The OECD also pledged to consider "appropriate action" with regard to Britain in March following a further review of the matter.

Britain signed the anti-bribery convention in 1997 and is therefore subject to surveillance from the OECD's Working Group on Bribery in International Business Transactions, which has been interviewing British government officials in the past few days.

The anti-bribery group is set to complete a broad review of anti-corruption measures in Britain in March and will follow up on recommendations made in 2005 to ensure that investigations are not be ended because of national interests.

"The working group will then consider appropriate action," the OECD said.

The British government dropped an investigation into British group BAE Systems last month, saying that Saudi Arabia was threatening to sever its security links with Britain, posing a danger to the national interest.

The OECD anti-bribery body has no official powers. But the statement is likely to add to pressure on the British government, which has faced fierce criticism for its action.

Responding to the statement, a spokesman for the British government said: "We don't see the OECD as having delivered a verdict."

He said the government would try to provide further information to allay concerns but had told the OECD that "we think we have made the right decision and we stand by that".

BAE Systems reiterated that it rejected all allegations of wrongdoing.

The OECD, a Paris-based international body, suspects that Britain has violated a key article of the OECD convention, which stipulates that investigations of bribery "shall not be influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved".

Britain was meant to have completed amending its laws to comply with the convention in February 2002.

The controversy centers on a decision to halt an investigation by the British Serious Fraud Office into allegations that BAE established a slush fund for some members of the Saudi Arabian royal family to help secure a contract with the country in the 1980s.

Another BAE deal, worth 10 billion pounds (15.2 billion euros, 19.6 billion dollars) for 72 Eurofighter jets, was reportedly under threat because of the SFO probe.

British Prime Minister Tony Blair said earlier this week that continuing the probe would have had "devastating" consequences for relations between Britain and Saudi Arabia and could have cost thousands of jobs.

The OECD is an international body with a 30-strong membership of developed, democratic nations. All members plus six other countries have signed the anti-bribery convention.

The OECD publishes in-depth research, draws up conventions for its members and works on solving problems facing policymakers in the world's leading industrialised nations.

Its statement Thursday also said the secretary general of the organisation, Angel Gurria, had stressed the role of governments in "preserving the credibility and integrity of the anti-bribery convention".

"The credibility of the convention depends on its implementation and enforcement by the countries that are signatories to it, Mr Gurria made clear," the OECD statement read.

European Trade Commissioner Peter Mandelson, a former Labour cabinet member and close friend of Tony Blair, was asked on BBC radio whether the European Commission would consider investigating the matter.

"My response is that it is a matter for the United Kingdom, the police and legal authorities, I don't think Europe has a role or a hand in interfering in that judgement," he said.

earlier related report
Britain Faces OECD Bribery Experts Over Saudi Arabia
Paris (AFP) Jan 16 - The British government faced an international anti-corruption body on Tuesday to explain why a controversial fraud probe into the dealings of defence group BAE Systems with the Saudi royal family had been halted, the OECD said. Officials from the British Serious Fraud Office and the office of the attorney general appeared before a group of anti-bribery experts at the Paris-based Organisation for Economic Cooperation and Development.

Britain has signed an OECD anti-bribery convention, which had supposedly been transposed into British law, and is subject to surveillance from the corruption body, called the Working Group on Bribery in International Business Transactions.

"The members of the working group are not here to sit in judgement, but rather to assess the extent to which the UK's actions are in compliance with the convention," an OECD spokesman explained.

The Serious Fraud Office had been running an investigation into allegations that BAE established a slush fund for some members of the Saudi Arabian royal family to help secure a contract with the country in the 1980s.

BAE last year secured a 10-billion-pound (15.2-billion-euro, 19.6-billion-dollar) deal with Saudi Arabia for 72 Eurofighter jets, but the transaction had reportedly been under threat because of the SFO probe.

The British government ended the probe last month, saying that Saudi Arabia was threatening to sever its security links with Britain, posing a danger to the nation.

The OECD anti-bribery body has no official powers, but the hearing was a further embarrassment for the British government on a day when Prime Minister Tony Blair was drawn into defending the decision to scrap the probe.

"The OECD works on the basis of peer pressure and that is true in this case and other cases," said the OECD spokesman.

He said the panel would make "some kind of statement" at the end of the meeting on Thursday and suggested a final judgement could be made public in March when Britain's anti-corruption measures were set for a broad review.

The OECD is an international body with a 30-strong membership of developed, democratic nations.

It publishes in-depth research, draws up conventions for its members and works on solving problems facing policymakers in the world's leading industrialised nations.

The British government is suspected of having violated Article 5 of the OECD anti-bribery convention, which states that investigations of bribery "shall not be influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved."

The OECD said that Britain had completed amending its laws to comply with the convention in February 2002.

"In the case of any follow up, they (the anti-bribery panel) may well re-examine the legal dispositions in Britain. Are they in fact as strong as we thought they were?" said the OECD spokesman.

Blair said on Tuesday that continuing the probe would have been "devastating" for Britain's interests.

earlier related report
Blair defends dropping of BAE-Saudi probe
London (AFP) Jan 16 - Prime Minister Tony Blair defended Thursday the dropping of a fraud probe into BAE Systems' weapons deals with Saudi Arabia, insisting it would have been "devastating" for Britain's interests to continue. The Serious Fraud Office (SFO) last month stopped an investigation into claims that giant British defence firm BAE established a slush fund for some members of the Saudi royal family.

The fund allegedly provided perks including luxury cars while the company attempted to secure a contract in the 1980s.

Blair advised Attorney General Lord Peter Goldsmith that to continue would have been against Britain's national interest. The investigation into the Al-Yamamah BAE Systems deal from the 1980s was stopped after two years.

"There is no doubt whatever in my mind, and I think of those of any of the people who have looked at this issue, that had we proceeded with this, the result would have been devastating for our relationship with an important country with whom we cooperate closely on terrorism, on security, on the Middle East peace process and a host of other issues," Blair said.

"And that is leaving aside the thousands of jobs that we would have lost, which is not the consideration in this case, but nonetheless I'll just point it out."

BAE last year secured a 10-billion-pound (15.2-billion-euro, 19.6-billion-dollar) deal with Saudi Arabia for 72 Eurofighter jets, and the deal was reportedly under threat due to the SFO investigation.

"I may be wrong but this is my view," Blair told reporters during his monthly news conference at his Downing Street office.

He said the investigation would have significantly damaged a major strategic partnership just at the moment when it was of vital importance.

Responding to suggestions that Britain did not need the Saudis as much as Riyadh needed London on counter-terrorism, Blair said: "It's not the information I've got".

"I've got to take a judgement about the national interest and that's my job. I know I would be heavily criticised for it but I believe it to be the right judgement."

Blair said it was the soundly-based judgement of "our entire system".

The Foreign Office said later Tuesday that Britain's overseas intelligence agency MI6 did share government concerns about the investigation and the "possible consequences for the public interest".

The Guardian newspaper had said Tuesday that MI6 disputed the argument that national security was at risk and that MI5, the country's domestic spy agency, had no evidence the Saudis would sever its security links with Britain.

Meanwhile officials from the SFO and Goldsmith's office faced a group of anti-bribery experts from the Paris-based Organisation for Economic Cooperation and Development (OECD) to explain why the probe had been halted.

Britain is suspected of having violated Article 5 of the OECD anti-bribery convention, to which it is a signatory.

It states that bribery probes "shall not be influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved".

"The members of the working group are not here to sit in judgement, but rather to assess the extent to which the UK's actions are in compliance with the convention," an OECD spokesman explained Tuesday.

The OECD said that Britain had completed amending its laws to comply with the convention in February 2002.

"In the case of any follow up, they (the anti-bribery panel) may well re-examine the legal dispositions in Britain. Are they in fact as strong as we thought they were?" the spokesman said.

The panel would make "some kind of statement" at the end of the meeting on Thursday and suggested a final judgement could be made public in March when Britain's anti-corruption measures were set for a broad review, he added

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