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BAE chairman seeks end to graft claims

Financial Times: BAE chairman seeks end to graft claims

By Sylvia Pfeifer and Michael Peel

Published: May 6 2008 21:54 | Last updated: May 6 2008 21:54

Dick Olver, chairman of BAE Systems, will on Wednesday call for a review of the corruption cases against the group in what will be viewed as a last-ditch attempt to draw a line under claims that have dogged the UK’s largest defence contractor for decades.

Mr Olver will call on Richard Alderman, head of the Serious Fraud Office, and independent QCs to review the case for corruption claims in relation to the £43bn al-Yamamah arms deal with Saudi Arabia. The review should include cases in the other four countries where BAE faces investigations by the Serious Fraud Office and come to a conclusion whether there is a case to answer or not.

A report by Lord Woolf, the former lord chief justice, into the company’s business ethics on Tuesday revealed its top management had admitted failing “to pay sufficient attention” to ethical standards that could have damaged its reputation.

Lord Woolf’s report, which was commissioned by BAE last year and has cost it an estimated £1.7m, said the company’s reputation continued to be tarnished by allegations of unethical conduct.

Lord Woolf said the company risked suffering “long-term damage” if it pursued every defence contract regardless of ethical considerations.

He said: “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.”

BAE had hoped the report would help it leave behind the allegations of corruption.

Alexandra Wrage, president of Trace International, a not-for-profit body that helps companies tackle corruption, said the report’s focus only on future conduct was not “likely to restore public confidence or even to answer questions about how BAE got where it is now, reputationally or legally”.

One London lawyer said the Woolf recommendations were “Coke Lite” in that they did not go as far as US companies at the centre of corruption allegations, such as hiring outside law firms to do an in-depth investigation – something done by Siemens, the German industrial conglomerate.

BAE has always denied any wrongdoing. The UK abandoned its probe into al-Yamamah in 2006, a decision attacked by the High Court, which said the SFO had broken the law by scrapping the probe. The SFO was last month given leave to appeal to the House of Lords on the ruling.

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