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Recently, I've been researching BAE Systems,
a company that has had its problems with ethics not
withstanding the fact that it operates in a morally uncertain trade,
but it is now trying to establish itself as an ethical leader.
BAE's approach suggests that
ethical leadership is too important to be left to individuals.
Ethical leadership must be embedded in the very fabric of the organization.
BAE Systems is the world's second largest global defense company,
employing 105,000 people across
five continents and supplying customers in over 100 countries.
Sales exceeded £18.5 billion in 2008.
In recent years, the company which operates in
an industry that is inevitably ethically sensitive,
has found itself subject to allegations of impropriety.
The most notable accusations surrounded the £43 billion
Al Yamamah arms deal signed with the Saudi Arabian government in 1995,
but investigated by the British Serious Fraud Office some 20 years later after
the Guardian newspaper alleged that a £60 million slush fund was used to win the deal.
Complex political pressures appear to result in the SFO dropping
the investigation in December 2006.
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BAE Systems deny any specific wrongdoing but admit
the attention of procedures to ensure the ethical conduct of employees,
lacked rigor, and therefore,
left the company open to accusations of malpractice,
that caused serious reputational damage.
Their response was to establish an independent commission,
led by Lord Woolf,
a former law chief justice,
which was charged with developing a code of
ethics that represented the highest moral standards.
The company made a commitment to be bound by whatever recommendation the committee made.
The Woolf Report was published in 2008 and made
23 robust recommendations that
an impartial observer would probably consider quite severe and challenging.
Also, in 2008, BAE Systems published a 63 page code of ethical conduct.
The code states: "every company needs a compass so that we all know the right path to take.
Our ethical principles set the direction."
