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US Investigates Europe's Top Military Contractor for Corruption

British military contractor BAE Systems says it is being investigated by the U.S. government over the company's compliance with anti-corruption laws in its extensive business dealings in Saudi Arabia. VOA's Stephanie Ho reports from Washington.

Officials of BAE Systems have refused to speak on tape, but they issued a brief statement the company gave to the London Stock Market earlier Tuesday. The exact wording was "BAE Systems has been notified by the U.S. Department of Justice that it has commenced a formal investigation relating to the company's compliance with anti-corruption laws including the company's business concerning the Kingdom of Saudi Arabia."

In Washington, Justice Department spokeswoman Jaclyn Lesch refused to even confirm BAE System's statement.

"Companies often disclose information, but that doesn't mean that the Justice Department is in a position where we can confirm or deny the existence of an investigation," Lesch said.

She added that the Justice Department does not want to implicate anyone prematurely and only confirms an investigation when it actually issues charges.

British media have reported BAE paid $2 billion to Saudi Prince Bandar bin Sultan over a decade in connection with a multi-billion dollar aircraft deal awarded by the Saudi government to BAE in the 1980's. Prince Bandar, a former Saudi ambassador to the United States, now heads the country's National Security Council.

BAE and the Saudi prince have denied accusations that they either made or received illegal payments from the deal.

The British government dropped an inquiry into BAE's dealings with Saudi Arabia last year after Prime Minister Tony Blair said it would harm national security and relations with the Gulf kingdom.

The investigation comes as BAE is awaiting U.S. government approval for its four billion dollar bid to buy Florida-based armored vehicle maker Armor Holdings. Last week, the U.S. Treasury's Committee on Foreign Investment in the United States, cleared the sale, concluding it does not pose a threat to U.S. national security. In a separate investigation, the Justice Department is looking into possible anti-trust issues.

BAE is the largest defense company in Europe. Its relationship with Saudi Arabia dates back to 1966. It employs 5,000 people there.

On the London Stock Exchange Tuesday, BAE shares closed eight percent lower, at nearly 408 pence, or $8.15, per share.