By Nick Hawton In Sarajevo

Nato peacekeepers in Bosnia say an arms company that has been accused of selling weapons to Iraq has broken international export agreements.

Last month the United States accused the company of supplying military aid to Iraq, but this was denied by Bosnian authorities which carried out a brief investigation into the company.

The Nato-led force in Bosnia, S-For, says these are only the preliminary results of its investigation into the Bosnian Serb military company, Orao Aviation.

A spokesman said they had found evidence linking the aircraft company to the unreported export of weapons systems components.

The S-For spokesman would not say which foreign country the exports were destined for, but insisted the trade was in breach of international agreements.

'No proof'

Earlier this month S-For carried out a surprise raid on the Orao factory in the town of Bijeljina.

In the weeks running up to the raid, the US had accused the factory of providing military aid to Iraq and had called for an investigation into the company.

That investigation now appears to be happening.

The Bosnian Serb authorities have already carried out their own inquiry into the company.

They say there is no proof that weapons, military equipment or spare parts were exported to Iraq or any other country which is under a UN arms embargo.

The S-For investigation is expected to last several more weeks.

They say they will pass on the new evidence to the Bosnian Serb authorities and will provide more evidence of the company's activities as, and when, it is found.