Humiliation for Britain over BAE

The Government is bracing itself for further humiliation over its decision to scrap a corruption inquiry into a multibillion pound arms deal between British Aerospace and Saudi Arabia with a powerful international watchdog poised officially to reprimand the UK later this year.

It will make Britain just the second country to be reprimanded by the Organisation for Economic Co-operation and Development's Anti-Corruption Unit.

Last week the High Court condemned the Government for forcing the Serious Fraud Office to halt its investigation into the biggest arms deal in history, in a challenge brought by the Campaign Against the Arms Trade and Corner House.

The SFO scrapped its investigation in December 2006. Saudi officials had threatened to withdraw co operation in the fight against terror and cancel the deal if the SFO did not halt its inquiry, leading the Government to fear lives could be at risk.

In today's Independent on Sunday, however, ex-CIA agent Robert Baer argues that Saudi Arabia has never given any useful intelligence on Islamic terror to the West.

On Thursday the High Court ruled the Government's capitulation to a foreign power was an "outrage". The Government is considering whether to appeal, while the SFO must decide whether to reopen its inquiry.