Mark Leftly: Conflict of interest and the MoD contracts

Outlook The retirement of Linda Hudson, the chief executive at BAE's US division, has rightly grabbed the headlines given her star status in the defence industry, but the resignation yesterday of a non-executive director is arguably of far wider significance.

Last month, The Independent on Sunday revealed the extraordinary conflicts of interest facing the companies that want to run the £14bn budget Ministry of Defence agency that buys aircraft carriers, tanks and missiles. This huge quasi-privatisation could see companies that work for BAE and its rivals being responsible for dishing out contracts to them, too.

One of the clearest conflicts was that Lee McIntire was a non-executive director at BAE while at the same time being chairman and CEO of CH2M Hill, the US engineering giant that is heading one of the two consortiums bidding to take over Defence Equipment & Support. At the time of our investigation, Mr McIntire conceded that he would "of course" give up his board seat at BAE.

However, that process is well over a year from completion. By quitting at a far earlier time – and BAE itself said the reason was "to avoid any potential conflict of interest" – the Nebraska University graduate has proved that these issues must be resolved by the other companies involved, which include the already reputationally challenged Serco.

The MoD must not wait to sort out the web of conflicts until after bidding has concluded. Handing over the coffers to buy the nation's battle-gear to the for-profit sector is already far too great a risk without the perception that members of the winning consortium will do favours for their mates, whether that be the case or not.

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