Jeremy Warner's Outlook: Not much of a Woolf at the BAE door
Wednesday 07 May 2008
Can the arms trade ever be given an ethical face? It seems a contradiction in terms, yet that hasn't stopped BAE Systems, stung by allegations of corruption over the Al Yamamah arms contract with Saudi Arabia, from commissioning Lord Woolf, a former Lord Chief Justice, to examine its conduct and suggest areas for improvement.
His findings, published yesterday, are a predictable combination of the bleedin' obvious and largely vacuous which must leave Dick Olver, the chairman, wondering whether he's got value for money from his committee of eminent outsiders.
How about this for size? The 23 recommendations are apparently designed to "provide material reinforcement of the high-level commitment that already exists" and will "guide the work already under way, including the development and implementation of a global code of ethical business conduct".
You might have thought that the committee would have designed such a global code as part of its brief, but no, that's still a work in progress. Was it really necessary to pay £1.7m for this list of cosmetic platitudes?
Moving from the general to the particular, executive bonuses would be made partially dependent on high standards of ethical conduct and effective implementation of the ethical code. What does this mean – that senior executives will receive extra remuneration for losing a contract because they'd refused to pay a bribe? This is risible stuff of little obvious value to anyone.
The trouble with this report is that it doesn't begin to address the main point of contention, namely whether BAE Systems has behaved illegally in the past and whether current executives are implicated in this behaviour. The closest Lord Woolf comes to it is in reporting that in discussions, "the chairman and chief executive acknowledged that the company did not in the past pay sufficient attention to ethical standards and avoid activities that had potential to give rise to reputational damage".
In this round about way, Lord Woolf does at least put his finger on the nub of the problem, which is that arms trading never has been considered an ethical business and therefore hasn't historically been terribly concerned about the way it is perceived. Secretive, politically sensitive and, to many people's minds, reprehensible, there wasn't much of a reputation to lose in the first place. None the less, modern bribery laws require that defence contractors, along with everyone else, do not engage in corrupt practice.
In recent years, BAE has been accused of more of it than almost any similar Western company. As Lord Woolf points out, his brief was not to examine the veracity of these allegations, but to suggest a framework of accountability that would ensure BAE remains free of them in all its future dealings.
For some, the arms trade is never going to be a legitimate business, but this was not the point at issue for Lord Woolf. There is a worthwhile but entirely different debate to be had on whether Britain should be in these industries in the first place, and in particular whether it should be selling to despotic regimes such as Saudi Arabia.
Rather, the purpose of Lord Woolf was to provide window dressing for BAE so that it doesn't become excluded from important global markets by dint of its less than savoury past. Does he succeed in this purpose? Not really. Lord Woolf uses the Princess Diana analogy to illustrate his difficulty. There are some who will never believe she was killed by a drunk driver, whatever the evidence.
With BAE, there are many who will likewise never be persuaded to think of the company as anything other than the devil incarnate, however hard it strives to be whiter than white in the way it conducts itself. It is no surprise that the company has agreed to accept Lord Woolf's report in full – there's nothing of substance here to accept. For all companies these days, this is standard stuff.
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