BAE review warns over ethics

A report into business practices at BAE Systems today said the firm admitted it previously failed to "pay sufficient attention" to ethical standards and avoid activities that had the potential to damage its reputation.

The comments from the company's chairman and chief executive were revealed in a report by Lord Woolf, the former Lord Chief Justice, who was last year appointed by BAE to lead a four-strong independent committee to review current policies and practices at the defence firm.

BAE has been at the centre of controversy relating to alleged payments to help win a Saudi Arabian deal in the 1980s. The company maintains that it did not believe it had done anything that would constitute a criminal offence.

However, the report said BAE's reputation continued to be tarnished by allegations of past unethical conduct.

The report said: "Critically, both the chairman and chief executive, in discussions with us, acknowledged that the company did not in the past pay sufficient attention to ethical standards and avoid activities that had the potential to give rise to reputational damage.

"Combined with this was its acceptance of conditions which constrained its ability to explain the full circumstances of its activities. Together, these contributed to the widely-held perceptions that it was involved in inappropriate behaviour.

"They recognise that, justly or otherwise, these perceptions have damaged the company's reputation and that it must continue along the route of taking all practicable steps to ensure that such circumstances do not re-occur in relation to future contracts."

The committee, which did not investigate allegations relating to past conduct at the firm, recommended BAE publish and implement a global code of ethical business conduct, as well as carry out a regular, independent and external audit of business conduct.

Lord Woolf said BAE had "already made considerable progress" in creating the procedures that should ensure higher standards of ethical business conduct.

He added: "Given the position that it is in, the company has told us it accepts that it has no alternative but to continue along the route of taking all practicable steps to ensure that the circumstances that gave rise to allegations of past misconduct do not re-occur in the future."

Lord Woolf said the report provided a route-map for BAE which will ensure it becomes a "leader among global companies" for standards in business conduct.

The High Court recently ruled that it was unlawful for the Serious Fraud Office to end an investigation into the Saudi allegations, which related to contracts that formed part of the Al Yamamah programme between the UK and Saudi Governments dating back to 1985. The SFO has been given permission to appeal over the ruling.

Meanwhile, the company is also the subject of a separate ongoing investigation by the SFO into suspected false accounting. BAE denies any wrongdoing.

And in June 2007, the company was notified by the US Department of Justice that it had commenced a formal investigation relating to the group's compliance with anti-corruption laws, including business concerning Saudi Arabia.

Lord Woolf said that while BAE had made "huge improvements", it still needed to do more.

"The company had, like most companies in the past, just focused on the law. There was no ethical standards embedded in the company," he told the BBC Radio 4 Today programme.

"What the company has now done, it has moved quite considerably to getting those standards. What we have said is it hasn't gone far enough, it has got further to go.

"We've given it a road map to reach the gold standard."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

Nick Bollettieri's Wimbledon Files

Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

‘This is one of the best McLaren teams ever – we are going to do it’

Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most