MISSION IMPOSSIBLE FOR LEGAL TOP GUN? ; BAE Is Set to Appoint Lord Woolf as Head of a Business Ethics Committee Designed to Restore the Reputation of the Battered Defence Giant. by David Prosser ++ Business Analysis
Prosser, David, The Independent (London, England)
Mike Turner, chief executive of BAE Systems, had hoped yesterday might prove to be a turning point in his attempts to restore confidence in Britain's biggest defence company, which has spent much of the past six months doggedly battling accusations of corruption.
While the BBC was last night due finally to broadcast the Panorama programme that it had been trailing for the previous 10 days, Mr Turner knew the documentary would include no new revelations about BAE's involvement in secret payments to the Saudi Arabian royal family.
Meanwhile, he had been expecting to spend the day putting the final touches to his plan for the launch of an independent business ethics committee at BAE, to be chaired by Lord Woolf, the former Lord Chief Justice of England and Wales.
Unfortunately, BAE's plans for the committee were leaked to journalists ahead of schedule, and campaigners poured scorn on the idea that the initiative would help the company put the corruption allegations behind it.
Publicly, BAE yesterday refused to comment on reports that it has hired Lord Woolf, or even that it has been discussing the launch of an ethics committee. Privately, however, officials at the company concede they are close to signing up Lord Woolf to chair a committee of we lknown figures who would advise the company on its business standards and policies. The idea was first proposed by executive directors, led by Mr Turner, earlier this year, and the company has been working on the detail for several months.
The committee seems unlikely to appease BAE's harshest critics. Analysts made comparisons yesterday with an independent review of health and safety set up last year by the oil company BP, following an explosion at one of its refineries in Texas City. But crucially, unlike the BP inquiry, BAE's committee will have no remit to investigate what has gone on at the company in the past. Lord Woolf will not be employed to study the Al Yamamah arms deal BAE signed in the 1980s, or any of the allegations about payments that the company has subsequently made to the Saudi royal family.
A spokesman for the Campaign Against Arms Trade, which is seeking a judicial review of last December's decision by the Serious Fraud Office to drop its investigation into such payments, said the launch of the committee would not be enough for BAE to move on from the Al Yamamah affair. "This announcement is certainly no substitute for a proper SFO investigation," he said. "This will not address the previous allegations at all."
Panorama last night repeated allegations the corporation first made last week. It said BAE had paid up to [pound]120m a year into accounts controlled by Prince Bandar, a leading member of the Saudi royal family, as part of the original Al Yamamah arms deal negotiated between the UK and Saudi Arabian governments in 1985.
Prince Bandar has already vehemently denied any improper or illegal actions. The Ministry of Defence has said it was unable to comment on the affair, because it had signed a series of confidentiality agreements as part of the original Al Yamamah contract. BAE has cited the same agreements, though it too insists it has not behaved illegally.
However, while the Al Yamamah confidentiality clauses present investigators with a challenge, they have also left BAE facing a dilemma. The company concedes payments were made under the contract, but it is unable to explain exactly what they were for - or reveal how much was paid, when, who to and how.
Legal experts said yesterday that none of the parties to the original Al Yamamah deal have yet offered sufficient explanations for their actions for independent observers to be confident there have been no breaches of the law. …