The investigation into Ostrowski Arms and the Polish Chamber for National Defence (PIPnrOK) relates to "suspicions that the law was broken by Polish establishments who took part in the call for tender for the delivery of equipment to the Iraqi army", PAP news agency quoted the prosecutor's spokesman, Maciej Kujawski, as saying.

The interior ministry said last week Ostrowski Arms did not have the necessary licence to operate on the international arms market and PAP said PIPnrOK had admitted it did not have a licence either.

The call for tender is also expected to be examined shortly by the government itself and by a parliamentary committee.

The contract -- to supply weapons, vehicles and uniforms to the future Iraqi army -- was won in late 2003 by US-led consortium NOUR, which comprises three US firms, four Iraqi ones, Ostrowski Arms and PIPnrOK.

NOUR won the contract by asking for a much lower price than Polish rival Bumar, which had had the official support of the Polish government and the country's military intelligence service (WSI).

Bumar had submitted a bid estimated at 554 million dollars, while NOUR had asked for 227 million dollars.

Bumar's defeat sparked uproar in Poland, which has been a staunch supporter of Washington in its invasion and occupation of oil-rich Iraq and commands a 9,000-strong force patrolling a large swathe of southern Iraq.

WAR.WIRE