BAE systems lost as much as six percent on Wednesday as gathering storm cloudsof scandal swept around the company as Britain’s Serious Fraud Office deepened its investigation into Europe’s biggest defence company. The probe is into suspected false accounting over service contracts with a travel agents, Robert Lee International limited.

The travel agents provided hotels and travel and arranged visas relating to BAE’s contracts in Saudi Arabia, part of its biggest contract, the Al Yamamah programme, running since 1985 and often described as the “sale of the century”. Last month BAE was accused of making illegal payments from a secret fund to win orders in Saudi Arabia, including paying for Californian holidays for the Saudi royal family, Rolls Royce cars, and prostitutes. BAE denied the allegations. Two people have been arrested in the latest investigation, in which 80 police officers raided eight locations in London and southern England.

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