The civil society in Britain, the OECD and the Transparency International (TI) have all expressed their extreme dismay over the recently published Woolf Committee Report’s silence on BAE Systems’ alleged recourse to bribery to obtain the multi-billion dollar Al Yamamah military contract from Saudi Arabia.

Though the report on the ethical business practices and policies of BAE Systems and its recommendations have been widely welcomed, many however, feel that its announcement at this stage could well be a ploy of the interested parties to create the impression that something concrete was being done in regard to the bribery allegations involving Saudi princes in the Al Yamamah deal as well as the perception that the Labour government had willingly allowed itself to be blackmailed into stopping the investigation.

The TI welcoming the report, however, said that the halting of the Serious Fraud Office’s (SFO) investigation into Al Yamamah deal had caused untold damage, both to the reputation of the UK and to global efforts to improve governance and combat corruption.

At the OECD, it has reduced the UK’s standing among its peers in the Working Group on Bribery and undermined the collective political commitment on which the success of the OECD Anti-bribery Convention and other excellent OECD initiatives depend.

The TI says that on the world stage, the UK stands accused of hypocrisy for prescribing governance reforms in developing countries in receipt of its development assistance, whilst failing to enforce anti-corruption laws at home.

“It would also undermine implementation of the United Nations Convention against Corruption, where tensions between developed and developing countries have already slowed progress.

“Corruption threatens democracies and human rights. It erodes development and destroys lives and livelihoods, especially of the poor. It puts businesses and their employees at risk, and it weakens the integrity of markets. We urge the (UK) government to re-assert its commitment to the anti-corruption agenda, respect the principle of prosecutorial independence, and to allow the SFO to take the decision to re-open this investigation,” the TI observed.

The Woolf Committee Report recommendations included:

• The adoption of a global code of ethical business conduct, which would apply throughout the company regardless of location, unless local laws require a higher standard.

• The appointment of a senior executive to take responsibility for the implementation of the code. This person would report to the CEO and have direct access to the Chair of the Corporate Responsibility Committee.

• The regular assessment of business conduct, practice and progress by external auditors.

• Enhanced diligence and transparency in the use of agents and in regard to offsets

• The instigation of internal investigations into allegations of unethical behaviour and the disclosure of material findings to the relevant authorities

However, in light of the consistent allegations of misconduct in the Al Yamamah contract and the damage it has caused to the company and to the United Kingdom, TI (UK) said it was disappointed with the Committee’s failure to require enhanced safeguards in the new Eurofighter Typhoon aircraft (Salaam) contract. An assurance that the contract “should not in itself create risks of unethical conduct to the company” does little to allay fears, and is not in line with the principles of transparency broadly endorsed by the Report.”

The Report urges the government quickly to bring forward anti-bribery legislation, which has been scandalously delayed. However, the Report might have been more rigorous in the treatment of ‘hospitality and gifts’.

The report, by senior retired judge Lord Woolf, sets out 23 recommendations that it says will ensure the defence company having “world class ethical business practices”. It was commissioned by BAE last summer to help draw a line under years of criticism that have dogged it since it signed the Al Yamamah arms deal to sell aircraft and other defence equipment to Saudi Arabia in 1989.

The continued political fall-out from the abortive probe into alleged bribery by BAE Systems is raising pressure for reform of Britain’s archaic anti-corruption laws, amid growing embarrassment about the lack of successful prosecutions.

The Law Commission has proposed a long-awaited overhaul of the rules, but critics accuse the government of hypocrisy for lecturing other countries on the evils of bribery while failing to pursue the very British companies that are paying bribes.

The Organisation for Economic Co-operation and Development – the leading force in international anti-bribery work – is due soon to unveil the results of high-profile probe into why London’s efforts lag behind those of the US and even historically poor performers such as France and Germany.

Critics have grown increasingly alarmed by Britain’s failure to bring a prosecution under a 2001 law that for the first time explicitly made it an offence for a British national or business to bribe public officials overseas.

However, under existing rules, prosecutors have to prove that foreign officials receiving the alleged bribes – known as “agents” – have acted without the consent of their superiors, known as “principals”.

But this law so far remained unused because of the difficulties in applying the relevant rules in countries in which “principals” such as top civil servants, prime ministers and presidents are themselves complicit in the bribery.

In the Al Yamama case, British officials and investigators had argued over whether it would be necessary to achieve the near-impossible feat of gathering testimony from Saudi Arabia’s King Abdullah that the alleged bribes were paid without his knowledge.

What is more worrying for the civil society in the UK is the government’s continued failure to honour a long-standing promise to reform the anti-corruption laws to prevent such problems in future cases. Many see it as reflecting a wider political reluctance to jeopardise commercial and strategic interests.

A 10-month old US request for legal assistance on the BAE case is stranded in the Home Office. And it has been six months since the SFO recommended to the attorney-general to prosecute a British executive allegedly involved in bribery related to electricity network building contracts in the Balkans.

The proposals to give the attorney-general unprecedented statutory powers to block corruption probes and prosecutions on national security grounds have also come under heavy criticism.