Portillo quits BAE Systems 'to avoid conflict of interest'

Michael Portillo, the former defence secretary who retired as an MP at the last election, stepped down yesterday as a director of BAE Systems, the country's biggest defence group.

Mr Portillo said he had decided to relinquish the post to avoid any potential conflict of interest with his role as a political journalist. He appears on the BBC's weekly political review programme, This Week, and writes a column for The Sunday Times.

A BAE spokesman denied the former Conservative minister and MP had been persuaded to stand down because his political connections were no longer any use to the company. He has been a non-executive director of BAE since September 2002 and stood down as MP for Kensington and Chelsea at last May's general election.

In his resignation letter, Mr Portillo said it was important to be able to speak freely on any topic. BAE said: "There is a danger that his views might be thought to represent the position of the company or alternatively be thought to be at variance with the company's views. Having considered the problem carefully he believes that it can only be resolved by standing down from the board."

Neither Mr Portillo nor BAE cited any instances of how his role as a director of the company had impinged on his ability to speak freely in the past. Nor could they give any instances of how he might be prevented from doing so in the future. A spokeswoman for Mr Portillo said he was not commenting beyond what was said in the statement from BAE.

Mr Portillo is paid £45,000 a year as a non-executive director of BAE and has not missed a board meeting since joining the company three and a half years ago. He will formally stand down as a director at the end of the company's annual meeting in May.

Dick Olver, BAE's chairman, said the group had truly benefited from Mr Portillo's presence on the board and was sorry that his other work made it difficult for him to continue.

Mr Portillo is the second former Tory minister to leave the BAE board since Mr Olver's arrival. Lord Hesketh, a former Conservative trade minister, left last year. Mr Olver has strengthened the board with the appointment of three US citizens - reflecting the growing importance to BAE of the US market, which accounts for about a third of BAE's £15bn in annual sales.