Just because Britain’s biggest defence company has for too long behaved like a victim does not mean that it hasn’t been badly treated. As Henry Kissinger once said: “Even a paranoid has some real enemies.”

For months BAE Systems has complained that it has been buffeted by a scandal beyond its control. The British Government, it has pointed out, engineered the terms of the al-Yamamah oil-for-arms deal with Saudi Arabia and agreed the distribution of multimillion-pound payments to Saudi officials. Then the same British Government launched a Serious Fraud Office investigation into alleged corruption surrounding the deal. And, then, for a variety of shifting reasons the same British Government cut the investigation short, leaving unresolved the question of BAE’s guilt or innocence.

Throughout it all, BAE has been bound by the confidentiality requirements of the deal and, more recently, the strictures imposed upon it by an ongoing SFO investigation. BAE has stood by its customer, the Saudis. Meanwhile, it has been left to swing in the wind by its sponsor, HM Government.

BAE is far from blameless. It was centrally involved in the £43 billion deal with the Saudis and it served as the willing conduit of funds to Saudi officials. It is under investigation for corruption in six other countries and is still dogged by stories of slush funds, kickbacks and call girls. It has sworn blind that it never did anything wrong in the past and, in the same breath, announced that it was improving on past behaviour and axing hundreds of highly paid secret advisers who lobby for arms deals. And, for much too long, it has declined to take responsibility for its previous actions, allowing its reputation to be defined by politicians, the press and disgruntled SFO investigators.

Yesterday the US Government emerged to address the matter. The Department of Justice is launching a formal investigation into possible corruption surrounding the al-Yamamah deal.

The diplomatic repercussions will be widespread and long-lasting. On Tony Blair’s last full day in office, the Bush Administration launched an inquiry into corruption in Britain. This is not only ironic, it is humiliating.

Gordon Brown will be left to deal with the fall-out, both in terms of the strains to the special relationship and the displeasure in Saudi Arabia. The Ministry of Defence, the closest ally of the Pentagon, will not like the prospect of its past role in the deal being investigated by US authorities. Nor will George Bush’s closest personal friend in the Gulf, Prince Bandar, like his bank statements being reviewed by the US Government.

The craven decision to abandon the SFO inquiry will be revisited. Not only has it been shown to have been an act of expediency but, worse, an ineffective one. It has fuelled suspicions about BAE, prompted an OECD investigation into government corruption, piqued the interest of the US authorities and undermined the UK’s claims to prize the rule of law.

Ironically, though, the DoJ investigation may be good for BAE. It has long avoided a review of its ethical standards and, in the process, lost public confidence. Now it has two: Lord Woolf, the former Lord Chief Justice, is assessing current behaviour; the DoJ is looking into what happened in the past. Both will likely have unexpected and jarring consequences for the company. But, as people begin to understand more and more about the role of the Government in the Saudi deal, it will be the whole British military establishment that is under scrutiny.

For BAE, at least, this will give it the chance to get back to its business.

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