Succession battle hots up at arms manufacturer BAE

The succession race at BAE Systems stepped up a gear yesterday after Ian King, the executive in charge of the defence company's Al Yamamah arms-for-oil deal with Saudi Arabia, was appointed to the board.

Mr King, who is regarded internally as one of the favourites to replace Mike Turner when he retires as chief executive, becomes chief operating officer with responsibility for all BAE's worldwide activities other than the US.

Mr Turner, 58, has been chief executive of BAE since March 2002. He is due to retire in four years time when he reaches 62.

Two other executive directors, Chris Geoghegan and Steve Mogford, cease to be chief operating officers although they will remain on the BAE board.

Mr Geoghegan is responsible for BAE's partnerships, such as the missiles joint venture MBDA, while Mr Mogford will take charge in the new year of attempts to merge BAE's naval shipyards with those of VT and Babcock to create a single UK warship supplier.

A spokesman described the management changes as "another step in the evolution of the business" and rejected suggestions that Mr Geoghegan and Mr Mogford had been demoted in any way as a result of losing their COO status. Mr Mogford is one of the BAE executives interviewed by the Serious Fraud Office in connection with its investigation into an alleged slush fund used to bribe Saudi officials involved in the Al Yamamah project.

BAE is also ringing the changes among the senior management of its US operations, which now account for 40 per cent of group sales. Mark Ronald, chief executive of BAE Inc, retires in January to be replaced by Walt Havenstein, while the head of the company's US-based land and armaments division, Tom Rabaut, is also retiring.