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BAE to call in Woolf-led ethics pack

May find it difficult to sell weapons as a result

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BAE Systems plc, the arms colossus at the centre of a decades-long stink over allegedly corrupt arms deals in Saudi Arabia, is to call in Lord Woolf, the former Lord Chief Justice, to validate its business practices.

The BBC reports that the weapons biz goliath - which says it is the fourth largest defence company worldwide - will set up an "independent ethics panel" led by Lord Woolf in coming months.

Interestingly, the Beeb's biz editor Robert Peston hints that the ethics panel may have been the brainchild of the non-executive part-timers on BAE's board.

This group, led by former BP No.2 Dick Olver, may be feeling a tad unsettled at having their names linked to the rather swashbuckling sales tactics BAE is said to have employed.

CEO Mike Turner and the other two UK-based operations men, Ian King and Chris Geoghegan, all joined BAE's precursor companies straight from university and have been hardcore British arms-industry types for their entire working lives (the group finance boss, George Rose, is a comparative newcomer, however, and USA-based chief Walt Havenstein is a former US Marine).

The ethics committee could be a false move, as its set-up effectively admits that BAE has a serious image problem. Worse, its remit will apparently be limited to current operations, without any inconvenient harking back to the past. As the long catalogue of allegations against BAE dates from the 1980s, even a solid upcheck from Lord Woolf is unlikely to silence the company's critics.

Conceivably, it might ease the ongoing BAE push into the US market, but Capitol Hill opponents of this are probably motivated by protectionism as much as probity. Ethics validation won't take away any of their ammunition.

And, worse still, the company probe could be bad news for sales and investor relations. Given the realities of the worldwide arms trade, many people might be reluctant to buy kit from or shares in a weapons maker known to be undergoing an internal effort to root out kickbacks and bribery. ®

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