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Old 28th Jul 2007, 10:12
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Torygraph: BAE backlash against axing of export agency

BAE chief's furious letter to Gordon Brown [pdf file]

The head of Britain's leading defence company has reacted with fury to Gordon Brown's decision to shut down a key government export agency without consultation. Mike Turner, the chief executive of BAE Systems, has demanded a meeting with the Prime Minister after the responsibilities of the Defence Export Services Organisation (Deso) were transferred to the Trade and Industry department, The Daily Telegraph has learned.

The defence industry, which has exports worth 6 billion a year, was said to be "seething" over the decision. The Government said it wanted defence exports "more effectively integrated" within "general trade support activities".

Deso was caught up in the Serious Fraud Office investigation into allegations that a Saudi Arabian prince had received payments of up to 30 million in the 43 billion Al-Yamamah arms deal for British Tornado jets. BAE allegedly made the payments with the knowledge of MoD officials and has always denied any wrongdoing. The SFO inquiry was halted last December by the then Attorney General, Lord Goldsmith. Tony Blair said it was "in the national interest" to stop it.

Mr Turner, who with other defence industry leaders was said to be "utterly furious", wrote to the Prime Minister saying he had "considerable concern" about the move. "I am very disappointed at the complete lack of consultation with the industry stakeholders," he wrote in an unprecedented letter obtained by this newspaper.

Mr Turner warned that Britain's export trade would suffer huge damage without full Government support at a time when other defence companies in Russia, America and France were getting support "at the very highest levels". "I can think of no benefit that 'synergy' with UK Trade and Industry can offer that can begin to outweigh the lost excellence of the Deso operation," he said.

A spokesman for the Prime Minister said Des Browne, the Defence Secretary, had been consulted over the decision and it was "up to him who he consulted within his own ministry". It was important to bring all government exporters "in line" under one department, he added. Industry concerns would be addressed during a five-month consultation period and Mr Turner's issues would be dealt with by the Cabinet Secretary.
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