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FAQ: The investigation

What is the Serious Fraud Office investigating?

The SFO, aided by the MoD police fraud squad, is investigating a worldwide system of offshore secret payments by BAE Systems. The money was allegedly channelled through a company codenamed "Red Diamond". The sums involved may total as much as £1bn. The inquiry began in 2004, when documents from a company of travel agents suggested BAE was running a £60m slush fund to bribe Saudi generals. But the inquiry has since spread much wider.

Are these types of payments illegal?

In 2002, Britain brought in legislation outlawing corrupt payments to foreign politicians. The SFO wants to find out whether cash has been paid to clinch arms deals since that date. One strand of the inquiry is looking at military sales between BAE and Saudi Arabia, known as al-Yamamah - the Arabic word for dove. This is the UK's biggest ever arms deal and involved the delivery of warplanes.

Is the SFO inquiry in danger of jeopardising British jobs?

BAE signed a contract earlier this year, initially worth £6bn, to sell the Saudi regime 72 Eurofighters which would be part-manufactured near Preston. The company now claims that Saudi Arabia may pull out if police investigations continue but there is no confirmation this will happen. Critics say Britain has no real economic need to rely on arms sales to corrupt and despotic regimes.

As well as the Saudi connection, which deals are the SFO looking at?

Chile It is alleged secret commissions may have gone to Gen Augusto Pinochet, the former head of state accused of torturing opponents. BAE has sold surplus frigates and other arms to Santiago.

Romania The BAE agent Barry George has been raided by the SFO, investigating £7m of commissions paid on another frigates deal. Adrian Nastase, the then Romanian premier, faces separate bribery charges in Bucharest.

Czech Republic Czech police say bribery attempts occurred during a deal to lease BAE-Saab Gripen fighters, and the US protested to Britain at the time.

South Africa Another BAE agent, the tycoon John Bredenkamp, was raided by the SFO, examining alleged commission payments in a £1.5bn deal to sell Hawk warplanes .

Tanzania An investigation has been opened into a Downing Street-backed deal to sell a BAE military air traffic control radar to one of Africa's poorest countries. It is alleged commissions of more than 29% may have been paid into Swiss banks.

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