My BAE AGM virginity was about to come to an end as I entered the Queen Elizabeth Conference centre, where no expense had been spared on lavish security measures to welcome proxy shareholders like myself. The BAE chairman Dick Olver’s introductory statement included a shareholder-pleasing boast about a 13.3% proposed increase in the 2007 dividend. However, much of his presentation was devoted to this year’s hot topic, business ethics. He acknowledged the reputational damage that the whole SFO affair had done but kept stressing that “our” company had never been found guilty of any wrongdoings in four years of SFO scrutiny, conveniently omitting the fact that the investigation was halted just as it was making good progress unearthing useful details from Swiss bank accounts.
He made much of the publication of a single global code of ethical conduct due in January 2009 which is to implement the 23 (!) recommendations of the hot-of-the-press Woolf Committee report, designed to fulfil BAE’s aspiration “to be the industry leader in business ethics” and “to set the pace for ethical business behaviour”. This ambition, in light of the way BAE had lobbied for the cessation of the SFO enquiry, was later described as “Orwellian” by one of the questioners.
CEO Mike Turner’s 2007 performance review highlighted the significance of Saudi Arabia as a growth market, as a result of which yet more UK staff had been transferred there. But even in his overview of BAE’s top ten objectives, the presentation returned to this year’s flavour, ethics, albeit in tenth place, and bundled together with diversity and safety (the latter giving rise to heckles of “how safe are your weapons?”).
Soon we reached the part of the meeting we had all been waiting for: the question and answer session. The opening salvo was delivered by an apparently old stalwart of BAE AGMs who expressed concerns about BAE wasting too much of investors’ money on the unnecessary implementation of ethics measures, and furthermore urged BAE to impress on the Prime Minister the UK’s reliance on Saudi Arabian cooperation. However, once the second BAE supporter had been dealt with, the floor belonged almost exclusively to a range of protesters, with corruption-related questions dominating the proceedings.
Reference was made to Dick Olver’s appearance on the morning’s “Today” programme where he had drawn a careful distinction between commission payments (legal!) and bribery (illegal). Was BAE now happy to support completion of the SFO enquiry? As earlier on, Dick Olver referred once more to four years of cooperation with the SFO which had not yielded any incriminating results but he welcomed a case review by the SFO. Why then, he was asked, had BAE invested so much effort into trying to halt the enquiry in the first instance? The question remained unanswered.
A BAE aide had to come to Dick Olver’s rescue on the matter of cluster bombs, eventually confirming that BAE had stopped supplying these in 2004 but that, despite its new-found enthusiasm for ethics and social responsibility, substantiated by brandishing the polished Corporate Responsibility (CR) report, it did not compensate those still affected by its cluster bombs, nor contribute to the clear-up of blighted areas. Further questioning as to what constituted ethical weaponry was referred to the CR report. When asked what criteria the Board uses to base its decision on, it was unsurprising to learn that this was based on a commercial risk assessment.
The apparent irreconcilability of two different types of ethics, selling lethal wares to a country with an appalling human rights record but in an ethical, i.e. corruption-free manner, was lost on the BAE board. Olver went on to portray BAE’s involvement in Saudi Arabia almost as a type of development aid, stating that engagement was preferable to ostracism and that BAE was helping the country with its industrialisation.
A local authority employee outlined his involvement in campaigning for ethical investment of his local authority pension fund and pointed out that BAE had long missed the corporate social responsibility bandwagon that many other companies had boarded some while ago. He went on to say that, as an ex-member of the Territorial Army, he felt that BAE’s dealings with Saudi Arabia actually undermined UK security rather than enhance it.
This year, BAE had made some changes to the way questions were being handled which, as one CAAT supporter noted, had led to the AGM becoming more and more a slick showcase for the company and less of the shareholder meeting it should actually be. Any interaction with the Board, previously possible, was now curtailed since, so far, all questions had been handled by Dick Olver only. Minutes later, the truth of this was borne out again when another activist directed his ethics-related question specifically at a member of the CR Committee. Olver’s brusque reaction was that it was he who decided who was to respond, and that was to be him only.
Olver had been fielding the questions very slickly but nevertheless his increasing irateness came across as he started to patronise questioners with increasing frequency, no more clearly than when a Warwick University engineering student, usually the kind welcomed with open arms by BAE at university milk rounds, described his and many other students unease at applying his skills in a lethal industry. The invitation to attend a public debate at Warwick was declined by Olver.
The two lone “genuine” shareholders who did manage to get a word in amongst all the inconvenient questioning both expressed concern about BAE’s move away from diversification, having now put all its eggs in one defence basket (although, curiously, one of them did also complain bitterly that the BAE AGM clashed with that of Rolls Royce – some people just cannot get enough!).
The Q & A session was fittingly closed by South African former ANC MP Andrew Feinstein who had resigned from parliament in 2001 in protest over the South African government’s refusal to allow a full investigation into corruption allegations relating to a £5m arms deal. He had given evidence to the Woolf Committee, and urged BAE, if it was serious about turning over a new ethical leaf, to come clean about its past, stop all commission payment still being made, and provide full disclosure of its procurement process.
Edda Dirks, CAAT London Campaigner