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The unanswered questions
David Leigh The Guardian, Wednesday May 7 2008 Article historyAbout this articleClose This article appeared in the Guardian on Wednesday May 07 2008 on p6 of the UK news section. It was last updated at 00:09 on May 07 2008
. Yesterday's press conference in which Lord Woolf presented his report on BAE's "ethics" was an uncomfortable affair. The 75-year-old former lord chief justice bridled when he was asked by the Economist about the £6,000 a day paid him by BAE to lead an inquiry on behalf of the arms company.
He said: "I don't deserve to be approached on that basis." The report had taken him and his panel, he said, "nine months of hard work". But for all that effort, the report that emerged yesterday did not answer the questions that have caused international concern.
Woolf's remit was too narrow and tight for him to address issues such as:
· Did BAE set up a secret offshore subsidiary called Red Diamond to handle worldwide cash for arms deals?
· Did the company pay 31% "commission" into a Swiss account on a sale to the African state of Tanzania?
· Did BAE employ Count Alfons Mensdorff-Pouilly, previously caught up in a bribery scandal, as its undercover agent in central Europe?
· Did it provide exotic holidays and prostitutes to the entourage of the head of the Saudi air force?
· Did it pay £1bn to Saudi agents including Wafic Said, and another £1bn to Saudi Prince Bandar? To every question about what BAE may have actually done, Woolf's answer was the same: "We weren't given the job of looking at the past."
He stressed that the outgoing chief executive, Mike Turner, had admitted "that the company did not in the past pay sufficient attention to ethical standards". BAE's opponents may therefore treat with great scepticism the report's list of anti-corruption recommendations for future good practice.
In the US companies which hope for leniency from Department of Justice corruption investigations are generally required first to conduct searching internal inquiries, identify culprits and make full confessions. Woolf's inquiry did not look back.
"The future is much more important than the past," he insisted. The company still faces criminal investigations in London, Washington, Dar es Salaam, Bucharest, Prague, Berne, Budapest and Johannesburg, over continuing multi-million pound arms contracts. Last month Woolf's former colleague, Lord Justice Moses, ruled that the abandonment of the Serious Fraud Office investigation into BAE had betrayed the rule of law. Moses said there had been an "abject surrender" to threats when the SFO, under pressure from BAE, from the then prime minister Tony Blair, and from Prince Bandar, agreed to drop investigations into the Saudi payments.
Asked about that, Woolf said: "It wasn't BAE's fault that the SFO weren't able to finish their task." Asked if he didn't think it inappropriate for him to be working for BAE in view of Moses's words, he added: "No, I don't."
Although critics will call the Woolf report a whitewash, there were two positive sides to it. He demanded that the government reform the inadequate corruption laws which have made it virtually impossible to get bribery convictions against British companies.
And Woolf made plain that BAE's reputation has suffered badly. He said: "The company has continued to suffer reputational damage in respect of its business ethics. The damage flows directly from what is alleged to have happened in earlier years ... there is scepticism as to what extent the company has left its legacy problems behind." To that extent, the Woolf report is a clear call to BAE to clean up its act. It remains to be seen whether, in the absence of any prosecutions, BAE will feel any obligation to comply.
Last night the Corner House, one of the campaigners who won the BAE court case, called the Woolf inquiry "an interesting academic exercise". The group said "BAE should have saved its £1.7m spent on the committee and adopted instead accepted best practice: namely, to employ a law firm as an independent investigator to go through all its internal emails and documents in order to make adequate disclosure to the law enforcement authorities."