Europe's largest defense company BAE Systems Thursday denied a news report that it had paid a Saudi prince hundreds of millions of pounds in connection with Britain's biggest-ever weapons contract.

According to a BBC Panorama investigation, BAE Systems paid more than 1 billion pounds (about 2 billion U.S. dollars) to the ex-Saudi ambassador to the United States Prince Bandar bin Sultan, and the payments were made with the full knowledge of the British Ministry of Defense (MoD).

Up to 120 million pounds (about 240 million U.S. dollars) a year was secretly paid by BAE into two accounts in Washington for more than 10 years, the BBC reported.

The Panorama program also found that these accounts were actually a conduit to Prince Bandar for his role in the Al Yamamah oil-for-arms deals between Britain and Saudi Arabia in 1985, which was worth 40 billion pounds (about 80 billion U.S. dollars).

However, BAE Systems denied the report, saying, "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."

"We deny all allegations of wrongdoing in relation to this important and strategic program." BAE said.

"All the information regarding the Al Yamamah contract in our possession has been made available to the Serious Fraud Office over the last two and a half years and, after an exhaustive investigation, it was concluded, over and above the interests of national security, that there was and is no case to answer," the company said.

On Thursday, the MoD also said in a statement, "The MoD is unable to comment on these allegations since to do so would involve disclosing confidential information about Al Yamamah and that would cause the damage that ending the investigation was designed to prevent."

According to Sky News, the Al Yamamah deal to supply the Saudis with more than 100 Tornado and Hawk warplanes was originally agreed by Margaret Thatcher's Conservative government in 1985. A previous report by the National Audit Office into bribery allegations was suppressed in 1992 amid claims that its publication would damage relations with Saudi Arabia.

Source: Xinhua