 King's BAE crown comes with a whiff of scandal
(China Daily)
Updated: 2008-07-01 08:02
Ian King, CEO designate of BAE, Europe's biggest military contractor, takes on a company blessed with a burgeoning order book but tainted by a whiff of scandal about past Saudi arms deals. King, who came to BAE via its 1999 takeover of Marconi which he joined as a graduate entrant in 1976, was favorite for the top job from the moment Mike Turner announced last October he would retire this August. King has been head of BAE's UK and other non-US businesses since January 2007 prior to which he built up its Customer Solutions & Support business which helps simplify maintenance tasks by supplying all necessary spares in a single package. Asked what gave him more pleasure, getting the CEO job or Portsmouth, the football team he supports, winning the FA Cup this year, King said: "My son getting a century (playing cricket) on his 17th birthday". The BAE he will inherit has forecast a further year of good growth, after posting a 22 percent rise in underlying 2007 profit to 1.477 billion pounds. Its end-2007 order book stood at 38.6 billion pounds, up 22 percent. The world's third largest defense contractor is involved in many major US and British military projects, including the F-35 Joint Strike Fighter, Type 45 destroyer, Astute submarine and mine-resistant ambush-protected vehicles used in Afghanistan and Iraq. King, who takes over as chief executive on Sept 1, said one of his biggest immediate challenges would be to implement a report on how BAE should best act ethically. In May, Lord Harry Woolf, a former British law lord hired by BAE to chair an independent committee reviewing BAE's business practices, said the company had paid insufficient attention to ethical standards in the past. BAE has always denied any wrong-doing amid long-standing allegations it paid kickbacks to a Saudi prince over a deal, known as al-Yamamah ("the dove"), for Tornado fighter jets. An investigation by the Serious Fraud Office into the matter was halted in December 2006 by Prime Minister Tony Blair after the probe angered Saudi Arabia. Authorities cited the risks the inquiry posed to Britain's relationship with the oil kingdom, but the move attracted sharp criticism by anti-bribery campaigners and British media. Blair's intervention was followed nine months later by Saudi Arabia awarding BAE a 4.43 billion pounds deal for 72 Eurofighter Typhoon combat jets. But critics persisted by taking the government to court. In April, judges said the investigation should not have been halted, in a ruling that criticized the British and Saudi governments. Govt appealing verdict The government is appealing that verdict and is set to take its case to Britain's highest court, the House of Lords, on July 7-8, with a verdict not expected until October. Separately, BAE faces a US Department of Justice investigation into its compliance with anti-bribery laws, including its dealings with Saudi Arabia. Turner's legacy is a company transformed from being a largely British business into a major global defense company. BAE targeted the US in recent years, keen to tap the world's largest defense budget and growing demand for equipment from the US Department of Homeland Security. To that end, BAE bought Armor Holdings and United Defense Industries to become a leading supplier of tanks and armored vehicles to the US military. Chairman Dick Olvers said King had been "to the front and centre" during those takeovers which led to BAE arranging its corporate structure so as to be regarded as a US company. The US is now one of BAE's six so-called home markets, along with Australia, Britain, Saudi Arabia, South Africa and Sweden. The six generated 85 percent of 2007 sales. Numis Securities analyst Roger Johnston said King's appointment removed an element of uncertainty surrounding the group because its strategy was "unlikely to change" with international home market expansion set to continue. Agencies (China Daily 07/01/2008 page16) |
