BAe named in Austrian `bribe' scandal

British Aerospace was last night named in connection with an alleged bribery plot in which two Austrian political parties were to have been paid £2.5m in return for a £237m arms contract.

The Austrian government was in turmoil after one of two politicians involved in the allegations resigned when it emerged that plans to carve up the "bribe" had been taped.

An Austrian magazine, News, will today publish the transcript of a conversation in February between Peter Marizzi, the Social Democratic Party business manager, and Hermann Kraft, the People's Party spokesman on military affairs. The two parties run the country as a coalition.

During the conversation, British Aerospace is linked to a 2 per cent "commission" which the politicans say will be paid through the bank account of the husband of the Austrian environment minister. Asked whether he has good entree to his British contact,Mr Kraft replies: "Very much so, it's up and running."

Mr Kraft resigned yesterday, apparently admitting the plot but distancing his party from it. "I was working on my own and, accordingly, I have made a mistake," he said. "I take full responsibility...my contacts with the SPO (Social Democratic Party) business manager Marizzi happened without the knowledge of the People's Party and the Defence Ministry."

BAe said last night that it knew nothing of the alleged plot.

In spite of the frequent references to BAe and the British on the tape, the transcript offers no conclusive evidence that BAe knew of the conversation. The Austrian requirements, which are still being drawn up, are for a BAe 146 plane to be converted into an official government aircraft, and for 36 combat helicopters for the Austrian army.

BAe pointed out that it does not make helicopters, but it had entered into a prime contractorship arrangement with the UK Ministry of Defence to buy, adapt and supply combat helicopters for the British armed forces.

A spokesman said: "None of our helicopter people knows anything about any contract with the Austrians."