UK drops probe into BAE's Saudi defence deal

LONDON, Dec 14 (Reuters) Britain's Serious Fraud Office (SFO) said today it had decided to drop its two-year-long fraud investigation into a multi-billion pound arms deal with Saudi Arabia involving BAE Systems Plc.

The decision follows a recent newspaper report that Saudi Arabia had given Britain a deadline to halt the SFO inquiry or lose a contract for 72 Eurofighter Typhoon combat jets being jointly developed by BAE, Europe's largest defence company.

The SFO said the decision was made after representations to the Attorney General and the director of the SFO over the need to safeguard national and international security.

''It has been necessary to balance the need to maintain the rule of law against the wider public interest,'' the SFO said in a statement.

''No weight has been given to commercial interests or to the national economic interest,'' it added.

BAE, which had no immediate comment on the decision, has repeatedly said it was cooperating with the SFO and believed it had done nothing wrong.

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