UPDATE 2-UK questions Airbus staff, defence officials in Saudi corruption probe

Wed Jul 9, 2014 7:15am EDT

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(Recasts with Airbus statement, defence officials also being questioned, details)

July 9 (Reuters) - British fraud investigators have questioned defence officials and former and current employees of an Airbus subsidiary in connection with allegations of corruption in Saudi Arabia, the aerospace and defence company said on Wednesday.

The Serious Fraud Office (SFO), which confirmed that unnamed individuals had been arrested over the weekend, launched a criminal investigation into allegations surrounding Airbus unit GPT Special Project Management in Saudi Arabia in August 2012.

The investigation hinges on allegations of bribery in connection with a $3.3 billion GPT contract to provide communications and intranet services for the Saudi National Guard, which protects the kingdom's royal family. (reut.rs/1lRLrGk)

"Airbus Group understands that four former and current employees were recently interviewed - along with MOD (Britain's Ministry of Defence) officials - as part of a wide-ranging SFO investigation into subsidiary GPT," a spokesman said.

A spokesman for the SFO confirmed there had been arrests over the weekend but declined to comment on the number of people held for questioning or whether they were part of the investigation into the Airbus unit.

The Ministry of Defence declined to comment.

Allegations of corruption are not new to the defence industry, where companies tend to use individuals or third-parties to help to broker deals to win lucrative contracts.

British and U.S. prosecutors are investigating allegations of bribery and corruption at Rolls-Royce Holdings in Asia. The aerospace and defence company has said it is cooperating with the inquiries.

While all serious fraud investigations are complex, they can also be highly political.

Under former SFO head Richard Wardle, the agency dropped an investigation into alleged corruption in a BAE Systems arms deal with Saudi Arabia in 2006 after an intervention by former British Prime Minister Tony Blair.

(Reporting by Kirstin Ridley in London; Editing by Steve Orlofsky and Pravin Char)

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