BAE Systems, Britain's largest defense contractor, paid as much as $240 million a year to the Saudi Arabian prince who helped negotiate an $80 billion arms deal between the two countries in 1985, according to a report from the BBC. BAE was the primary contractor under the deal.

BAE has denied it broke any British laws in connection with the contract.

The BBC probe alleges that the money went to Prince Bandar bin Sultan, who was the Saudi Arabian ambassador to the U.S. for 20 years and is now the national security adviser to King Abdullah. The prince has not commented on the investigation.

BAE Systems deposited money each quarter into an American bank account used by the Saudi embassy, the BBC says, and the funds were used to finance the prince's private plane.

It is unclear how long the deposits went on, and it's also not certain that such compensation would be against the law. In 2001, the U.K. passed a law making the bribery of foreign officials illegal; however, the BBC inquiry says the payments were written into the contract and were approved each quarter by the British defense minister. It is unknown if any disbursements occurred after 2001.

British Prime Minister Tony Blair called off an inquiry into the matter last December. Asked about the report yesterday, Blair defended his decision.

"This investigation, if it had gone ahead, would have involved the most serious allegations in investigations being made into the Saudi royal family, and my job is to give advice as to whether that is a sensible thing in circumstances where I don't believe the investigation incidentally would have led anywhere except to the complete wreckage of a vital strategic relationship for our country," Blair was quoted as saying in an Associated Press account.