Thursday, 1 October 2009

BAE: The ethics of domicile

I have no insight as to whether the breathless Newsnight story about BAE that i saw last night and in the papers today have any credence.

Sadly, the few people I know in the arms business all confirm that it perhaps not the most ethical industry. A Hobbesian view of the world suggests those that are selling weapons to murder people with are perhaps not those most prone to strong views on right and wrong.

However, even if these accusations fail in court, with the record of the SFO this is after all quite likely, the much has been spread.

I note in recent years that BAE has been busy buying up companies all over the world and in the US, to try and diversify its business. If it finds that its head office is based in a country that does not want it anymore then why not move abroad. The factories can stay and surely the government would want this as it is very dependent on BAE for jobs and defence needs.

The bosses could operate in a jurisdiction with a more friendly tax and political regime. There are plenty of candidates for this.

This is not to condone the paying of bribes and an unethical way of business, but reality bites hard sometime. Labour's ethical foreign policy did not last long, I do wonder about the merits of pursuing BAE for past actions instead on ensuring future compliance.

13 comments:

Blue Eyes said...

I once went for a job interview at BAE Systems. I like to think they rejected me for having too much integrity...

Demetrius said...

Tricky this, one likes to be on the moral side, but in the arms trade there isn't one. The other worrying aspect is that BAE is in a high risk, highly competitive trade, and is a major chunk of our industry. With finance now we have just too much tied up at the high risk end, we really need to find low risk, steady small scale stuff. But governments do not do this.

roym said...

im sure that BAe have tucked enough of last years 1.8bn profit away for the 20mill fine they'll get. they'll just have to make do with cava at the xmas do!

CityUnslicker said...

ROYM - the fine is said to be £1 billion - hence them fighting.

James Higham said...

If it finds that its head office is based in a country that does not want it anymore then why not move abroad. The factories can stay and surely the government would want this as it is very dependent on BAE for jobs and defence needs.

Simple logic.

Richard Elliot said...

Preston had a few interesting comments in his blog about BAE being quite keen to pay a fine an move on under their new management.

Houdini said...

I don't blame any company for dodgy practice, but getting caught is another matter. The main point, for me, is the way the Government and the SFO has really gone for the jugular. Any other country would still have brought them to book, but with such a massive fine, and that is a point well made CU but sadly, I think, missed.

Mind you are we surprised? Great British companies get sold out to foreign companies every day, lately. PO and BT amongst others.

electro-kevin said...

"I do wonder about the merits of pursuing BAE for past actions instead on ensuring future compliance."

Quite. But note the vigour of the investigation. If only the fraud agencies were as thorough with politicians.

And Barroness Scotland to decide. Oh puh-leease !

Graeme said...

Following electro-kevin's comment - what are the odds that that bastion of propriety, Baroness Scotland, will review the SFO's case, and dismiss it?

I suspect it'll go that way, because the gubmint won't want to risk the can of worms marked "BAE-Saudi Arabia" being opened up again...

Houdini said...

I think you are entirely right Graeme because how many ministerial fingers were in those various dodgy pies?

It's already been reported that the export licences for the military air traffic system to Tanzania could well be very suspect, and Blair was involved with the Saudi deal. How many others?

Now the headline that the Government is honest and will crack down on dodgy practices, especially by those evil arms dealers (unions are happy) has been grabbed I suspect the whole thing will slowly go away and BAE made to pay over about £200million.

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