BAE told to clean up act after claims that deals were corrupt

Defence giant BAE Systems must tighten up its anti-corruption measures following lurid allegations of bribery in its bids for arms deals, a keenly awaited report found today.

The report by former Lord Chief Justice Lord Woolf made 23 recommendations for the former British Aerospace to strengthen its standards on corruption.

BAE commissioned Woolf to carry out the investigation after probes by the Serious Fraud Office and Department of Justice into arms sales to Saudi Arabia, and years of criticism over the way BAE won the £43 billion Al-Yamamah arms deal with Saudi Arabia in 1989.

Woolf said BAE had improved its practices, but added: "The company has a substantial task ahead if it is to meet higher standards.

"The company's rapid evolution to a global company and the characteristics of the defence sector mean that more needs to be done."

Among his findings were a call for BAE to undergo a full independent audit every year.

It also demands the company uses central registers to collect and monitor information on how much it spends on gifts and hospitality.

It was told it should also strengthen its anti-bribery measures in the appointment, management and payment of advisers. Claims BAE used bribes to win contracts had "damaged the global reputation of the country', the report said.

BAE said it would examine and act on the findings. But former South African MP Andrew Feinstein, an arms industry-expert who made a submission to Lord Woolf 's inquiry, dismissed today's report: "I don't think it adds anything new - it's just PR."

The report found no wrongdoing in the recent securing of the £4.4 billion deal with Saudi Arabia for 72 Eurofighter Typhoon planes.

In 2006, the Serious Fraud Office controversially abandoned an investigation into Al-Yamamah after the Government said it could jeopardise Britain's relations with Saudi over the War on Terror. The High Court recently attacked the decision.