Sky News business editor Michael Wilson

Ethics and business are a difficult mix, especially when cultural differences demand a different way of doing things. And when local customs dictate a bit of this and a bit of that, exporters often feel they have to adjust their moral compass to get the all important contract.

The Woolf review into business practices at BAE has called for much tougher anti-bribery measures after allegations that a £60m slush fund was used to bribe members of the Saudi royal family involved in the Al Yamamah arms-for-oil deal.

All the allegations were hotly denied by all involved. Eventually the Serious Fraud Office ended an investigation into the deal, claiming national security concerns.

That, of course did nothing to dampen suspicions of bribery and corruption, especially as the High Court ruled that decision was unlawful.

Today Britain’s largest arms manufacturer acknowledged that it ‘did not in the past pay sufficient attention to ethical standards,’ and has agreed to implement Lord Woolf’s recommendations.

A nice bit of entertaining, middlemen, agents, preferential terms, a sweetener here and there – all part of the business of business.

Not nice, but our major exporters have a responsibility not only to their shareholders but to their workforce. No contract, no jobs.

Take the Eurofighter programme for example. 50,000 jobs are directly dependent on it, BAE’s workforce which relies on it numbers 9,000.

So how officiously should we strive to avoid the payment of bribes, backhanders and other slippery measures to make sure that jobs are secured and contracts are won?

When the Serious Fraud Office ended the BAE investigation, many took the implication of that as something like 'a bit more rigorously than other countries, but not enough to lose the business'.

I’d be interested to see how a whiter-than-white approach to doing business works in the real, dirty world.

Comments

[Rick, Sweden 7 May 2008 05:08:33]

Selling aircraft military or civil, always has and always will involve some level of corruption. In the 40 years I have worked in the Aviation Industry both as a buyer and seller of aircraft, I have seen it all, from expensive lunches to large scale payoffs. All manufacturers have a slush fund, if they didn’t they would loose out to their competitors. The ability to win contracts in some parts of the world is down to the size of your slush fund in comparison to your competitors. The sales executive starts out , starry eyed, armed with all the information to prove that his product is better and cheaper than Brand X and is determined to win contracts on the demonstrably superiority of the equipment he is selling. When he gets outside of Western Europe , he finds that is a matter of ‘Never mind the quality, feel the width’. As long as the equipment can do the job as per the RFQ put out by the buyer, winning the contract is a matter how influential your agent/representative is which goes down to how deep your pockets are compared to your competitors. Everybody tries to get in to the loop from the Secretary/PA who gives you a appointment to see the boss, to the boss himself and often right up to the highest echelons of politics. So don’t blame BAE for just doing what they need to do to earn a crust, blame the greedy of the world that have created the environment that has made slush funds a necessity.

[Don Mitchell Swindon 6 May 2008 21:09:34]

Why can't we just be 'honest' and acknowledge that in some parts of the world, you have to pay a bribe to get the business. I remember being part of an airline crew that flew into Cairo. Whilst we waited for our passengers, Air France came and went...why... our ground staff said 'you know why'. I'm happy to say that this does not happen now, but in other, not so open situations, I'm sure its rife.Furthermore, you don't have to go overseas to see this. Look at some of the dodgy planning applications that are approved by councils after others have been turned down. We are not as clean as we make ourselves out to be and as long as money talks it will, rightly or wrongly, always be that way.

[Michael Cornwall 6 May 2008 12:35:03]

Ethics and business are an incredibly difficult mix. Unfortunately I can't hold my hand up and say I am whiter than white.

[Khalid 6 May 2008 11:19:37]

Sir
Thus far as many a matter surrounding ethical tolerance, then I'm sure the world over knows, when it comes to the business of making money, cultural matters are adjusted to ensure business propserity, save for matters within the High Court itself.
Now, thus far as the arms issues herein, it is generally accepted that in order to gain business, hospitality plays a pivotal role and as the High Court itself knows, an acceptable practice.
On the other hand however, the slush fund circa £60M is a sum that could have been better utilised by the powers to be and if the purchasers had an ethicla compass that was working at the time of the presentation, he/she would have ensured such vast amounts were not spent just to sign a contract to purchase equipment that not only provides national security, but more often than not results in many tongue to be silenced forever.
The issue thus far as I see it is very starightforward [Simple Minds] suffice to say, [Sanctify Yourself]. So, lets get to the matter of contract and see whether or not a deal can be done so that the proposed £60m can provide better relief for many a cyclone hit region, without prejudice of-course!