Anthony Hilton: Trivial pursuits can prove costly

When the annual report of the British defence manufacturer BAE Systems was published just before Easter, it revealed that the company had not renewed the contract under which Sir Richard Evans, a former chief executive and chairman, served as an adviser.

Anthony Hilton
Anthony Hilton

BAE has been dogged by controversy in recent years as it tries to cope with allegations that some of the contracts won on Sir Dick's watch - including with Saudi Arabia and Tanzania - may have involved improper payments. Trying to draw a line under these corruption allegations, the firm has agreed to pay various fines for lesser charges without admitting to the more serious offences.

Under new chief executive Ian King, it has been making genuine efforts to be more open. The stance was that whatever might or might not have happened in the past, the present and the future were going to be different. And in a series of background breakfasts and lunches with key journalists, it was putting the message across rather well. So far, so good.

But when The Times covered the story of Sir Dick's departure following the publication of the annual report that, by law, had to reveal it, given that he earned £246,954 last year, it included the following paragraph: 'On 19 February, Ian King, the BAE chief executive, told The Times that the company would continue to employ Sir Dick despite the failings made under his leadership.'

Now it could be that when he was asked the question on 19 February, King had no idea that Sir Dick would be on his bike just nine days later, but the casual observer would think, as chief executive, he must have known. They would infer that The Times had the story of Sir Dick's ousting but the timing was not of the company's choosing, so it sought to put the reporter off the scent.

Why do companies do this? Here is a global firm suffering from reputational damage that could cost it hundreds of millions of pounds in lost orders. BAE is trying to rebuild trust with media, politicians and opinion formers in order to demonstrate to people that it has changed, yet it risked being caught trying to mislead - and over something pretty trivial.

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