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BAE Systems has been criticized by its external assurers for failing to provide enough information in its corporate responsibility report on allegations of bribery and corruption within the company.
The Corporate Citizenship Company, which provides the external assurance statement for BAE’s latest CSR report, says the company does not tackle the issue thoroughly enough given the public interest in multi-million pound payments allegedly made to third parties who helped the company win arms deals with Saudi Arabia.
That interest rose significantly at the end of last month, when the company announced that it had become the subject of an anti-corruption probe by the US Department of Justice, which caused the company's shares to fall by an initial 11 per cent.
The consultancy acknowledges that BAE is unable to make a detailed rebuttal while investigations continue, but argues that ‘nonetheless, given the extent of concern expressed, including public statements from institutional and other investors, we believe readers would expect to see a fuller expression of the company’s position.’
BAE confines its comments on the allegations to three paragraphs expressing disappointment that recent media coverage is proceeding on the assumption, ‘unsupported by any evidence’, that offences have been committed.
However, the Corporate Citizenship Company says BAE’s statements on the matter do not cover enough ground – and that while the company ‘remains ahead of its sector in its reporting’, future documents should tackle this area more thoroughly. Others have expressed similar views. Deborah Smith, founder of EQ Management, a consultancy which advises companies on reporting, said she had been disappointed by the ‘cursory’ account of the recent Saudi-related accusations, and added: ‘this is perhaps the only annual CSR report I have ever read where the short verifier’s report is much more revealing than the whole of the client report that went before.’
Deborah Allen, director of corporate responsibility at BAE, told EP: ‘We remain constrained in what we can say by legal obligations, and beyond our public statements confirming that there has been no wrongdoing there is little more that can be said’.
Allen added: ‘I anticipate that this issue will be included in next year’s report and we will continue to ... be as open as we can.’
EP understands that the company’s limited treatment of corruption allegations in its report has to some extent been reflected in its stakeholder engagement, with participants in at least one recent focus group being told there was to be no discussion of such issues.
However, one CSR consultant said BAE had to be given credit for bringing up the issue at all, given the possible legal and political implications of revealing too much. ‘One thing this does show is that BAE’s CSR report is now the first source of the company’s views in this area, and it’s great for CSR reporting that people are noticing this,’ he said.
The Corporate Citizenship Company, which provides the external assurance statement for BAE’s latest CSR report, says the company does not tackle the issue thoroughly enough given the public interest in multi-million pound payments allegedly made to third parties who helped the company win arms deals with Saudi Arabia.
That interest rose significantly at the end of last month, when the company announced that it had become the subject of an anti-corruption probe by the US Department of Justice, which caused the company's shares to fall by an initial 11 per cent.
The consultancy acknowledges that BAE is unable to make a detailed rebuttal while investigations continue, but argues that ‘nonetheless, given the extent of concern expressed, including public statements from institutional and other investors, we believe readers would expect to see a fuller expression of the company’s position.’
BAE confines its comments on the allegations to three paragraphs expressing disappointment that recent media coverage is proceeding on the assumption, ‘unsupported by any evidence’, that offences have been committed.
However, the Corporate Citizenship Company says BAE’s statements on the matter do not cover enough ground – and that while the company ‘remains ahead of its sector in its reporting’, future documents should tackle this area more thoroughly. Others have expressed similar views. Deborah Smith, founder of EQ Management, a consultancy which advises companies on reporting, said she had been disappointed by the ‘cursory’ account of the recent Saudi-related accusations, and added: ‘this is perhaps the only annual CSR report I have ever read where the short verifier’s report is much more revealing than the whole of the client report that went before.’
Deborah Allen, director of corporate responsibility at BAE, told EP: ‘We remain constrained in what we can say by legal obligations, and beyond our public statements confirming that there has been no wrongdoing there is little more that can be said’.
Allen added: ‘I anticipate that this issue will be included in next year’s report and we will continue to ... be as open as we can.’
EP understands that the company’s limited treatment of corruption allegations in its report has to some extent been reflected in its stakeholder engagement, with participants in at least one recent focus group being told there was to be no discussion of such issues.
However, one CSR consultant said BAE had to be given credit for bringing up the issue at all, given the possible legal and political implications of revealing too much. ‘One thing this does show is that BAE’s CSR report is now the first source of the company’s views in this area, and it’s great for CSR reporting that people are noticing this,’ he said.
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