A shareholder in BAE Systems has filed a lawsuit against the British defense company's board and other individuals which seeks damages stemming from past arms deals with Saudi Arabia.
BAE Chief Executive Mike Turner and former Saudi ambassador to the United States Prince Bandar bin Sultan are among those named in a suit filed on Wednesday at the U.S. District Court in Washington, law firm Coughlin Stoia Geller Rudman & Robbins LLP said.
It alleges that BAE officials past and present failed to execute their duties.
"It is alleged that this behavior included making, or permitting to be made, improper and illegal bribes, kickbacks and other payments to Prince Bandar and others, totaling more than $2 billion in order to win lucrative contracts," the law firm said.
A BAE spokesman said the company had been given no prior notice regarding the lawsuit nor had any proceedings been served upon the company.
"The company intends vigorously to defend any such proceedings," he said.
Bandar was not available for immediate comment but has previously denied any wrongdoing.
BAE is the subject of a U.S. Department of Justice investigation launched in June focused on the company's compliance with anti-bribery laws including past dealings with Saudi Arabia.
Britain's Serious Fraud Office abruptly halted a similar probe last December after then Prime Minister Tony Blair said pursuing it could harm Saudi-UK relations.
BAE served as prime contractor for arms-for-oil deals signed by the governments of Britain and Saudi Arabia beginning in the 1980s.
The small shareholder behind the lawsuit is The City of Harper Woods Employees' Retirement System based in Michigan. It holds less than 10,000 shares in BAE but other shareholders can and are expected to join the suit, Coughlin Stoia lawyer Patrick Daniels told Reuters.
The class action law firm has recovered over $7 billion for Enron investors in the wake of the Texas-based energy company's collapse in 2001.
Under what is called a stockholder derivative action, any damages won from the individuals named would be paid to BAE.
The law firm said others named in the suit include former BAE officials, three former Riggs Bank executives and controlling shareholders, and PNC Financial Services Group, the company which took over Riggs.
Prince Bandar, now head of Saudi Arabia's National Security Council, in a statement released in June defended himself against accusations published in Britain's Guardian newspaper which said that he had personally received 1 billion pounds ($2 billion) through accounts held at Riggs Bank.
"The funds the newspaper referred to were from the accounts of the government of the Kingdom of Saudi Arabia and have been transferred to other Saudi government accounts in the United States and not to my personal accounts," Prince Bandar said.
BAE earlier this year underscored that past arms-for-oil deals were state pacts: "The al-Yamamah program is a government-to-government agreement and all such payments made under those agreements were made with the express approval of both the Saudi and the UK governments."
Shares in Europe's biggest defense company had pared morning losses, standing down 1.29% at 480 pence versus a low of 471p.