BAE Systems, Britain's largest defense contractor and the fourth-largest weapons maker in the U.S., said federal prosecutors have opened a formal investigation into payments it made to a Saudi Arabian prince, allegedly to secure an $80 billion arms deal.

In a terse one-sentence statement, the London-based company said, "BAE Systems has been notified by the U.S. Department of Justice that it has commenced a formal investigation relating to the company's compliance with anticorruption laws, including the company's business concerning the Kingdom of Saudi Arabia."

U.K. newspaper the Guardian and the British Broadcasting Company recently reported that BAE had paid as much as $240 million a year to Prince Bandar bin Sultan, who helped negotiate the sale of more than 100 warplanes to Saudi Arabia in 1985. BAE was the prime contractor in the aircraft sale.

At the time, BAE denied it had broken any British laws in connection with the contract. British prime minister Tony Blair called off an inquiry into the matter last December and later defended his decision, saying an investigation would have led to "the complete wreckage of a vital strategic relationship for our country."

The Justice Department investigation will presumably focus on whether the company violated U.S. law, particularly the Foreign Corrupt Practices Act. The 1977 statute makes it illegal to bribe foreign-government officials in order to obtain or retain business.

The BBC alleged that the money went to Prince Bandar, the Saudi Arabian ambassador to the U.S. for 20 years and now the national security adviser to King Abdullah.

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. Although Britain outlawed the bribery of foreign officials in 2001, the BBC says the payments were written into the contract and approved each quarter by the British defense minister. It is unknown if any disbursements occurred after 2001.

Prince Bandar has denied receiving improper payments.

The U.S. investigation is important for BAE because the company is in the process of shifting its focus to America, by far the world's biggest weapons market. BAE sold its 20 percent interest in Airbus, the European aerospace company, in October and acquired Armor Holdings, a U.S. manufacturer of military vehicles, in May.

BAE also sells guns used by the Navy, missile-warning systems for the Army, and fuselage components for the Joint Strike Fighter military aircraft, used by all branches of the U.S. armed forces.