Dick Olver, the departing chairman of BAE Systems, today gave a refreshingly frank speech about corruption and his campaign against it during his nine years as chairman.
Today was the first time that the chairman had addressed corruption at the firm. BAE was forced by the Serious Fraud Office and the US Department of Justice to pay fines of almost £300m in 2010 after pleading guilty to false accounting and making misleading statements to secure arms deals in the 80s and 90s.
Since then Transparency International, an independent organisation leading the global fight against corruption, ranked BAE fourth out of 129 companies in its latest defence industry anti-corruption index.
“We’re a company that has the most stringent anti-corruption and compliance standards, not just of any defence company, but across business generally,” commented Mr Olver.
“Clearly, we can’t undo the past. Let me be clear: mistakes were made. We regret and accept full responsibility for the past shortcomings that the authorities investigated,” he continued.
Olver highlighted the importance of the board in changing BAE’s corporate culture by setting the tone from the top. As chairman, he bought in more non-executive directors that supported his cultural change, changing the split between non-executive and executive directors from 50% to a two to one ratio.
He credited the report into BAE’s ethical conduct by Lord Wolfe, published in 2008, and the new board’s full backing of its recommendations with revolutionising the company’s attitudes. BAE now turns down business that does not meet its ethical code.
The chairman also referenced the involvement of regulators and Lord Gold, appointed as an independent corporate monitor by the Department of Justice. He said this had helped BAE become more transparent and to draw a line under shady business practices from the 80s and 90s.
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