Defence giant expected to adopt stronger anti-bribery measures and a global ethical code of conduct
BAE advised to put its reputation before contracts
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Defence giant BAE Systems was told yesterday that some future contracts may have to be sacrificed if it wants to repair its tarnished reputation.
BAE, which has faced long-running controversy relating to allegations about its conduct on a Saudi arms deal, is also expected to adopt stronger anti-bribery measures and a global ethical code of conduct.
The proposals were among 23 recommendations made by an independent committee headed by Lord Woolf, the former lord chief justice, following a year-long review into current policies and practices at BAE.
Lord Woolf said BAE risked suffering long-term damage if it pursued every defence contract regardless of ethical considerations.
He added: “BAE either becomes an ethical company, which involves refusing to get involved in some contracts, or it does not become a fully ethical company reaching the gold standard that we have identified.
“There are contracts that are not worth having and that will do long-term damage. The company has to accept that.”
The committee said regular, independent external audits of business conduct were needed to help to restore confidence in the firm.
While the Woolf Report did not investigate previous allegations, the report contained an admission from BAE’s chief executive and chairman that the company had paid insufficient attention to ethical standards in the past.
Lord Woolf said BAE had already made considerable progress in improving standards, but added that it now had a route map to ensure it became a leader among global companies for standards in 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.”
BAE will outline how it plans to respond to the Woolf report by the end of July. It has previously pledged to implement the findings.
The High Court recently ruled that it was unlawful for the Serious Fraud Office (SFO) 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.
BAE is also the subject of a separate continuing investigation by the SFO into suspected false accounting, but denies any wrongdoing.
