British Aerospace is to be called before the Commons Trade and Industry Select Committee to explain the company’s £200m contract to supply Hawk jets to Indonesia.
Government sources confirmed the select committee planned to investigate British trade with countries where there could be ‘ethical difficulties’.
Terms of reference for the inquiry to be held before the end of the year have not yet been decided, but the committee will examine trade between British firms and ‘regimes and dictatorships’.
The temporary suspension last month by the new Indonesian government of Thames Water’s 25-year contract with a company controlled by the Suharto family to supply Jakarta’s water is understood to have convinced the committee to go ahead with the inquiry.
‘This is not a witch hunt to blow the whistle,’ a government source claimed. However, companies trading with military regimes or dictators would ‘not be able to continue as before’.
It is possible the committee will simply recommend tightening of export licence rules.