HAMPSHIRE defence firm BAE could be quizzed by local authority pension funds over its activities.

The Local Authority Pension Fund Forum (LAPFF), which represents 40 funds with invested assets totalling £70bn, is drawing up a series of questions to put to defence companies as it seeks to encourage responsible investment by pension funds.

Farnborough-based BAE, which employs thousands of people in Hampshire, has been the subject of allegations of bribery in its winning of contracts.

Both BAE and the Government are at the centre of a political storm over the issue after an investigation by the Serious Fraud Office into bribery connected to the £40bn al-Yamamah arms deal with Saudi Arabia in the 1980s and 90s was scrapped by ministers.

BAE systems is now locked in negotiations for a new multibillion-pound deal to sell military aircraft to Saudi Arabia.

The Pressure group Campaign Against Arms Trade (CAAT) has publishes figures showing that 75 local authority funds have a total of £311m invested in BAE. Of the 99 funds surveyed by CAAT, 24 had no investment in BAE.

Hampshire's pension fund for councils has assets of £2,854 million. It is known to have £10m invested in arms companies, roughly split between BAE and Rolls-Royce.

Symon Hill of CAAT said: "BAE's reputation has plummeted in recent months. Local residents and council employees have a right to know how employee pensions funds are invested."

A vote at the recent Unison conference, the union which represents local government employees, called for an end to investment in arms companies.

LAPFF will be seeking talks with defence companies in coming months to raise a wide range of concerns, including the allegations against BAE, as well as the relationship between arms companies and governments, the use of technology, and the way labour is exploited.