A top BAE Systems executive and ex-defence official has been questioned by investigators over a suspected bribery plot involving a Viennese count to win European arms contracts, the Financial Times has learned.

Julian Scopes – BAE’s former head of government affairs and former private secretary to Alan Clark, the late Tory defence minister – was interviewed at Guildford police station on Sunday by the Serious Fraud Office, people familiar with the matter said.

The questioning of Mr Scopes highlights the top-level business and government interests that have turned the BAE case into an explosive affair for both the company and ministers.

Mr Scopes, 55, was interviewed as part of an SFO probe into a suspected conspiracy to bribe people in high positions over arms deals in countries including Austria and the Czech Republic, people close to the matter said.

People around the world believe that Britain has become a markedly more corrupt country, according to a league table published yesterday.

Britain has slipped down the rankings of a table compiled yearly by the group Transparency International, following political scandals and the government’s failure to prosecute over alleged bribery.

The table is compiled each year by the global anti-corruption group, from polls taken around the world. The results are used to assess how much corruption is perceived to exist among public officials and politicians in 180 countries.

Britain is now classed as the 16th cleanest country in the world, down from 12th in the previous year, and its worst performance since the league table was started in 1995…

The executive director of Transparency International, Chandrashekhar Krishan, said it was “probably no surprise” that Britain’s reputation had “significantly worsened”. He said: “Public confidence in political office has been eroded by the ‘cash-for-honours’ affair and the grudging exposures of MPs’ expenses.”

Britain, he added, had a “wretched and woeful record” in prosecuting business executives for paying bribes to foreign politicians and officials to win contracts.

He said this was epitomised by the government’s decision to drop the police investigation into allegations that BAE, Britain’s biggest arms company, paid bribes to Saudi royals.

BAE Systems, the British arms manufacturer under investigation in several countries for alleged bribery, paid at least £20m to a company linked to a Zimbabwean arms trader allied to President Robert Mugabe, documents seen by the Financial Times show…

The payments raise fresh questions about BAE’s dealings with outside agents, intermediaries who sometimes act as brokers in arms deals. Agents have featured in investigations into whether BAE channelled bribes to foreign officials to win contracts.

BAE refuses to provide details of its relationships with agents, although it has pledged to introduce reforms as part of an effort to improve its image after the corruption investigation into its multibillion-pound al-Yamamah arms deal with Saudi Arabia.

The House of Lords has overturned that decision and declared that the director of the SFO acted lawfully and within his powers when he ended the inquiry.

On the fact of it, this is disappointing. But the real issue is not whether the SFO acted unlawfully - it’s the political pressure apparently put on the SFO by ministers, and the reasons behind the decision to drop the investigation. That’s why we’re continuing to campaign for an independent inquiry into how and why the Serious Fraud Office’s investigation was ended.

And there are some interesting comments from the Law Lords in this regard, as the BBC reports:

Baroness Hale said she would have liked to have been able to uphold the court’s decision that the SFO’s director acted unlawfully because it was “extremely distasteful that an independent public official should feel himself obliged to give way to threats of any sort”.
[...]
Lord Bingham, said the SFO director Robert Wardle “was confronted by an ugly and obviously unwelcome threat”.

The nature and source of those threats still need to be exposed.

Swiss authorities have widened a corruption investigation linked to arms deals by the British aerospace company BAE Systems PLC, prosecutors said.

Federal prosecutors are conducting three criminal investigations into possible money laundering linked to the company, spokeswoman Jeannette Balmer told The Associated Press late Wednesday.

Previously prosecutors had confirmed only one investigation and Balmer declined to comment on what prompted Swiss authorities to open two additional investigations.

The investigations center on allegations that BAE used Swiss bank accounts to pay millions of pounds (dollars) in bribes to officials from Saudi Arabia in return for contracts. BAE has always said it acted lawfully.

You can read more here.

Until last year, Garwood led a team of 600 civil servants at the Defence Export Service Organisation at the MoD, where he worked on projects including last year’s deal to sell Eurofighter Typhoons to Saudi Arabia. He was seconded to the MoD from BAE in 2002.

That secondment reinforces the suggestion that the relationship between the MoD and BAE is too close.

BAE chief executive Mike Turner and non-executive director Sir Nigel Rudd had already been issued with subpoenas.

City grandee Sir Nigel Rudd, chairman of airports operator BAA and deputy chairman of Barclays Bank, was one of the two BAE Systems executives detained briefly last week by US officials investigating allegations of corruption by the UK defence company.

Sir Nigel, a non-executive director at BAE, was issued with a subpoena by investigators from the Department of Justice (DoJ) when he arrived at New York’s Newark Airport en route to a holiday in Florida. Yesterday, The Sunday Telegraph disclosed that Mike Turner, BAE’s chief executive, had been detained at an airport in Texas, where his laptop and Blackberry were seized.

The DoJ is investigating claims that BAE paid bribes in the 1980s and 1990s to win the £20bn Al Yamamah arms deal with Saudi Arabia. News of the detentions will further strain relations between Washington and London over the DoJ’s probe, as Sir Nigel has been at BAE less than two years and had nothing to do with the Saudi deal.

In 2006 Britain’s Serious Fraud Office controversially dropped its own investigation into Al Yamamah, and there have been claims Whitehall is dragging its feet over requests from the DoJ for information. The detentions may be a sign of the DoJ’s determination to raise the stakes, although one source said last night: “It could equally be a sign of frustration.” …

Liberal Democrat Treasury spokesman Vince Cable said yesterday reports of the detentions “illustrate that the investigation into alleged corruption over this arms deal is very far from closed.”

A review into business practices at defence firm BAE Systems has called for tougher anti-bribery measures.

The study by Lord Woolf, former Lord Chief Justice of England and Wales, set out 23 recommendations for the firm.

Lord Woolf said the report provided a “route map” for BAE to ensure it was a leader for its ethical standards…

The BBC’s business editor Robert Peston says that the report’s finding, that in the past BAE did not pay sufficient attention to ethical standards in the way it conducted business, is an embarrassing admission.

The newspaper provides some background information:

The SFO is probing a 2002 contract under which BAE supplied Tanzania with a military radar system, a deal that was strongly criticised by aid agencies and politicians, including the then UK International Development Secretary Clare Short.
[...]
Despite the SFO abandoning its high-profile investigation into BAE’s Al Yamamah arms deal with Saudi Arabia, the fraud office has continued to probe several other overseas deals.

Poverty-stricken Tanzania bought a £28m military air traffic control system from BAE, when many experts said a far cheaper civil system would have done.

You can read the full story on the Telegraph website.

This follows yesterday’s ruling by the High Court that the SFO acted unlawfully when it suspended - under direction from the Labour Government - its investigation into the deal between BAE and Saudi Arabia.

Nick Clegg also calls on the Prime Minister to update Parliament on the progress of other investigations into alleged corruption by British companies, and on UK Government cooperation with the US Justice Department’s investigation into alleged bribery by BAE.

Here’s the letter in full:

Dear Gordon,

This week’s High Court ruling on the halting of the Serious Fraud Office investigation into the “al-Yamamah” arms deal between the UK and Saudi Arabia has delivered another hammer-blow to public trust in our political system.

In order to restore faith in the Government’s actions over this matter, do you now accept that there is no alternative but to re-open the SFO investigation and hold a full inquiry into how this unlawful decision ever came about?

On taking office last year you made it a key pledge of your premiership that, in order to restore public faith in our political system, there would be fundamental constitutional reform. You recognised that the position of the Attorney General had become so sullied by the BAE issue, questions over the legality of the Iraq war and the cash for honours inquiry, that it had to be reformed. Indeed, your Governance of Britain White Paper pledged to “renew the role of the Attorney General to ensure that the office retains the public’s confidence”.

This sentiment is flatly contradicted by your recent proposals in the draft Constitutional Renewal Bill. These proposals will give the Attorney General effective carte blanche in future to block or quash any investigations or prosecutions under the pretext of “national security”. Given that under these draft rules there would be no recourse to judicial review of such decisions, do you not see that this will be seen by the public as a step backward, not forward? Why have you backtracked on your apparent intention to address the widely-held view that the role of the Attorney General is fraught with conflicts of interest? I urge you to reconsider these proposals urgently.

There is a great deal of uncertainty too about the progress of other ongoing investigations into allegations of corruption, such as those related to British companies’ commercial activities in Tanzania, South Africa and Romania. I am concerned by reports that these investigations are not culminating in prosecutions because of weaknesses in the 2001 anti-corruption legislation which your Government brought into effect. You will be aware of concerns at the OECD that this legislation simply doesn’t fulfill the requirements of the OECD Anti-Bribery Convention, which your Government signed up to over ten years ago. I hope the ongoing OECD inquiry into our anti corruption safeguards will highlight any weaknesses in the law which may be making it difficult to bring prosecutions.

I would be grateful for your views on whether present legislation is sufficiently watertight to conform to the highest anti-corruption standards as required by the OECD, and confirmation that your Government is cooperating fully and openly with the OECD investigators.

Finally, could you confirm when you intend to update Parliament on the UK Government’s cooperation with the US Justice Department’s investigation into alleged bribery by BAE? It is, I hope you will agree, essential that the Government cooperates fully with the US Justice Department and does nothing to impede its investigation.

I am dismayed by the self inflicted damage being wrought by this Government’s actions on Britain’s standing in the world. It is also highly damaging to all British exporters, who depend on a reputation for probity and respect for due process to secure contracts abroad, to see such extrajudicial measures being taken by the Government to prevent any further scrutiny of the al-Yamamah arms deal. How can Britain stand up to corruption and bribery abroad if we are not spotless at home?

I would be grateful for a reply to these substantive queries as soon as possible.