US arms maker cancels deal with Saudi firm over alleged ties to Russia, China: Report

Major US weapons maker Raytheon has reportedly terminated a multi-billion-dollar deal with a Saudi Arabian weapons firm over claims that the kingdom was engaged in dealings with sanctioned Russian and Chinese entities.

The New York-based Wall Street Journal, citing unidentified sources, reported on Thursday that Raytheon Technologies Corporation (RTX) called off the agreement due to apprehensions that the Saudi firm, Scopa Defense, was pursuing financial translations with Chinese, Russian, and Belarusian entities subject to sanctions by the US administration.

The American newspaper said the unease over engagement with entities from Moscow and Beijing also led to the advisory board of Scopa Defense, which was comprised of retired US military officers, to resign from the company.

Established in 2021, Scopa Defense is one of the companies in Saudi Arabia that plans to transform the kingdom from importing arms to developing its domestic military sector.

Last year, the RTX and Scopa Defense entered into a memorandum of understanding with the intention of establishing a factory for air defense systems in Saudi Arabia.

Nasr Alghrairi, the former CEO of Scopa, said the deal, which included radars and several air defence systems, was expected to have been an investment of $25bn in Saudi Arabia and would have brought $17bn worth of sales.

“The US government has expressed apprehension regarding the possibility of its weapon systems being compromised if the technologies integrated into Scopa Defense's weaponry were acquired by Chinese or Russian entities and subjected to reverse engineering,” the US daily newspaper said.

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Citing company records, the WSJ reported that two companies linked to Scopa Defense, namely Tal Military Industries and Sepha Military Industries, conducted business with sanctioned entities from China, Russia, and Belarus.

Scopa owner Mohamed Alajlan had reportedly hired an executive from a Russian company sanctioned by the US to run Sepha, and hired a Chinese national to run Tal, which had engaged in talks regarding deals with Chinese firms that are also sanctioned by Washington.

The newspaper added that Sepha also held discussions with Russian and Belarusian firms that face Western sanctions.

Tal and Sepha, the two Saudi firms, also shared computer servers with employees at Scopa, as Scopa was looking to gain access to sensitive data from RTX, according to the WSJ.

One document showed that Sepha had looked at "marketing Russian ammunition, body armor and surveillance equipment in Saudi Arabia, assembling Russian attack helicopters there, and manufacturing armored vehicles with Russia’s Military Industrial Co.”

Alajlan has refuted allegations of engaging with companies under international sanctions and having dealings with Russian firms, stressing that any transactions with Chinese companies are limited to securing raw materials to be used for producing ammunition and armored vehicles.

“We don’t work with any companies that have international sanctions,” Alajlan said in an interview with the WSJ, adding that any suggestions that he was working with sanctioned firms “are all rumors, inaccurate and illogical and unrealistic."

Since the beginning of the war in Ukraine last February, Western countries, led by the United States, have been levying sanctions against Russia, while pumping Kiev full of tens of billions of dollars worth of advanced weapons, steps that Moscow says would only complicate the standing situation and prolong the hostilities.

China also has long been under sanctions by the United States over various issues, including accusations of cyber security attacks and intelligence espionage.  

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