BAE chief subpoenaed in U.S. over Saudi arms deal

WASHINGTON (Reuters) - U.S. officials investigating alleged bribes in a Saudi arms deal subpoenaed the chief executive of BAE Systems (BAES.L), Britain's biggest military contractor, on his arrival in the United States last week, BAE officials said on Sunday.

A subpoena was served on Mike Turner, the CEO, at George Bush International Airport in Houston, Texas, on May 12, said Greg Caires, a BAE spokesman in Washington.

Also subpoenaed was a BAE non-executive director, Sir Nigel Rudd, who was traveling with Turner, Caires said.

A subpoena is a court order to give testimony. The summonses were part of a U.S. Justice Department investigation of bribery charges tied to Britain's biggest arms deal, a series of warplane sales to Saudi Arabia clinched in the mid-1980s and valued at up to $80 billion.

The British government's Serious Fraud Office dropped an inquiry into the deal in December 2006 after then-Prime Minister Tony Blair said the probe threatened national security.

In June 2007, the company said it had been notified the U.S. Justice Department had begun investigating BAE's compliance with anti-bribery laws, including dealings with Saudi Arabia.

An unspecified number of subpoenas also were served on BAE Systems' employees in the United States last week, BAE said.

"The company has been and continues to be in discussion with the DoJ (U.S. Department of Justice) concerning the subpoenas served in the course of its investigation," Caires said.

BAE has denied making wrongful payments to help secure the arms deal known as al-Yamamah, or "the Dove."

The U.S. Justice Department had no comment, said Laura Sweeney, a department spokeswoman.

Caires said he could not confirm or deny British media reports that personal electronic devices belonging to Turner and Rudd, including laptops, had been seized and examined before they were allowed to continue their trip.

The pair were not prevented from entering the United States and Turner has since returned to Britain, John Neilson, a BAE spokesman told Reuters in London.

A BAE shareholder has charged past and present BAE board members breached their duties by allegedly allowing more than $2 billion in kickbacks, illegal bribes and other payments to Prince Bandar bin Sultan and others.

Bandar, the former ambassador to the United States who is now the head of Saudi Arabia's national security council, has strongly denied the charges, as has BAE.

The lawsuit was brought by the Michigan city of Harper Woods' employee pension fund. It is before a U.S. federal judge in Washington, Rosemary Collyer, who earlier this year temporarily barred Bandar from removing real estate proceeds from the United States.

BAE won a 4.43 billion pounds deal for 72 Eurofighter Typhoon combat jets from Saudi Arabia last September, nine months after Britain's Serious Fraud Office ended its inquiry.

Bribery could violate both the U.S. Foreign Corrupt Practices Act and the Racketeer Influenced Corrupt Organizations Act if found to have deprived the government of tax revenue, said Selva Ozelli, an international tax attorney and certified public accountant in New York.

(Editing by Alan Elsner)