Political pressure from American defence contractors may have prompted the criminal investigation into BAE by the US Justice Department (DoJ), senior British government officials said yesterday.
The inquiry into claims that BAE paid bribes of £1 billion to secure Saudi Arabian arms contracts appears to have been started within days of a letter from Senator John Kerry to Alberto Gonzales, the US Attorney-General.
Sources at the Ministry of Defence, which has been implicated in the corruption claims, have hit back by highlighting significant financial or lobbying links between American defence companies and Capitol Hill.
These include donations made to Mr Kerry’s political campaigns by Raytheon, one of America’s biggest military contractors, based in the senator’s home state of Massachusetts.
In his letter last month, Mr Kerry, the Democratic presidential candidate in 2004, demanded to know if a DoJ inquiry was under way given “BAE’s prominent role within the US defence industry” and the British company’s attempt to extend its share of the American market by buying Armor Holdings.
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Mr Kerry cited State Department concerns “about BAE’s business practices” going back to July 2002 and a DoJ pledge that it would enforce anti-bribery laws against foreign-owned businesses “just as it does against American companies”. Mr Kerry asked if the DoJ had been contacted by other parts of the Bush Administration over this issue. President Bush and his father are known to be close to Prince Bandar bin Sultan, the former Saudi Ambassador to Washington, who is alleged to have received hundreds of millions of pounds for helping to broker the al-Yamamah oil-for-arms deal with Britain.
Mr Kerry has also been a long-term beneficiary of defence industry backing, most notably from Raytheon, which donated $1 million to help to fund the 2004 Democratic convention in Boston when he was running for president. At the same time three Raytheon lobbyists – John Merrigan, Mac Bernstein and Charlie Baker – from Piper Rudnick, the law firm, were key fundraisers in the campaign, generating at least $250,000.
Raytheon employees, including executives, made direct contributions of $68,438 to Mr Kerry’s campaigns since 1997, according to the Centre for Responsive Politics.
One prominent British defence source, said: “The US defence industry is pretty cut-throat and it is not a secret that they are unhappy about the expansion of BAE into one of the Pentagon’s biggest contractors.”
Mr Kerry did not respond to requests for an interview, but his staff were dismissive of suggestions that such links had triggered the senator’s intervention. “John Kerry has a 30-year record of cracking down on organised crime and corruption” one aide said. A spokeswoman added that the senator had not received a reply to the letter. “We are concerned that the subsidiary of a foreign company, reportedly under investigation by US authorities, has been granted permission to purchase a defence-related American company,” she said.
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Loren Thompson, a defence analyst with the Lexington Institute in Washington, said: “It is very common for the big contractors to use their links with the local senator or congressman to undermine their competitors.
“I find it hard to believe that Kerry’s office would not have at least talked to Raytheon before sending the letter. Massachusetts senators and congressmen have a reputation of being very liberal and possibly hostile to defence interests, but when it comes to looking after the interests of the big defence contractors in their states, they are usually onside.”
BAE, which denies any wrongdoing over the bribery allegations, refused to be drawn into what its spokesman called “a discussion of Senator Kerry’s motives”. A spokesman for Raytheon made no comment.