BAE IN THE US

YESTERDAY'S news that Britain's BAE Systems had finalised a $4.5 billion takeover of the American Armor Holdings company came as a surprise. In itself the deal makes sense: Armor is a manufacturer of military vehicles and armoured Humvees, giving BAE what its chief executive said would be “a major tactical wheel presence that we don't already have”. It would also strenghten BAE's considerable presence in the United States, where it is already listed as the seventh largest defence company, by increasing its US sales by $3 billion; Armor's shares have risen by 880 percent since the US invasion of Iraq. However, the surprise is in the fact that BAE is currently in a difficult position in relation to the US government because of the inquiry into allegations of bribery made against it over its huge Saudi Arabian contract. That inquiry, by Britain's Serious Fraud Office, was brought to a sudden halt earlier this year on the direct instructions of Tony Blair who said that Britain's security was threatened by it. The US Department of Justice is said to be considering whether it can launch a formal inquiry into the alleged bribery in place of the aborted British action. If such an inquiry were to be instituted and establish that bribery took place, the penalties under the Foreign Corrupt Practises Act could run into millions of dollars. BAE has insisted from the start that it has no case to answer and believes it is the victim of unjustified government interference.