BAE Systems Company Profile

One of the biggest arms companies in the world, BAE Systems makes huge amounts of money from the sale of guns, bombs, fighter jets, submarines, nuclear weapons and other military weapons and equipment. The company’s rap sheet is long and varied, and includes supplying a litany of repressive regimes with arms, spying on anti-arms trade campaigners and being criminally prosecuted for corruption and bribery.

You can find Corporate Watch articles on BAE Systems and our 2002 Company Profile in the right hand column of this page.

Click here for details of BAE Systems’ head office and other basic details from the opencorporates website.

There is also lots of useful information on BAE Systems’ website:

  • Click here to find out what BAE Systems is currently selling.

  • Click here to find out who BAE Systemsdirectors and board members are.

  • Click here for details of their latest profits and other financial results.

  • Click here to download BAE Systems’s latest annual report and accounts.

For a more critical perspective on their work, try Campaign Against Arms Trade.

Industry Areas

BAE SYSTEMS plc is a global arms company, with interests also in civilian avionics and engineering.

 

Market Share/Importance

BAE SYSTEMS aims to be ‘a truly global systems, defence and aerospace company with unrivalled capability…[the] prime contractor and systems integrator for our customers, in the air, land, sea, and space’.[2] As such, the company has interests in areas spanning the range of avionics and defence systems, from hardware manufacture to personnel training. Primarily, however, BAE is an arms company, ranking first in the world in terms of arms sales.[3] Military equipment currently accounts for around 75% of the company’s total sales.[4] In 2000 it pulled in $13,248 million in military revenue.[5] It is the world’s fourth largest defence and aerospace firm, behind Boeing, Lockheed Martin, and EADS.[6]

The company is a significant employer, directly employing over 100,000 people. Over a third of its workforce is outside the UK – in the US, Saudi Arabia, France, Italy, Germany, Sweden, Australia & Canada. BAE SYSTEMS is present in five continents, with customers in 129 countries, and its order book at the end of the year 2000 totalled £41 billion.[7] Its biggest rivals are the US companies Lockheed Martin and Boeing, as well as the European syndicate EADS Inc, which formed when BAE acquired GEC (see History). In theory, BAE SYSTEMS is financially strong enough to attempt a takeover of its rivals. However, BAE SYSTEMS’ ambition to merge with Boeing or Lockheed has been ruled out by the US government.[8] Nevertheless, its desire to break into the US market, by far the largest in the world for arms companies, continues unabated.

 

History and Strategy

British Aerospace (BAe) was first formed as a nationalised corporation in April 1977 by the merger of the British Aircraft Corporation, Hawker Siddeley Aviation, Hawker Siddeley Dynamics and Scottish Aviation. State control over the arms trade didn’t survive for very long under the Thatcher government, however, with the UK Government selling 51.57% of its shares in BAe in 1981, upon its formation as a public limited company (PLC). In 1985, the UK Government sold its remaining shares, keeping only a special £1 share in order to ensure that the company continues under British control (foreign ownership of BAE SYSTEMS is limited by law to 29.5%).

At around the same time as it became an entirely privately-owned company, BAe became involved in one of the biggest trade scandals of the 1980s – the Al-Yamamah deals with Saudia Arabia. According to the Financial Times[9], the arms deal (known as Al Yamamah II) was ‘the biggest [UK] sale ever of anything to anyone.’ The deals were condemned by Amnesty International as a clear endorsement of a country in the hands of a repressive regime who displayed a ‘persistent pattern of gross human rights abuses’.[10] BAe was the prime contractor for the entire deal, which included the sale of 48 Tornado bombers, 24 Tornado fighters, 30 Hawk trainer-fighters, and a large number of Rapier missiles. It also involved millions of pounds worth of corrupt commissions paid to Arabian businessmen, which the Conservative government of the time denied (see Corporate Crimes). Needless to say, this part of the company’s history does not appear on its own corporate timeline.

Meanwhile, in 1988 BAe began to expand its holdings, starting with the acquistion of the Rover group. By 1991 Heckler & Koch GMbh, the German small arms company, had joined them, and in 1992 the company reorganised itself. The arms side of the company were amalgamated into British Aerospace Defence Limited, whereas three new companies were formed to replace British Aerospace (Commercial Aircraft) Limited. These were British Aerospace Airbus Limited, British Aerospace Regional Aircraft Limited and British Aerospace Corporate Jets Limited. As well as internal reorganisation, BAe also began to form alliances with other companies in the arms sector; in October 1993 a joint venture company was formed with GEC-Marconi to ‘manage and develop their involvement in the naval Principal Anti-Air Missile System guided weapons project.'[11] This reflected the increasing trend for co-operation between companies in the sector.

Undeterred by the outrage and corruption which had mired its arms deals to Saudi Arabia, in November 1996 the Conservative Government handed BAe another morally dubious trade agreement. A large shipment of arms, including 16 Hawk fighter aircraft, was to be sent to the dictatorship that ruled Indonesia, despite widespread suspicion that they would inevitably be used to facilitate the repression of East Timor. As Robin Cook stated in the House of Commons in 1994″Hawk aircraft have been observed on bombing runs in East Timor in most years since 1984.”[12] Needless to say, this evidence did nothing to dissuade BAe from extracting the maximum profit available from the deal.

In the following years, BAe continued to restructure its business, concentrating more heavily on its ‘core competencies’ and divesting its shares in other, unrelated businesses. In March 1998, for example, it disposed of shares representing a 16.11% ownership of Orange plc, making £763.8 million. Meanwhile, it increased its interest in the civil aerospace interest of Airbus, and continued to expand into the US arms market by joining Lockheed Martin’s Joint Strike Fighter project team. In September 1998 it entered into partnership agreements (along with Rolls Royce) with the Universities of Cambridge, Sheffield and Southampton in order to ‘research into future engineering design processes’.[13] (see Corporate Crimes section)

The biggest change for BAe came, however, in January 1999, when the company announced its merger with GEC’s Marconi Electronic Systems business (essentially the arms dealing side of GEC Marconi). In November 1999, the two businesses merged, creating a new corporate entity named BAE SYSTEMS, which became the largest arms dealer in the world. All was not necessarily rosy with the new company, however, with a profits warning issued on January 10, 2001, wiping away a quarter of the company’s value on the stockmarket.[14]

New developments have, however, made the company’s future look bright. The British Government continues to look after its corporate friends, with the recent £28 million sale of a military air-traffic control system to debt-stricken Tanzania causing outrage among ordinary voters. As Justin Forsyth, Oxfam’s head of policy, has put it: “It is outrageous that Tanzania’s debt relief will go towards bolstering the profits of BAE and Barclays bank rather than helping the poor people of Tanzania”.[15] On top of this, the British government is currently mounting an intensive campaign to sell 60 Hawk jets, worth £1bn, to India. This is despite the danger of the India-Pakistan dispute over Kashmir spilling into war and destabilising the entire region. BAE SYSTEMS has already sold Jaguar combat aircraft to India in licensing deals that the Ministry of Defence (MoD) refuses to disclose (see Corporate Crimes section).[16]

External factors have also helped to secure BAE’s future – most notably the fallout from the attack on the World Trade Centre on September 11th, 2001. The ‘War on Terrorism’ cannot fail to boost BAE’s profits, and as the Board of BAE point out in their preliminary results for 2001, the loss of revenue from civilian aeronautics will be mitigated ‘by the overall improvement in performance in other business groups.’[17] In other words, the fall in civilian air traffic doesn’t matter to BAE SYSTEMS, because they will continue to profit from the spiral of death and destruction which constitutes the arms trade. The outlook is bright for this company only when it is bleak for the rest of the world.

Despite an increase in share prices and a generally good outlook for the company, on Tuesday March 26th, 2002, a boardroom coup shocked The City. This lead to the departure of CEO John Weston, who had been with the company for more than 30 years. It has been suggested that his style clashed with the Chairman of the Board of Directors, Sir Richard Evans, and that the Ministry of Defence (MoD) resented being ‘bullied’ by Weston. As the Observer put it: ‘Weston had irritated Defence Secretary Geoff Hoon by his opposition to the Government’s defence procurement process…Weston has sometimes been criticised for adopting a ‘robust’ attitude when dealing with officials’.[18] Whatever the reason, Mike Turner (formerly Chief Operating Officer) was quickly promoted to the vacant CEO spot, and The City expects more changes to occur soon, not least in the orientation of the company. Rather than a single focus on the United States, it is thought that Turner will concentrate on keeping the activities of BAE diversified, and on rebuilding relations with the MoD.

References:

[1] BAE SYSTEMS homepage: http://www.baesystems.com accessed 29/4/02

[2]’BAE SYSTEMS – Overview’, BAE website: http://www.baesystems.com/overview/overview.htm accessed

27/4/02

[3] CAAT (2002) BAE SYSTEMS Alternative Report 2002, website http://www.caat.org.uk/companies/BAES2002.pdf accessed 9/5/02

[4] ibid.

[5] ibid.

[6]BAE SYSTEMS Capsule, Hoover’s Online, website: http://www.hoovers.com/co/capsule/1/0,2163,40681,00.html accessed 27/4/02

[7] ‘BAE SYSTEMS – Overview’, BAE website: http://www.baesystems.com/overview/overview.htm accessed 27/4/02

[8] Wrigley, C. (2000) Arms Industry Briefing, CAAT website: http://www.caat.org.uk/research/ArmsIndustry_Body.html accessed 29/4/02

[9] cited in Hirst, C. ‘The Arabian Connection: The UK arms trade to Saudi Arabia,’ CAAT website: http://www.caat.org.uk/research/Saudi_Body.html, accessed 9/5/02

[10] Amnesty International report (1999) – cited on BAE SYSTEMS, Reaching Critical Will website: http://www.reachingcriticalwill.org/dd/bae.html, accessed 9/5/02

[11] BAE SYSTEMS Overview: Our Evolution, website: http://www.baesystems.com/overview/ourevolution.htm, accessed 29/4/02

[12] Hildyard, N. (1999) Snouts in the Trough: Export Credit Agencies, Corporate Welfare and Policy Incoherence, Corner House Briefing No. 14, The Corner House website: http://www.thecornerhouse.org.uk/briefing/14ecas.html, accessed 9/5/02

[13] BAE SYSTEMS Overview: Our Evolution, BAE SYSTEMS website: http://www.baesystems.com/overview/ourevolution.htm, accessed 9/5/02

[14] Kuo, D. (2001) BAE Systems Dives, Market Comment, The Motley Fool website: http://www.fool.co.uk/news/comment/2001/c010110b.htm, accessed 9/5/02

[15] Denny, C. (2001) Backlash over costly high-tech for Tanzania, The Guardian website, 21/12/01: http://www.guardian.co.uk/tanzania/story/0,11441,623358,00.html , accessed 10/5/02

[16] Norton-Taylor, R. (2002) British plane sales to India raise fears of nuclear use, The Guardian website, 23/4/02, http://www.guardian.co.uk/kashmir/Story/0,2763,688932,00.html, accessed 10/5/02

[17] ‘BAE SYSTEMS delivers 2001 financial results to plan with a strong order book and balance sheet’, Virtual News Room, 14/2/02, BAE SYSTEMS website: http://www.baesystems.com/virtualnewsroom/archive/140202news1.htm, accessed 29/4/02

[18] Wachman, R. (2002) A very British coup at BAE, 31/3/02, The Observer website, http://www.observer.co.uk/business/story/0,6903,676379,00.html, accessed 29/4/02

BAE Systems: Who, Where, How much?

Headquarters

 

Warwick House,

PO BOX 87,

Farnborough Aerospace Centre,

Farnborough,

Hampshire,

GU14 6YU,

UK

Tel no. 0044 (0)1252 373232

Fax no. 0044 (0)1252 383000

London office address

6 Carlton Gardens,

London,

SW1Y 5AD,

UK

Tel no. 0044 (0)1252 373232

Fax no. 0044 (0)1252 383991

An extensive list of the company’s offices worldwide, including those of its subsidiaries, can be found on the company’s website at: http://www.baesystems.com/facts/pages/location.htm

Significant shareholders

 

 

BAE SYSTEMS divides its different interests into business groups, each of which is overseen by one of three COOs (Chief of Operations). Only three companies hold over 3% of the shares issued by BAE SYSTEMS; Franklin Resources Inc (6.2%), Brandes Investment Partners, LP (4.0%), and CGNU plc (3.2%).

 

Subsidiaries

 

BAE holds significant equity in many ventures worldwide, the most important of which include:

 

  • Matra BAE Dynamics
    Six Hills Way, Stevenage, Herts, SG1 2DA, UKTEL: 01438 312422

    This company is a joint venture with a French arms manufacturer. It concentrates on the development of guided weapons for use on land, air and sea. It has recently won a contract to produce the Meteor, an air-to-air guided missile, for use in the Eurofighter project. It has an order book of £2.5 billion, and employs around 6,100 staff (2850 in the UK and 3250 in France). BAE SYSTEMS owns 50% of this company.

 

  • SAAB AB Group

Box 70363

SE-107 24 Stockholm, Sweden

Visiting Address:

Kungsbron 1, World Trade Centre, Entrance G, 6th Floor.

Telephone: +46 8 463 00 00

FAX: +46 8 463 01 52

Web site: www.saab.se
E-mail: infosaab@saab.se

SAAB is a large Swedish based engineering company, employing over 14,000 staff. Its total annual sales are around SEK 16,000 million, or over £1 billion. Its most obvious link to BAE SYSTEMS is its Gripen fighter, which is developed and sold in collaboration with the British firm. BAE SYSTEMS is by far the largest shareholder with a 35% stake.

  • Alenia Marconi Systems Inc. (AMS)
    Eastwood HouseGlebe Road

    Chelmsford

    Essex

    UK

    BAE SYSTEMS owns 50% of the shares in this company, Finmeccanica of Italy the other 50%. AMS is one of Europe’s leading providers of radar and air control systems. In fact, it is one of the 3 leading manufacturers of land and naval radar systems in the world.

  • Aeronautical Technologies Company Ltd, SA
    c/o Advanced Technologies and Engineering Company (PTY) LtdPO Box 632

    Halfway House

    1685 South Africa

    Tel: +27 11 314 2170 Fax: +27 11 314 2151

    This company is a South African based avionics systems integration and UAV (unmanned air vehicle) manufacturer, whose programmes include systems upgrade programmes on Hawk jets, as well as manufacture of the Vulture class UAV. BAE SYSTEMS has a 20% share in the company.

  • Airbus Integrated Company Ltd.
    The Airbus Integrated Company is a joint venture between Europe’s largest aerospace and arms firms, to manufacture a series of short, medium and long range commercial aircraft. It is manufacturing the world’s largest commercial aircraft, the A380, which can carry more than 600 passengers. BAE SYSTEMS owns 20% of the shares in this company; the other 80% are owned by EADS, the European arms manufacturer’s coalition.The contact addresses for queries about Airbus are those for BAE (see above) and EADS:

    EADS Deustchland GmbH

    PO Box 801109

    81663 Munich

    Germany

    EADS France S.A.S

    37, Boulevard de Montmorecy

    75781 Paris, Cedex16,

    France

  • Astrium Ltd
    37, Avenue Louis Breguet BP178146 Velizy Villacoublay

    Cedex

    France

    Tel: +33 (0) 1 34 88 30 00

    Fax: +33 (0) 1 34 88 43 43

    Website: www.astrium-space.com

    BAE SYSTEMS owns 25% of the shares of this company, the other 75% are owned by EADS. Astrium is one of Europe’s leading space technology companies, and is involved in communications and military satellites, as well as launch vehicles for European space efforts.

  • Competence Center Informatik
    Lohberg 10Postfach1225

    49716 Meppen/Rule

    Germany

    Tel: +49 5931 805-0

    Fax: +49 5931 805-100

    Website: www.cci.de

    This is a German based information technology company, which designs computer systems for the arms trade and commercial world, including both hardware and software. BAE SYSTEMS’ share in the company is 10%. Other notable shareholders include DaimlerChrysler Aerospace (10%), and Sema Group GmbH (77.5%).

  • Euromandarin Ltd
    7th FloorHarcourt House

    39 Gloucester Road

    Wanchai

    Hong Kong

    Tel: +85 2 2143 6878 Fax: +85 2 2143 6642

    A venture capital orientated company set up in 1998 to research, structure and manage aerospace related investments in Greater China. BAE SYSTEMS own 50% of the shares in this company. The other 50% are owned by First Mandarin in Hong Kong.

  • Exostar SM
    13530 Dulles Technology Drive, Suite 200Herndon, VA 20171

    USA

    Phone: 703-561-0500

    Fax: 703-793-1673

    Website: www.exostar.com

    In the UK:

    New Filton House

    PO Box 5

    Filton, Bristol BS34 7QW

    UK

    Freephone number: 0800-917-2485

    Fax: +01 703-793-7962

    Worldwide: Phone: +01 703-793-7800

    Fax: +01 703-793-7962

    Exostar SM is a company set up to develop and operate a marketplace for the aerospace and arms industries. BAE SYSTEMS have a 25% share in the company. The other shareholders are Boeing, Lockheed Martin and Raytheon, all with a 25% share. It is hoped by BAE that the company will help increase efficiency and collaboaration between companies in the industry. ExostarSM is headquartered in the Washington DC area, although the company plans a significant presence in both Europe and Asia. The exchange has been trading since September 2000.

  • Innovation Partnerships Worldwide
    PO Box 5249Rutland Hall

    Ashby Road

    Loughborough

    Leicestershire

    LE11 3WW

    UK

    Tel: +44 (0) 1509 228499 Fax: +44 (0) 1509 211516

    This, according to BAE, is a joint venture with Loughborough University, designed to ‘promote social and economic programmes in the global marketplace.’ Its main purpose would seem to be to get University students familiar and comfortable with the BAE brand and ‘ethic’. BAE SYSTEMS share in the project is 55%, with the other 45% being owned by Loughborough University.

  • Singapore British Engineering PTE Ltd
    435 Orchard Road#19-02, Wisma Atria

    Singapore 0923

    Tel: +65 735 8328 Fax: +65 735 8233

    This is, bluntly, a marketing front for BAE SYSTEMS equipment and expertise in South East Asia. BAE SYSTEMS’ share is 51%, the other 49% is held by Singapore Technologies.

  • Spectrum Technologies PLC
    Western AvenueBridgend

    CF31 3RT

    United Kingdom

    Tel: +44 (0) 1656 655437 Fax: +44 (0) 1656 655920

    Email: sales@spectrum-technologies.co.uk
    Website: www.spectrum-technologies.co.uk

    A developer and supplier of high technology UV laser equipment and services for manufacturing processes; specifically the CAPRIS range of laser wire marking and processing systems, used by most aerospace companies around the world. BAE owns 20% of the company.

  • STN Atlas Electronik GmbH
    Sebaldsbruecker Heerstr.28305 Bremen

    Germany

    Tel: +49 421457 0

    Fax: +49 421 457 29 00

    This German-based company specialises in defence electronics, with its activites stretching from weapons control systems to virtual reality, radar technology, unmanned vehicles and communications. BAE owns 49% of the company.

  • Togethr HR Services Ltd
    PO Box 87Lancaster House

    Farnborough Aerospace Centre

    Farnborough

    Hampshire

    GU14 6YU

    UK

    Tel: +44 (0) 1252 373232 Fax: +44 (0) 1252 383456

    Website: www.togethr.com

    Togethr was formed on 1 May 2001. According to BAE, it ‘will provide human resource support services to BAE SYSTEMS and the rapidly growing global integrated HR services market.’ Its services include recruitment, learning, benefits, pensions administration and HR (human resources) systems and records. BAE SYSTEMS share is 50%, the other 50% being held by Xchanging Ltd.

 

Board of Directors

 

As can be seen from the above interests and shareholdings of BAE SYSTEMS, the company controls a tremendous amount of the world’s defence industry, and especially dominates the UK market. The board of directors at BAE reflects this width of interests, with several directors having been formerly on the boards of other engineering and manufacturing firms. However, this information may be quickly outdated, given the boardroom coup that recently deposed the former CEO, John Weston (see History and Stategy). Up-to-date information regarding the current Board of Directors may be found on the BAE SYSTEMS website at: http://www.baesystems.com/overview/leaders.htm

Corporate Leaders

Sir Richard Harry Evans, CBE
Chairman, BAE SYSTEMS plc
Evans was born in Blackpool in 1942 and educated at the Royal Masonic School, Hertfordshire. In 1960, he joined the Ministry of Transport and Civil Aviation and, shortly afterwards, moved into the then newly-formed Ministry of Technology. Appointed Deputy Managing Director (and Managing Director Designate) of the newly formed British Aerospace Military Aircraft Division in 1986, he was awarded the CBE in the Queen’s Birthday Honours List for ‘Services to Export’.

In January 1987 Evans was appointed to the Board of British Aerospace plc as Marketing Director and the following year he became the Chairman of the British Aerospace Defence companies. Evans was appointed Chief Executive of the Company in 1990 and concurrently has been a member of the Supervisory Board of Airbus Industrie since 1992. In June 1992 he was elected for a one-year term as President of the Society of British Aerospace Companies. He was knighted in the 1996 Queen’s Birthday Honours. On May 1, 1998, Evans was appointed Chairman of British Aerospace plc.

In 1997 Evans joined the Board of United Utilities plc as a Non-Executive Director and was appointed Chairman on January 1, 2001. In 1998 he became a Non Executive Director of NatWest plc and resigned from that Board in February 2000.Evans has also been elected an Honorary Member of the NSPCC (National Society for the Prevention of Cruelty to Children) Council.[23]

The Observer described Sir Richard Evans as ‘one of the few businessmen who can see Blair on request’.[24] (See also section on Influence: Tony and Dick)

Mike Turner, CBE
BAE SYSTEMS Chief Executive Officer
In October 1991, Turner was elected a Fellow of The Royal Aeronautical Society. In January 1994, he was appointed Chairman of Commercial Aerospace, which added BAe Airbus to his portfolio, and also became a member of the Main Board of British Aerospace plc. In June 1995 he was appointed Vice President of the SBAC (Society of British Aerospace Companies) and was President from June 1996 until June 1997. In 1996, Turner was appointed a Non-Executive Director of Babcock International Group plc. In April 1996, Turner took responsibility for BAe’s defence export business (in addition to his commercial aircraft responsibilities) when the sales and marketing Managing Directors were made responsible to him.

When British Aerospace plc and Marconi Electronic Systems merged in 1999 to created BAE SYSTEMS, Turner became Chief Operating Officer of the new company. He was awarded a CBE for services to the Aerospace Industry in the Queen’s Birthday Honours list in June 1999. Following the dismissal of the former CEO of BAE SYSTEMS, John Weston, on March 26th 2002, Turner became the new CEO.[25] It seems likely that he will change the Board of Directors at least slightly, in order to cement his position.

Mike Turner is co-chair of the Transatlantic Business Dialogue (TABD) for the year 2002. (See section on Lobbying)

Sir Charles Masefield
BAE SYSTEMS Vice Chairman
Sir Charles Masefield was educated at Cambridge University where he gained an Honours Degree in Aeronautical Engineering and flew with the Royal Air Force Volunteer Reserve. In 1994 the British Government requested Masefield to take over responsibility for Britain’s defence exports working within the Ministry of Defence reporting to the Secretary of State for Defence. During his four and a half years of responsibility for defence exports the UK’s world market share rose from 16% to 25%, second only to the United States.

In December 1998 Masefield left Government service to take up an appointment as Vice Chairman of GEC plc. Following completion of the merger between British Aerospace and Marconi Electronic Systems, Masefield was appointed to the Board of BAE SYSTEMS as Group Marketing Director. Masefield was the 1994/95 President of the Royal Aeronautical Society and was knighted in 1997 for services to British exports.[26]

Sarah Myers
Chief of Staff

George Rose
Group Financial Director BAE SYSTEMS
In 1988 Rose was appointed Finance Director of Leyland DAF UK and subsequently Director, Group Control of DAF NV located in the Netherlands. He returned to the UK and was appointed Rover Group’s Company Controller in March 1992. In December 1995 he was appointed non-Executive Director of Orange plc, and in April 1998 he was appointed as the Finance Director for British Aerospace plc.

In the same year he was appointed as a non-Executive Director of SAAB AB.[27]

Michael Lester
Group Legal Director BAE SYSTEMS
Lester was engaged in private practice until 1980 when he joined the General Electric Company plc (GEC) as an Associate Director and Director of Legal Affairs. Lester was appointed a Director of GEC in December 1983 and Vice-Chairman in July 1994. He was appointed a Non-Executive Director of Premier Farnell in 1998. Following the completion of the merger between British Aerospace Plc and Marconi Electronic Systems, Mr Lester joined the Board of BAE SYSTEMS.[28]

Steven Lewis Mogford
BAE SYSTEMS Chief Operating Officer
Mogford joined British Aerospace Military Aircraft in 1977 as a Supply Engineer at the company’s Preston site in Lancashire. He was appointed Programmes Director – Al Yamamah in 1994 and Managing Director of Systems and Services at the end of 1995. Following the merger of British Aerospace and Marconi Electronic Systems in November 1999 he was appointed group managing Director Programmes & Managing Director Eurofighter, BAE SYSTEMS. From April 1, 2000 he became Chief Operating Officer – Programmes, responsible for BAE SYSTEMS’ major projects and Customer Support, joining the Board of the Company.[29]

Non-Executive Directors

Sir Robin Biggam
Chairman of the Independent Television Commission and the Fairey Group plc. Also a non-executive director of British Energy plc.

Professor Sue Birley
Professor of Entrepreneurship at Imperial College, University of London, and was formerly a non-executive director at National Westminster Bank plc.

Keith Brown
Formerly managing director of Morgan Stanley Dean Witter plc. Chairman of the Racecourse Association, and of the International Advisory Board for Bipop–Carier (Italy).

Dr Ulrich Cartillieri
A member of the supervisory board of Deutsche Bank AG, a director of Robert Bosch GmbH, Henkel KgaA and deputy chairman of DEG, the German government owned Investment and Development company.

Sir Ronald Hampel
Chairman of United Business Media plc, former chairman of ICI plc and a non-executive director of the Aluminium Company of America.

Lord Hesketh
A non-executive deputy chairman of Babcock International Group plc. A former Government chief whip in the House of Lords and a Privy Councillor.

Paolo Scaroni
Group chief executive of Pilkington plc, and formerly a non-executive director of Burmah Castrol plc.

For an overview of all persons involved in BAE’s Leadership, visit: http://www.baesystems.com/overview/leaders.htm


References
[23] Sir Richard Evans Biography, BAE SYSTEMS website: http://www.observer.co.uk/business/story/0,6903,458405,00.html, accessed 29/4/02

[25] Mike Turner Biography, BAE SYSTEMS website: http://www.baesystems.com/overview/miketurner.htm, accessed 29/4/02

[26] Sir Masefield Biography, BAE SYSTEMS website: http://www.baesystems.com/overview/sircharlesmasefield, accessed 29/4/02

[27]George Rose Biography, BAE SYSTEMS website: http://www.baesystems.com/overview/georgerose.htm, accessed 29/4/02

[28]Michael Lester Biography, BAE SYSTEMS website: http://www.baesystems.com/overview/michaellester.htm, accessed 29/4/02

[29] Steve Mogford Biography, BAE SYSTEMS website: http://www.baesystems.com/overview/stevemogford.htm, accessed 29/4/02

 

Products/Projects

As befits a ‘truly global’ company, BAE SYSTEMS covers a wide range of products and projects. Few of them, however, are anything that the ordinary consumer would ever buy. BAE products are mostly intended for the defence procurement of nation states, and to a lesser extent, the huge budgets of airlines such as British Airways.

 

BAE undertakes both large, capital-intensive projects such as the manufacture of the ‘Future Carrier’ (intended to replace Britain’s current ‘Invincible’ class of aircraft carrier) and smaller-scale, more intricate work – such as the development and manufacture of thermal imaging and radar equipment. Undoubtedly, however, and despite the rather beguiling ‘civilian applications’ section on their website, the majority of their production goes directly into military applications.

 

The Avionics department of BAE deals with the more intricate and small-scale projects, covering areas such as radar, weapon guidance systems, satellite communications technology, thermal imaging, and electronic warfare. All of these smaller products come into use in BAE’s own range of military vehicles, which, as they proudly point, out cover land, sea and air.[19]

 

Air

BAE manufactures a wide range of military aircraft, from the now completed lines of Tornado and Harrier aircraft, to the infamous Hawk attack fighter, and to the joint European project of the Eurofighter. Other aircraft projects include the Gripen fighter (produced in collaboration with SAAB) and the much discussed American project, the Joint Strike Fighter. As well as having huge potential in the American market, one of the variants of the JSF is tipped to be the British Ministry of Defence replacement for the outdated Harrier jump jet.

 

Sea

On the sea, BAE has received provisional acceptance of its bid to construct the ‘Future Carriers’ (due to come online in 2012), and firm acceptance of its Type 45 Anti-Air Destroyers (the first of which, HMS Daring, will be operational in 2007). It also has a virtual monopoly on the British ship-building industry.

 

Ground

In ground warfare BAE has less of a presence, concentrating its capital intensive projects where they can benefit its manufacturing concerns (i.e. its shipyards). It is working on several projects for land based military application, however, including the Lancer recon vehicle, the description of which provides a prime example of BAE’s corporate-speak. As they so eloquently put it; ‘the LANCER solution delivers a high degree of data capture, fusion, interpretation and communication with other assets including UAV’s inside the digitised battlespace’.[20] In other words, the Lancer project utilises BAE’s high technology engineering innovations to more effectively guide tanks to where they can kill people.

 

Civilian Projects

BAE does have some civilian projects, almost all of which are concerned with avionics. Its Avro RJ jet is no longer manufactured but is still in use by over 60 airlines. These include British Airways and Lufthansa. Its replacement, the Avro RJX, is likely to be similarly popular. BAE is also involved in the Airbus Industrie consortium with European partners, largely in manufacturing the wings for Airbus jets. Airbus is one of only two manufacturers in the market for commercial aircraft seating more than 100 passengers. Airbus captures around 50% of all commercial airline orders. Airbus is owned by BAE SYSTEMS and EADS (European Aeronautic Defence and Space Company), holding 20% and 80% respectively.[21] However, it is rumoured that BAE may well exercise its prerogative to pull out of this project in 2004 in favour of more military projects.[22] After all, the civilian aircraft business is facing a depression at the time of writing, whereas the military sector certainly is not.


References
[19] BAE SYSTEMS Facts, Business Units, BAE SYSTEMS website: www.baesystems.com/facts/index.htm, accessed 29/4/02

[20] ‘LANCER’, BAE SYSTEMS website: www.baesystems.com/facts/pages/prog/lancer.htm, accessed 29/4/02

[21]’International Partnership – Airbus (BAE SYSTEMS 20%)’, BAE website: www.baesystems.com/facts/index.htm, accessed 27 April 2002

[22] BAE SYSTEMS Alternative Report 2001, CAAT website, pdf version: www.caat.org.uk/companies/BAES2001.pdf, html version: www.caat.org.uk/companies/BAES2001.html, accessed 29/4/02

Influence / Lobbying

BAE SYSTEMS uses many avenues to lobby governments and increase its sales. Its main advantage lies, however, in its sheer size and its ability to use its importance to the British defence industry to its advantage.

 

Monopoly over the defence industry

As has already been explained, BAE SYSTEMS owns most of the surviving shipbuilding capacity in Britain (see Products). As such it has the ability to use its massive holdings to influence government procurement policy, and to ensure the best deal for itself, rather than the taxpayer. Despite its international aspirations, BAE uses its status as a British company to further influence the Ministry of Defence; as the Defence Review put it, ‘deals with the MoD tend to come wrapped in the Union flag’.[30] Threats over job cuts and relocation are skilfully used to ensure that BAE lands the lions share of all MoD contracts. For instance, the MoD attempted in 1999 to break the monopoly enjoyed by Royal Ordinance (a BAE subsidiary) over fuel supply by purchasing propellant from a South African source. BAE reacted quickly, closing a propellant plant near Glasgow and threatening to shut down Royal Ordinance altogether. As a result, RO now has a guaranteed ten-year contract from the Ministry of Defence.

 

This behaviour has not gone unnoticed by other interested parties, with the chairman of Vosper calling BAE’s behaviour ‘outrageous’, and an article in the Spectator commenting on the ‘all-too comfortable relationship between a public-sector customer and one giant UK provider.’[31] Perhaps the recent dismissal of John Weston from his position as CEO of BAE SYSTEMS indicates that BAE is worried about this criticism; Weston had been widely criticised for ‘bullying’ the MoD, and it was a badly-kept secret that Geoff Hoon, the Minister for Defence, and Weston were not working well together. However, it seems unlikely that BAE will give up all of the advantages that their near-monopoly position gives them, simply because at the moment the MoD is in no position to go elsewhere for their supplies, given that it is government policy to ‘buy British’ wherever possible. At the time of writing, nearly 85% of the MoD’s procurement went through British companies[32], and most of that purchasing involved BAE SYSTEMS, in one way or another.

 

Government support for the defence industry

 

In fact, far from reining in an out-of-control company, the British government goes out of its way to promote and protect the British defence industry. In BAE SYSTEMS’ case, that effort goes right to the top, with Sir Richard Evans (Chairman of BAE) being described as ‘one of the few businessmen who can see Blair on request.'[33] This relationship between the company and the government is not something that is hidden, in fact in April 2001, Dr Lewis Moonie (Under-Secretary for Defence) informed the House of Commons that: ‘MoD has given full support to BAE SYSTEMS’ bid to supply Hawk jets to India…the Secretary of State for Defence and the Minister for Defence Procurement have met with BAE SYSTEMS and the Indian Government to discuss the Hawk proposal.’[34] According to the Guardian, The British government subsequently mounted an intensive campaign to sell 60 Hawk jets worth £1bn to India, in spite of the tremendous tensions in the Kashmir area. BAE SYSTEMS has already sold Jaguar combat aircraft to India in licensing deals the MoD refuses to disclose (see section on Corporate Crimes).[35] In other words, the Government has not only a policy of permitting, but also of supporting, promoting and even covering up arms deals. BAE boasts of commanding the loyalty of over 200 MPs, even describing them as “its” MPs.[36]

 

Financial backing from the Government

ECGD
As well as the advantages that BAE gains from its size and links to government, the company also benefits from measures designed to make foreign investment more secure for British businesses. The ECGD (Export Credit Guarantee Department) underwrites many of BAE’s export contracts, meaning that the taxpayer takes the risk of the transaction, rather than the company. Essentially, the ECGD is there to enable companies such as BAE to enter into high-risk and dubious sales without the risk of large losses. It has been estimated that, in this way, the ECGD subsidises British arms exports to the tune of £227 million annually.[37]

DESO

Another government organisation that makes life easier for the arms industry is DESO (Defence Export Services Organisation). Most Government support to the arms industry is co-ordinated by DESO which has over 300 staff and provides a range of services to the arms industry and potential customers. These include technical and logistical support, advice on negotiation, offset and financing arrangements, assistance to industry in regional marketing, market research funding for exhibitions and facilitation for military support to sales. DESOs marketing and most military support services are provided free to industry. Net operating costs to the MoD are £16m, according to a press briefing by Saferworld.[38]

In addition, the Government uses MoD personnel, as well as embassies and defence attaches to promote arms exports. Also, the Government spends lots of money on official visits to promote the sale of defence equipment. Official visits by ministers and high-level delegations such as the Royal Family are frequently used to promote the sale of defence equipment. Another example was mentioned before; The Secretary of State for Defence met with BAE SYSTEMS and held talks with the Indian Government this year to discuss a BAe Hawk jet proposal. According to Saferworld, the Government’s efforts to promote arms exports cost the taxpayer £69 million.[39]

In short, BAE hardly need to pursue a vigorous lobbying style, as the playing field is tilted heavily in their direction already. Arms companies are heavily subsidised by the state as it is, and BAE’s size means that it can put additional pressure on the MoD to bend to its demands.

Tony and Dick
Whilst exploring the world of arms exports, BBC correspondent Will Self confirmed the existence of an intimate relationship between Tony Blair and BAE SYSTEMS chairman Sir Dick Evans. “It’s Evans, with his abrasive style and no-nonsense salesmanship, who is widely credited with bringing Our Tone on to the export team. Dick got Blair to write a piece for the BAE SYSTEMS newsletter in the run-up to the 1997 election saying: ‘Winning exports is vital to the long-term success of Britain’s defence industry.’ He also pledged New Labour’s support for the industry. Evan’s is said to enjoy the PM’s ear whenever he wants.”[40]

 

Lobbying groups

 

Despite its ability to coerce the UK Government, BAE SYSTEMS also belongs to several lobbying groups. The company is prominent in the TABD (Trans-Atlantic Business Dialogue), which is a trans-continental business lobbying group, which describes itself as ‘a unique business-led process launched by the EU and US in 1995, [which] seeks to reinvigorate our economies by increasing transatlantic trade and investment opportunities through the removal of costly inefficiencies from excessive regulation, duplication and differences in EU and U.S. regulation.’[41] As anyone conversant with corporate speak will know, what this actually means is that the TABD is dedicated to eliminating all regulation which stops profit-making activity, regardless of its worth or importance; environmental regulations, labour standards and nationally owned public services have all come under attack from the TABD. Tellingly, the CEO of BAE, Mike Turner, is to be one of two co-chairs of the organisation for this year (2002).

 

BAE SYSTEMS is also a member of the International Chamber of Commerce (ICC). This organisation describes itself as the ‘World Business Organisation’, and has similar neo-liberalist aims to the TABD.. The European based research group, Corporate Europe Observatory, has this to say about the ICC: ‘The ICC has a long history of vigorously lobbying to weaken international environmental treaties…Examples include the Kyoto Protocol, the Convention on Biodiversity, and the Basel Convention against trade in toxic waste. In all of these UN negotiations, the International Chamber’s obstructive lobbying is in direct opposition to the Global Compact [a UN pledge for transnational corporations] principles it has pledged to pursue.’[42]

 

BAE also belongs to SBAC (Society of British Aerospace Companies), and, as by far the largest member, exercises a lot of power. John Weston, their ex-CEO, is currently President of SBAC. It seems unlikely that control of SBAC is very important to BAE however, given its own direct links to Government and the House of Commons.

 

The BAE SYSTEMS website provides links to Industry Associations, Government and Defence-related sites. See: www.baesystems.com/relatedlinks/relatedlinks.htm

 

 

Moving into the educational sector

 

BAE SYSTEMS is also looking after its future recruitment and ‘public relations’ by moving into the educational sector. BAE SYSTEMS has developed its PR machine far in advance of the traditional careers fair stall and occasional brochure. In 1998 it set up its ‘virtual university’, which awards Certificates in Management, supported by Lancaster and the Open University. BAE keeps expanding its ‘virtual university’, which is also supported by the Engineering and Physical Sciences Research Council (EPSRC). The EPSRC is the largest of the seven UK Research Councils. It funds research and postgraduate training in universities and other organisations throughout the UK.[43] The UK research councils claim to be autonomous, non-departmental public bodies. However, they are funded from the science budget received from the Office of Science and Technology (part of the Government’s Department of Trade and Industry). So basically, the Government is funding research and training conducted for arms manufacturers through the EPSRC.

 

In addition to the ‘virtual university’, BAE SYSTEMS has partnerships of varying natures with many other universities, cooperating with Sheffield Hallam in the production of curriculum materials, and having research partnerships with Cambridge, Sheffield and Southampton Universities, amongst others. It also sends many of its young engineers back into secondary schools, to extol not only the benefits of an engineering career, but one with BAE SYSTEMS. In addition, the company has sponsored various events and ‘educational’ displays, such as the Mind Zone in the Millennium Dome, further linking its name with scientific and engineering excellence, and avoiding its real business of manufacturing weapons to kill people. Having capital far in excess of any other UK engineering firm (partly because of its size, and partly because of its massive reserves from the Al-Yammamah deal) it offers extremely rewarding packages to the best UK engineering students, ensuring that the arms industry continues to leech off the most promising talents in the sector.


References
[30] Defence Review, Summer 1999, cited in Wrigley, C. (2000) BAE SYSTEMS Alternative Report 2000, CAAT

[31] The Spectator, 9 December 2000, cited in BAE SYSTEMS Alternative Report 2001, CAAT website, pdf version: http://www.caat.org.uk/companies/BAES2001.pdf, html version: http://www.caat.org.uk/companies/BAES2001.html, accessed 29/4/02

[32] Ingram, P. & Davis, I. (2001) The Subsidy Trap: British Government Financial Support for Arms Exports and the Defence Industry, Oxford Research Group.

[33] Morgan, O. (2001) A gun at the MoD’s head, 18/3/01, The Observer website: http://www.observer.co.uk/business/story/0,6903,458405,00.html, accessed 29/4/02

[34] Hansard (House of Commons Daily Debates), 04 April 2001, House of Commons website: http://www.parliament.the-stationery-office.co.uk/pa/cm200001/cmhansrd/vo010409/text/10409w02.htm, accessed 10/5/02

[35] Norton-Taylor, R. (2002) British plane sales to India raise fears of nuclear use, The Guardian website, 23/4/02, http://www.guardian.co.uk/kashmir/Story/0,2763,688932,00.html, accessed 10/5/02

[36] National Asset: The Westminster Briefing, No. 13, September 1999, cited in Wrigley, C. (2000) BAE SYSTEMS Alternative Report 2000, CAAT

[37] Ingram, P. & Davis, I. (2001) Executive Summary, The Subsidy Trap: British Government Financial Support for Arm Exports and the Defence Industry, Oxford Research Group/Saferworld. Available on the Oxford Research Group website: http://www.oxfrg.demon.co.uk/1programmes-armstrade-execsummary.htm, accessed 13/5/02

[38] £69 million cost to taxpayer for Government promoting arms exports, Saferworld Press Briefing, 3 July 2001, Saferworld website: http://www.saferworld.co.uk/brief3jul0169mill.htm , accessed 30/4/02

[39] ibid.

[40] Self, W. (2002) Addicted to arms – Tony’s secret vice, 26/4/02, The Independent website: http://www.independent.co.uk/story.jsp?story=288959, accessed 30/4/02

[41] TABD (2002) BAE SYSTEMS and the Boeing company to chair the TABD in 2002, TABD Press Release, TABD website: http://www.tabd.org/chairs2002.html, accessed 10/5/02

[42] Corporate Europe Observatory (2001) High time for UN to break ‘Partnership’ with the ICC, (briefing), CEO website: http://www.xs4all.nl/~ceo/un/icc.html, accessed 30/4/02

[43] EPSRC homepage: http://www.epsrc.ac.uk, accessed 10/5/02

Corporate Crimes

BAE SYSTEMS has committed an impressive amount of corporate crimes. What follows is merely a selection of some of the more recent ones and is by no means a comprehensive account of the company’s wrong-doings. CAAT have a wealth of information on BAE, and further details of the company’s deplorable record can be obtained from them (see Further Information/Resources).

 

Indonesia

 

BAE SYSTEMS’ arms sales to Indonesia are notorious. It has a long history of exporting Hawk Jets to the country, which was ruled by the vicious Suharto regime (and is still governed by a corrupt and undemocratic system, in which the military retains a large portion of power). Arms exports began as early as 1978, but the biggest controversy began in November 1996, when the Conservative government granted an export licence for 16 Hawk-209 aircraft. The purpose of the Hawk aircraft is not ambiguous – BAE themselves describe it as a ‘single-seat, radar equipped, lightweight, multi-role combat aircraft, providing comprehensive air defence and ground attack capability’.[44] Given that in 1996 Indonesia was also trying to purchase US F-16 aircraft (which are air defence fighters), it is likely that the Hawks were intended mainly for ‘ground attack’.

 

It is clear that these ground attack fighters were being purchased for use in internal repression, especially in East Timor. Despite Conservative denials, East Timorese leaders have frequently asserted that Hawk jets have been used in repressive attacks since 1978,[45] and whilst in opposition Robin Cook believed the same thing. As he stated in 1994, ‘Hawk aircraft have been observed on bombing runs in East Timor in most years since 1984’.[46] Unfortunately, this belief did not carry over into his stint as Foreign Secretary for the Labour Government, which renewed the export licence despite vehement protests. Needless to say, this change of heart had absolutely nothing to do with Lord Hollick (then a member of the BAE SYSTEMS Board of Directors) being a DTI advisor at the time of the decision[47], or BAE SYSTEMS’ massive influence over the Labour Government (see section on Influence/Lobbying). Despite continuing concerns over the use of Hawk jets in East Timor, the only action taken by the UK Government was a brief ban from September 1999 to January 2000. It eventually took UN intervention to stop the occupation of East Timor, and needless to say, BAE have never apologised for accepting contracts from a corrupt and murderous dictatorship.

 

Saudi Arabia

 

Before the protests over its exports to Indonesia, BAE (then British Aerospace) had already become involved in one of the biggest trade scandals of the 1980s; the Al-Yamamah deals with Saudia Arabia. In the words of the Financial Times, the arms deal known as Al Yamamah II was ‘the biggest [UK] sale ever of anything to anyone.”[48] The deals were condemned by Amnesty International as a clear endorsement of a country ruled by a repressive regime who displayed a ‘persistent pattern of gross human rights abuses.’[49] BAe was the prime contractor for the entire deal, which included the sale of 48 Tornado bombers, 24 Tornado fighters, 30 Hawk trainer-fighters, and a large number of Rapier missiles. It also involved millions of pounds worth of corrupt commissions paid to Arabian businessmen, which the Conservative government of the time denied, and which eventually led to the downfall of Jonathan Aitken. Bringing in the service side of BAe, the company provided training and advice for the Saudi military. Indeed, this was pursued to such an extent that The Economist suggested that ‘the company not only supplies Saudi Arabia with fighter aircraft, but virtually runs its entire airforce.’[50] The scandal was further added to by a Channel 3 TV documentary. This showed two BAe representatives offering electro-shock batons for sale and claimed that the company had supplied 8,000 of them as part of the Al Yamamah contract. In spite of the compelling nature of the evidence, the Director of Public Prosecutions decided not to charge BAe on public interest grounds.[51]

 

Turkey

 

The UK sold £84 million worth of arms to Turkey in 1998, most of which came directly from the BAE SYSTEMS empire. The orders for that year, which was largely typical, included tank turrets, military components and torpedoes. More worrying was the deal struck between Turkey and Matra Marconi Space, worth $110 million, for military satellite terminals, and the deal between a Turkish company and Matra BAE Dynamics for the manufacture of BAE’s Rapier anti-aircraft missiles. 850 of those missiles are to be supplied to Turkey.[52] The problem with all this, of course, is that Turkey is, an oppressive regime with an appalling human rights record. It routinely uses its military equipment to oppress and kill Kurds and other ethnic minorities. It has been accused by the Council of Europe, among other bodies, of having a history of ‘repeated and serious human rights violations’. The same body reported in July 1999 that it could see ‘no significant progress in limiting torture, disappearances, and extra-judicial killings’ in Turkey.[53]

 

Deliberate inflation of military spending

 

Selling military equipment to dictatorial and oppressive regimes is not the only corporate crime that BAE SYSTEMS commits (although they do seem to like doing it). Just as serious is its complete lack of scruples when selling weaponry to poverty-stricken and corrupt countries. The old argument ‘if we didn’t do it, someone else would’ is soon deployed when the examples (amongst others) of South Africa, Greece, Tanzania, Zimbabwe and India are raised. According to CAAT, ‘Arms purchases do not merely waste scarce resources, but also aggravate international tensions, generating mutual suspicion and hostility. The essence of this traffic is the alliance between Western arms companies and local military interests, which repeatedly show that they can manipulate even democratic politicians into needless extravagances.’[54]

 

    • South Africa
      At the time of writing, the government of South Africa has just decided to go ahead with the second phase of a deal with BAE worth £1.5 billion, involving the purchase of 24 Hawk aircraft as well as Gripen aircraft from SAAB (which BAE owns shares in). The deal has been roundly condemned by churches and NGOs across South Africa, as it will inevitably divert much needed resources from health, education and welfare policies. Raenette Taljaard, finance spokesman for the South African Democratic Alliance estimated that the money being spent on the Hawk jets could provide 4.5 million destitute South Africans with a basic living grant of R100 a month for a year, or offer housing subsidies for 337,500 homeless families.[55] Even if South Africa desperately needed new fighter aircraft, questions have been raised over the suitability of the ageing Hawk jets. Despite costing more than the aircraft which came first in the evaluation, BAE manufactured aircraft were chosen. This has lead to accusations of corruption and bribery.

 

    • Greece
      Arms sales to Greece would seem to be unobjectionable on first examination. After all, the country is a NATO ally of the UK and a European democracy. It is also, however, the poorest country in the European Union. At the same time, it spends a higher proportion of its national income on ‘defence’ than any other European power, except Turkey (Greece’s defence budget was 4.9% of its total budget in 1999). In the year 2000 Greece purchased 60 Typhoon aircraft from BAE SYSTEMS at a cost of £5 billion.[56] It is also looking to purchase additional submarines and attack fighters. This is disgraceful considering that the country cannot afford decent healthcare or housing for its citizens. This, however, is not a consideration for BAE, which will sell to any customer which has the money.

 

    • Tanzania
      Another case of BAE selling an expensive product to a country unable even to feed its own citizens came to light at the end of 2001, as the Labour Government approved the £28 million sale of a military air traffic control system to Tanzania. The country has an average per capita income of only £200, and the government of Tanzania has had to take out a hefty loan from Barclays to finance the deal. In an indication of the utter unsuitability of the deal, even the World Bank and the IMF refused to fund it, stating that they saw the system as a white elephant which would do nothing to benefit the country, and the Department for International Development rejected the deal on similar grounds before they were over-ruled by the Cabinet and Prime Minister. As Julian Forsyth, Oxfam’s head of policy, pointed out, the deal also makes a mockery of the Government’s supposed commitment to African debt relief. As he put it, ‘It is outrageous that Tanzania’s debt relief will go towards bolstering the profits of BAE and Barclays bank, rather than helping the poor people of Tanzania.’[57]

 

  • India
    In 2001, BAE SYSTEMS found itself involved in the ‘Hinduja scandal’ that prompted the resignation of Peter Mandelson. A former advisoer to the Indian government claimed that the company had paid a large “commission” to the Indian tycoons to fix a £1bn arms deal with the Indian Air Force for 66 Hawk jets. The ensuing controversy resulted in the resignation of India’s defence minister, George Fernandes, who also stood accused of manipulating procurement of the Hawks. Despite this embarassing setback, BAE continued to aggressively pursue the £1bn deal. This was at a time when India’s dispute with Pakistan over Kasmir threatened to turn into a (potentially nuclear) war, which would futher destabalise the entire region. Furthermore, whilst Tony Blair was expressing hope that the UK “could a calming influence” in the region, Geoff Hoon, the defence secretary, was pressing the Indian Government to make a quick decision on the Hawks. The proposed deal has faced harsh criticism from within India itself, with the UK being accused of “fleecing India over Hawks.” [58]

     

    According to The Guardian, the British government has recently admitted that British jets sold to India could be adapted to carry nuclear weapons or used to train pilots to fly nuclear-capable aircraft. The admission prompted angry reactions by MPs who said the sales flew in the face of the government’s commitment to sustainable development, its guidelines covering arms exports, and its pledge not to encourage nuclear proliferation.[59]

     

    BAE SYSTEMS has already sold Jaguar combat aircraft to India in licensing deals which the Ministry of Defence (MoD) refuses to disclose.[60] Besides breach of contract, ‘client confidentiality’ is the explanation that’s always trotted out to justify the obscurity within which the British Government is allowed to sponsor and subsidise gun-running, a BBC correspondent investigating the world of arms exports explains.[61] With regard to the Jaguar jet deal with India, junior defence minister Lewis Moonie told Tory MP Baldry that information about the end use in the Jaguar licensing deal, and the number of Jaguars involved in the deal, was confidential. Baldry said the deals were not consistent with the government’s publicly stated concern about the impact of arms sales on sustainable development. “What the Indian government would spend on Hawk jets amounts to a decade of UK bilateral development aid,” he said.[62]

 

Zimbabwe

 

 

BAE SYSTEMS was happy to provide spare parts to keep Robert Mugabe’s ageing Hawk jets in operation in Zimbabwe, which were obviously being used to sustain Mugabe’s operations in the Democratic Republic of Congo. Significantly, the Foreign Office had wanted to stop the export of the spare parts but are said to have been over-ruled by the Prime Minister, with whom Sir Richard Evans (Chairman of BAE) has a very close relationship (see section on Influence/Lobbying). BAE only stopped supplying spare-parts to Mugabe in mid-2000, when Mugabe’s behaviour became too outrageous to ignore.

 

 

Qatar/Algeria

 

 

In 2000, the Sunday Times reported that BAE had made an application to export £5 million worth of military equipment to Qatar, which Qatar intended to gift in full to Algeria. The information was leaked to the Sunday Times by a Qatari officer, and the DTI confirmed that ‘it had received the purchase order and it was being considered.’ Algeria has an ongoing conflict with Islamic groups and an infamous human rights record.[63]

 

 

Pressure on the Government and MPs

 

 

As the world’s largest arms manufacturer, and owner of a large majority of the UK’s ship-building industry, BAE is able to exert a massive amount of pressure on the Ministry of Defence. It has a history of threatening the Government with relocation and withholding of investment if it does not get the contracts that it desires. For example, in 2001 the company put pressure on the MoD to assign all 12 of the new Type 45 Destroyers to BAE, despite the original plan being to split their manufacture between Vosper Thornycroft and BAE SYSTEMS. It threatened that if it didn’t get the contract in its entirety it would scrap its planned investment of £150 million at Scotstoun on the Clyde, and effectively pull out of shipbuilding altogether, crippling the British manufacturing sector.[64]

 

BAE also boast close links to Tony Blair and the Government (see section on Influence/Lobbying).

 

Moving into the educational sector

 

 

BAE SYSTEMS has developed its PR machine far in advance of the traditional careers fair stall and occasional brochure. It has formed partnerships with a number of universities in the UK. It also sends many of its young engineers back into secondary schools to extol the benefits of a career with BAE. In addition, the company have sponsored various events and ‘educational’ displays, such as the Mind Zone in the Millennium Dome, further linking its name with scientific and engineering excellence, and avoiding its real business of manufacturing weapons to kill people. Having capital far in excess of any other UK engineering firm (partly because of its size, and partly because of its massive reserves from the Al-Yamamah deal) it offers extremely rewarding packages to the best UK engineering students, ensuring that the arms industry continues to leech off the most promising talents in the sector. (See also Influence/Lobbying)


References
[44] ‘BAE SYSTEMS Facts, Hawk Aircraft’, BAE SYSTEMS website: http://www.baesystems.com/facts/index.htm, accessed 30/4/02

[45] CAAT (2001) The International Arms Trade to Indonesia, Guardian Unlimited

Special reports, Guardian website: http://www.guardian.co.uk/indonesia/Story/0,2763,200783,00.html, accessed 10/5/02

[46] The Guardian (1999)Robin Cook defends his ethical foreign policy, Speaking on BBC Radio, 14 May 1997, Guardian Unlimited, 25/1/99, The Guardian website: http://www.guardian.co.uk/Archive/Article/0,4273,3811384,00.html accessed 30/4/02

[47] Gilby, N. (1999) Arms Exports to Indonesia, CAAT Briefing, CAAT website: http://www.caat.org.uk/research/Indonesia_Body.html,

[48] cited in Hirst, C. ‘TheArabian Connection: The UK arms trade to Saudi Arabia,’ CAAT website: http://www.caat.org.uk/research/Saudi_Body.html, accessed 9/5/02

[49] Amnesty International report (1999) – cited on BAE SYSTEMS, Reaching Critical Will website: http://www.reachingcriticalwill.org/dd/bae.html, accessed 9/5/02

[50] The Economist, 23 December 2000, cited in BAE SYSTEMS, Reaching Critical Will website: http://www.reachingcriticalwill.org/dd/bae.html, accessed 10/5/02

[51] Cooper, N. (2000) Minutes of Evidence, Select Committee on Defence, House of Commons website: http://www.parliament.the-stationery-office.co.uk/pa/cm199899/cmselect/cmdfence/541/9110314.htm, accessed 10/5/02

[52] Wrigley, C. (2000) BAE SYSTEMS Alternative Report 2000, CAAT

[53] ibid.

[54] ibid.

[55] Linton, L. (2002) Impoverished South Africa buys Hawk jets for £1.5bn, The Independent website, 6/4/02,: http://www.independent.co.uk/story.jsp?story=282099, accessed 30/4/02

[56] Aerospace 2000 / Defence, Industry Briefs: Financial Times Survey, The Financial Times website: A href=”http://specials.ft.com/ln/ftsurveys/industry/sc22322.htm“> http://specials.ft.com/ln/ftsurveys/industry/sc22322.htm, accessed 9/5/02

[57]’ Denny, C. (2001) Backlash over costly high-tech for Tanzania, The Guardian website, 21/12/01: http://www.guardian.co.uk/tanzania/story/0,11441,623358,00.html, accessed 10/5/02

[58] CAAT (2002) BAE SYSTEMS Alternative Report 2002, CAAT website: http://www.caat.org.uk/companies/BAES2002.pdf, accessed 10/5/02

[59] Norton-Taylor, R. (2002) British plane sales to India raise fears of nuclear use, The Guardian website, 23/4/02, http://www.guardian.co.uk/kashmir/Story/0,2763,688932,00.html, accessed 10/5/02

[60] ibid.

[61] Self, W. (2002) Addicted to arms – Tony’s secret vice, 26/4/02, The Independent website: http://www.independent.co.uk/story.jsp?story=288959, accessed 30/4/02

[62] Norton-Taylor, R. (2002) British plane sales to India raise fears of nuclear use, The Guardian website, 23/4/02, http://www.guardian.co.uk/kashmir/Story/0,2763,688932,00.html, accessed 10/5/02

[63] Colvin, M. (2000) Britain plans Algerian arms deal despite ethical policy, Times Newspapers, 16/7/00, Algeria Watch (Germany) webpage: http://www.algeria-watch.de/farticle/britainarms.htm, accessed 10/5/02

[64] Bannister, N. (2001) BAE threatens to pull out of warship work, 2/3/01, The Guardian website: http://www.guardian.co.uk/Archive/Article/0,4273,4144885,00.html, accessed 30/4/02

Further Information/Resources

Arms Trade – A major cause of suffering www.globalissues.org/Geopolitics/ArmsTrade.asp

A web-based information resource concerning the impacts of the arms trade.


BAE SYSTEMS website www.baesystems.com

Read the corporate-speak and weep. They are ‘making the world a safer place’!


Campaign Against the Arms Trade (CAAT) www.caat.org.uk

This group provide an invaluable source of information concerning the British arms trade. CAAT produce an annual Alternative Report on BAE. The 2002 report can be viewed at:

www.caat.org.uk/companies/BAES2002.pdf


Campaign for Nuclear Disarmament (CND) www.cnduk.org/aboutus.htm

CND campaigns non-violently to rid the world of nuclear weapons and other weapons of mass destruction and to create genuine security for future generations.


Indiana Peace Action Network (IPAN) www.ipan.net

IPAN is a grass roots organisation committed to nuclear disarmament, stopping arms sales to dictators, ending the economic sanctions against the people of Iraq and cutting the bloated military budget in order to fund community needs.


Mother Jones www.motherjones.com/arms

A magazine of investigation and ideas for independent thinkers. It is also accessible online, and carries a good section on Arms.


Nonviolence.Org www.nonviolence.org

A source for up-to-minute news and commentary on peace and non-violence.


Oxford Research Group www.oxfrg.demon.co.uk/1programmes-armstradereport.htm

This group has produced a report entitled “Government Subsidies of Arms Exports”.


Voices in the Wilderness www.vitw.org

A campaign to end the economic sanctions against the people of Iraq.


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