Publication: Business Day Issued: Date: 2007-09-07 Reporter: Reuters

BAE Jumps on Hopes for $40bn Saudi Fighter Deal

 

Publication 

Business Day
Date 2007-09-07

Reporter

Reuters

Web Link

www.businessday.co.za

 

London - Shares in Britain’s BAE Systems climbed 4% in early Friday trade, following a newspaper report it will clinch a £20bn deal to supply fighter jets to Saudi Arabia next week.

The Times, without citing sources, said the British government had sent the contract to supply 72 Eurofighter Typhoon jets to Saudi King Abdullah bin Abdul Aziz two days ago and that he was expected to sign it next week.

However, one source familiar with the situation told Reuters that the timing of the deal, which was first outlined in a preliminary agreement in December 2005, was still fluid.

“It could happen in the next few weeks, we just don’t know. It really is a case of when the Saudis decide to do something about it. It’s speculation at the moment,” the source said.

The deal became the focus of a political storm last year when the British government halted a probe of BAE by the country’s Serious Fraud Office (SFO), after Saudi Arabia warned it might cancel the order if the investigation went ahead.

The investigation concerned allegations of corruption in a previous deal between Britain and Saudi Arabia involving BAE, that led to Britain’s biggest ever export order, worth an estimated £43bn.

“Negotiations regarding the potential procurement of Typhoon for the Royal Saudi Air Force are between the governments of the UK and Saudi Arabia and BAE Systems is unable to make any comment as to their content or timing,” a BAE spokesman said.

Officials at Britain’s Ministry of Defence were not immediately available for comment.

Shares in BAE, Europe’s biggest defence firm, were up 3,8% at 465 pence in early trade, the biggest rise on the UK’s benchmark FTSE-100 index and valuing the maker of fighter jets, armoured vehicles and nuclear-power submarines at about £16,3bn.

In June, the US justice department also launched an investigation into BAE over its compliance with anti-bribery laws, including its dealings with Saudi Arabia.

British media reports have accused BAE of paying £1bn over a decade to Saudi Prince Bandar bin Sultan in connection with a previous fighter plane deal.

Bandar, a former Saudi ambassador to the US, has denied the sums involved represented secret commissions to him.

BAE has also denied making any wrongful payments in its dealings with Saudi Arabia.

Eurofighter jets are built by a consortium of European defence companies in Britain, Germany, Italy and Spain. Eurofighter is owned by EADS, BAE and Finmeccanica.

With acknowledgements to Reuters and Business Day.