Dominic Grieve, the attorney-general, will have to decide whether to intervene in an inquiry concerning the payment of millions of pounds in alleged bribes from a British defence firm to the Saudi royal family, according to The Sunday Times.
He is to consider whether the investigation by the Serious Fraud Office (SFO) into a two billion pounds contract to provide communications and cyberwarfare capability to Saudi Arabia is in the public interest.
According to the report, Grieve has been briefed on the case after officials at the SFO traced secret payments from the defence firm into a bank account in Switzerland controlled by a member of the Saudi royal family.
The Times said emails seen by it reveal staff at the company raised concerns with their bosses that the payments siphoned through offshore firms were illegal, the report said.
The latest SFO investigations centre on a 2 billion pounds contract awarded by the Ministry of Defence to GPT, a British subsidiary of EADS, Europe's biggest aerospace defence company.
The contract will modernise the satellite, radio and intranet systems of the Saudi royal palaces and National Guard, a force of tens of thousands that in May helped the Bahraini royal family crush a popular uprising.
The SFO's inquiry began after a whistleblower told them that 11.5 million pounds was sent by the firm to two offshore companies in the Cayman Islands, and then to a Swiss bank account.
A second whistleblower warned EADS bosses as early as 2008 that the payments "may be illegal... I am flagging up to you a possible illegal transaction and seeking your guidance", he wrote.
A colleague told him in a separate email that he should keep silent about his allegations for fear the company would lose a 35 billion pounds contract for 179 air tankers with the US Air Force.
The case echoes the political scandal that hit Tony Blair's government when he pulled the plug on a criminal inquiry into alleged bribes by BAE Systems, the British arms firm, to the Saudis.
Then the SFO was investigating allegations that millions of pounds had been paid to a Saudi prince to help BAE clinch a 40 billion pounds contract to sell jets to the kingdom.
Downing Street killed off the investigation after the Saudis threatened to ditch the contract and stop all co-operation on counterterrorism.