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SCOTT JAGOW: News of a corruption scandal is making headlines in Britain this morning. This involves a huge defense contractor, American banks and a Saudi prince. Our correspondent Stephen Beard joins us from London. Stephen, what are the allegations here?

STEPHEN BEARD: The BBC says that Britain's largest defense contractor BAE Systems paid hundreds of millions of dollars to a Saudi prince in connection with a massive $80 billion defense contract between BAE and Saudi Arabia. The Saudi prince, Bandar bin Sultan, he was Saudi Arabia's ambassador in Washington for 20 years. These funds, it is alleged, were paid through bank accounts in Washington, to which he had access.

JAGOW: Now this sounds kind of familiar Stephen. Seems like there was some kind of investigation going on before wasn't there?

BEARD: Absolutely. This is a deal that was controversial for years. Last year the government stoked up the controversy further by scrapping an official British investigation. It was claimed the British government had come under commercial pressure from the Saudis, you know drop this investigation or you won't get any more contracts from us.

JAGOW: Is there any involvement by the U.S. in this situation?

BEARD: There have been reports that the Department of Justice is beginning to take an interest in this case and if these payments were indeed made through American bank accounts that's clearly a matter of American jurisdiction. But there's a strong U.S. political interest in this case too. BAE is the Pentagon's largest foreign supplier.

JAGOW: And where is this Saudi prince right now?

BEARD: He I believe is back in Saudi Arabia I believe where he's doing a very high-powered job for the Saudi government and is refusing to comment on any of these BBC allegations.

JAGOW: Alright Stephen Beard, our correspondent in London, thank you.

BEARD: Ok Scott.