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Seeking reputational damage ethically can be tough task

By David Robertson

When it comes to reputational damage, few firms have suffered like BAE Systems, Europe's largest defence contractor, in recent years. BAE has been accused of bribery and corruption in a number of major arms deals with foreign governments and has been under investigation by the UK's Serious Fraud Office and US Department of Justice.

The company's previous management denied everything – a strategy that made BAE look guilty to the outside world. A new chairman has brought a change of heart and BAE has been bringing in new practices to ensure its ethical standards are the highest.

However, the SFO and DoJ investigations remained a cloud over BAE's reputation so when the company last week agreed plea terms with both organisations there was a clear sense of relief on all sides. BAE will pay $400m to the DoJ and plead guilty to making misleading statements to the US Government. It will pay £30m to the SFO for false accounting.

These are minor crimes and a long way from the bribery and corruption allegations, and is still a good settlement. This may be a second-best result for justice but it is win-win for everyone else.


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