamah arms deal, claiming that “all such payments made under those agreements were made with the express approval of both the Saudi and UK governments,” reports The Guardian.

To see Transparency International’s latest press release on this issue, go to:

www.transparency.org/news_room/latest_news/press_releases/2007/2007_06_13_uk_defence