LUCAS has confirmed that its AUL subsidiary in the US is under

investigation by the Pentagon in respect of its launch systems for the

American Maverick missile and hand-held radios for ground communication.

The investigations, which have been going on for 18 months, have been

reportedly linked to the ''friendly-fire'' events in the Gulf war in

1991, which resulted in British soldiers being killed by American

aircraft.

However, Lucas strongly denied that there was any connection between

the components supplied by AUL and the incidents.

''This is confirmed by the US authorities who advise that the

investigations into Lucas AUL are not linked to any 'friendly-fire'

incidents,'' a spokesman said.

The investigations are looking into inadequate testing of and faults

in equipment supplied to the American army by AUL. They have been under

way for 18 months and Lucas has already made provisions in its accounts

for an out-of-court settlement.

Sources close to the group indicated that a settlement of between $15m

and $20m was likely. AUL's sales are $15m a year.

Lucas played down the long-term effects of the problem and hoped that

its speedy response would mean that its reputation with the Pentagon

would not be damaged. Nevertheless, it is a blow for the group which is

currently restructuring its North American interests.

The spokesman said that investigations of this sort were relatively

common in the US and no specific charges had been made against the

company. Many of the inadequate testing procedures were in place before

the group bought AUL in 1988 and have subsequently been improved.

The spokesman commented: ''With civil customers you are talking about

issues of quality all the time but with government it takes on official

aspects which involve the launch of investigations such as this.''