A fresh investigation into the UK's efforts to tackle bribery and corruption is to be carried out by a high-powered international team after the Organisation for Economic Co-operation and Development expressed "serious concerns" about the Government's decision to drop an inquiry into a huge arms deal between BAE Systems and Saudi Arabia.
The dropping of the investigation could have huge commercial ramifications for BAE Systems, with some sources raising the possibility of it being frozen out of US defence contracts as a result of allegations that the group used a [pound]60m slush fund to bribe Saudi officials into granting it the Al Yamamah arms-for-oil deal.
The new inquiry, to be carried out by the OECD's working group on bribery, will focus on what it sees as the continued shortcomings of the UK's anti-bribery legislation and its failure to mount a single successful prosecution since a new treaty took effect in 1999 to which all the organisation's members are signatories.
The decision to carry out the "phase-two" inquiry into Britain's record on combatting bribery came after a two-day meeting of the OECD working group in Paris attended by the 36 countries which have signed up to its anti-bribery convention. The meeting failed to reach a decision on whether the UK had breached the convention when the Serious Fraud Office was ordered to drop its investigation into the BAE bribery allegations last December.
Tony Blair defended the decision on national interest grounds, claiming the Saudis had threatened to withdraw co-operation in the fight against terrorism if the SFO continued to pursue its inquiries. …