LONDON, 4 November 2004 — Britain’s Serious Fraud Office (SFO) said yesterday it was probing deals between BAE Systems and two services firms for suspected false accounting related to contracts with Saudi Arabia. Europe’s largest defense company responded by releasing a statement saying it may have been the victim of fraud and that it believed its own conduct was not the focus of the probe.
A Serious Fraud Office spokesman said none of the locations it and Defense Ministry police searched yesterday were BAE facilities but declined to comment further on BAE’s statement. BAE has close ties to Saudi Arabia, supplying fighter jets and other equipment under government deals dating back decades.
The SFO said it and Ministry of Defense police had “commenced an investigation into suspected false accounting in relation to contracts for services between Robert Lee International Ltd, Travellers World Ltd and BAE in connection with defense equipment contracts with the government of Saudi Arabia.”
The SFO said searches had been conducted at eight locations in London and the south of England and that two men, one aged 73 and the other 66, had been arrested and would be interviewed. The men or their corporate affiliations were not identified.
“Commentary has suggested that BAE Systems is itself currently the target of the investigation. BAE Systems believes that this is not correct,” BAE said in a statement released after the market close.
“There is a possibility that BAE Systems may itself have been the victim of a fraud,” it said.
