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BAE Systems, the company at the centre of a corruption scandal related to a defence contract with Saudi Arabia, is going to set up an external ethics committee to assess how it conducts its arms deals.

The company has been dogged by allegations of bribery over a £43 billion deal signed in 1985 to supply Saudi Arabia with more than 100 Tornado fighter jets and Hawk aircraft.

A Serious Fraud Office inquiry into the deal was stopped in 2006 by attorney general Lord Goldsmith as it was feared the inquiry would damage Britain's relationship with ally Saudi Arabia.

The Independent newspaper reports that the committee is expected to be 'forward-looking' in that it will keep a close eye on the company's policies and processes rather than focus on the Saudi arms deal.

BAE would not confirm the plan for the formation of an independent panel. A spokesman for the company said: "We are committed to looking for new ways of providing assurance for all our company's policies and processes.

"The board continues to benchmark our processes and undertakes periodic reviews to ensure they are subject to continuous improvement."

In January, the US filed a formal protest with Britain over the dropping of the inquiry and accused the UK of not taking its international responsibilities on corruption seriously.

Last week, BAE was again accused of paying a Saudi prince more than £1 billion in payments over a decade in order to ensure that the deal went through.

Liberal Democrat leader Sir Menzies Campbell has called for an inquiry into the allegations surrounding the deal in order to investigate claims the attorney general concealed from the Organisation for Economic Cooperation and Development (OECD) that payments were being made to a Saudi prince.