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BAE chief exec, director detained at US airports

Subpoenas issued - laptop drives copied?

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The CEO of BAE Systems plc, the controversial UK-headquartered arms giant, was detained by the US authorities after landing at Houston airport last week. A fellow company boardmember was also taken aside on arrival at Newark.

The Financial Times reports that Mike Turner and non-executive director Sir Nigel Rudd had their documents and personal electronic equipment "examined". US Department of Justice officials also served subpoenas on the men before allowing them to proceed with their journeys. Mr Turner is now understood to have returned to the UK.

Justice feds have been investigating BAE since last year, when it was revealed that allegedly corrupt payments in the order of $1bn had passed from the company to American bank accounts controlled by Prince Bandar of the Saudi royal house, who was serving at the time as ambassador to Washington. It has long been alleged that BAE made unethical payments to Saudi officials and/or royalty in order to secure the long-running al-Yamamah deal, in which weapons and services have been supplied to Saudi Arabia since the 1980s.

The company has always said that it has obeyed the law at every stage, and that all its dealings were sanctioned by the British government. Indeed, some of the Bandar payments were said to have moved via a UK Ministry of Defence account. (However, this was apparently an account belonging to the former Defence Export Services Organisation, an MoD arms-sales bureau controlled and partly staffed by seconded arms-industry executives rather than civil servants or uniformed officers.)

For his part, Prince Bandar does not deny the payments. He contends rather that they were entirely legitimate and consistent with his role as a member of the Saudi government.

The original media revelations which started off the US Justice probe came about as a result of leaks from the files of the UK Serious Fraud Office (SFO). The leaks were made in the wake of the decision by the British government to close down the SFO's own long-running investigation into BAE's Saudi dealings.

This decision has lately been subject to a judicial review, which established that the Blair government had "abjectly surrendered" to threats made in person by Prince Bandar during a visit to Downing Street late in 2006.

None of this has prevented BAE from successfully acquiring major US defence contractor Armor Holdings last year, using money raised by selling off its British airliner wing factories. The UK government has also, thus far, stood firm in its refusal to allow the Justice feds full access to the SFO's voluminous BAE files. However, the stop-and-search at Houston indicates that the massive arms firm - while still, apparently, firmly in the saddle in London - may not be having things all its own way across the Atlantic.

There were a lot of ways the Justice agents could have issued subpoenas to BAE or its executives, after all. But not many of those more civilised ways would have given them a chance to examine Mike Turner's laptop; and they wouldn't have sent quite such a strong message, either. ®

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