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Financial Times: Britain ‘damaged’ by BAE probe

By Michael Peel, Legal Correspondent
Published: February 7 2007 02:00 | Last updated: February 7 2007 02:00

The handling of the scrapped probe into alleged bribery by BAE Systems in Saudi Arabia has “damaged the reputation of Britain”, according to Sir Mark Moody-Stuart, chairman of Anglo American, the mining group.

In a letter to Vincent Cable, the Liberal Democrats’ deputy leader, Sir Mark, who has advised Number 10 on corporate responsibility and sustainable development, claims the efforts of many companies to build transparent relationships overseas will be “set back and affected by suspicion and cynicism”.

The letter – first obtained by Channel 4 News – comes amid government concerns over criticisms by leading investors of December’s controversial decision to drop the BAE investigation.

Sir Mark’s comments were among responses to a series of letters written to top British companies by the Lib Dems, who plan to attack the government’s behaviour on the Saudi case in a parliamentary debate today.

Sir Mark, a former chairman of Royal Dutch/Shell, the oil company, and a private sector adviser to the government’s Commission for Africa, says the best approach to the Saudi case is to “concentrate on ensuring that current and future relationships are transparent and in line with best practice”.

His comments come after Hermes, Britain’s biggest pension fund, said the scrapping of the case threatened the country’s reputation as a leading financial centre.

Lord Goldsmith, the attorney-general, said last month he was “really anxious” for British companies to understand that neither BAE nor any other business was above the law.

The Serious Fraud Office had been investigating allegations of slush funds and other unethical practices surrounding the 20-year-old Al Yamamah arms agreement with Riyadh, which last year signed a supplementary deal potentially worth as much as £40bn to BAE.

BAE is still being investigated over deals in South Africa, Tanzania, Chile Romania and the Czech Republic. The company denies any wrongdoing.

Copyright The Financial Times Limited 2007

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