BAE Systems to be “dogged by corruption questions” at AGM

Protesters and shareholders to raise Saudi corruption allegations as ministers lobby for new Saudi arms deal

LONDON, Thursday 4 May: UK arms giant BAE Systems is to face a barrage of questioning from shareholders and protesters at its annual shareholders’ meeting on Thursday 4 May surrounding a massive new arms deal with the repressive Saudi Arabia, expected to be announced within weeks.

Protesters outside and inside the AGM will be challenging the massive new arms deal, which analysts have argued may breach UK arms export rules restricting arms deals to human rights abusers or regions of instability.^[1]

The deal, involving BAE-manufactured Typhoon fighter jets, has been negotiated with personal lobbying from Tony Blair, John Reid and Jack Straw, despite an ongoing Serious Fraud Office investigation into allegations, denied by BAE, that the company provided a £60m slush fund for Saudi officials involved in a previous major UK-Saudi arms deal.^[2]

Protesters will also call for an end to the extraordinary government support given to BAE Systems by ministers and Ministry of Defence officials in 2005:

• The UK’s new Defence Industrial Strategy, released last December, identifies industrial partners covering key industrial capabilities who will essentially receive MoD contracts without having to bid competitively. These key areas conveniently cover BAE Systems’ areas of interest.
• Over 50% of the MoD’s budget is currently given to BAE projects, despite BAE Systems and its associated companies being responsible for four MoD projects that in 2003 collectively accounted for a £2.7 billion cost overrun and were delayed by 113 months, according to the National Audit Office.^[3]
• Members of the Defence Select Committee complained in January that the government is in danger of conflating the interests of one private company with the interests of this country^[4]

Corporate Governance Body PIRC has also advised shareholders to vote against potentially excessive pay awards to BAE Systems chief executive Mike Turner at this year’s AGM.^[5]

Anna Jones, CAAT’s action coordinator, said:

The past year has shown that BAE Systems only needs to whistle, and the government comes running. Having wrapped up MoD procurement despite billion-pound overspends on current projects, it is now enlisting Blair’s personal lobbying for arms sales to one of the world’s most repressive regimes. It’s time that taxpayers stopped having to foot the bill while Labour ministers act as poodles to a dangerous company whose only loyalty is to its own profit line.

Alternative BAE Systems Annual Report

An alternative overview of BAE’s business activities and outlook in 2005 has been produced by the Campaign Against Arms Trade. It covers what you won’t find in BAE’s own Annual Report and CSR statement, including:

• a stitch-up of UK’s new Defence Industrial Strategy to benefit BAE Systems;
• ongoing corruption allegations, and the arrest of senior BAE executives;
• BAE’s lobbying efforts to water-down ECGD anti-bribery regulations;
• BAE’s arms deliveries to human rights abusers including Saudi Arabia and Israel;
• BAE’s growing drive to cash in on the Iraq war through lucrative US contracts.

Download the Alternative Report.

Notes

1. See paper by British American Security Information Council
2. Arrests in BAE-Saudi investigation, The Guardian, 14 Sept 2005. For ministerial lobbying in 2005-6, see Blair in secret Saudi mission, The Guardian, 27 Sept 2005
3. National Audit Office Press Notice, Ministry of Defence: Major Projects Report 2003, 23 January 2004
4. Minutes of evidence taken before Defence Committee, Defence Industrial Strategy, House of Commons, 31 Jan 2006
5. Forbes