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BAE's man in the MoD taken aside by feds in Miami

Brit arms execs feel long arm of US Justice Dept

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A third senior BAE Systems executive has been subpoenaed by US investigators in recent weeks, it has emerged. Alan Garwood, until recently seconded from BAE as head of the Defence Export Sales Organisation (DESO), the controversial Ministry of Defence arms-sales bureau, was served with legal documents while changing planes in Miami last month.

Garwood, now head of business development at BAE, worked at DESO from 2002 to 2007, bossing 600 military and civil-service staff at an average cost to the taxpayer of £15m per year. His tenure saw high-profile overseas arms deals brokered, including last year's sale of Eurofighter Typhoon superfighters - and accompanying technology transfers - to Saudi Arabia.

BAE confirmed to news media including the Guardian and Financial Times that several of its executives have recently been subpoenaed by the US Justice Department during visits to American territory. It is understood that these actions relate to the feds' investigation into the long-running al-Yamamah deal, previous to the Eurofighter one, under which the UK sold Saudi Arabia a panoply of jets, weapons and warships.

The UK's own probe into possible corruption around the al-Yamamah deal was dropped in controversial circumstances late in 2006, following personal intervention at Downing Street by the Saudi Prince Bandar. British Serious Fraud Office investigators believed him to be a key figure in their investigation, as he had received enormous sums - up to $1bn - from BAE via a Washington bank while serving as ambassador to the US. It was this American involvement, leaked to the media by disgruntled SFO investigators after they were ordered to drop the case by the Blair government, which drew in the feds.

Bandar does not deny receiving the money, but says that the transactions were entirely proper and consistent with his role as a Saudi official. BAE say that all transactions connected with the al-Yamamah deal have been fully overseen and indeed negotiated by the British government.

By this, they generally mean overseen and negotiated by DESO - in other words, pretty much by BAE but operating under the MoD's banner. It appears, in fact, that some of the Bandar Washington cash travelled via a DESO account. This may give a clue as to why the feds are so keen to speak to Mr Garwood.

Perhaps unsurprisingly, given the embarrassing position DESO has put the British government in - the SFO muzzling has recently been described as "abject surrender" by High Court judges, who may force a reopening of the probe - one of the first acts of the Brown government was to move DESO out of the MoD in a bid to regain control of its activities. Meanwhile, despite repeated US requests, the government has refused to release its al-Yamamah files to the feds. ®

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