The Times - January 16, 2003:
BAE dismayed as Hoon says it is not British
By Russell Hotten
FEARS that the Government is preparing to award a £10 billion defence contract to the French sparked fury from British unions and dismay at BAE Systems yesterday.
The row erupted after Geoff Hoon, the Defence Secretary, told American journalists in London that BAE Systems, Britain’s biggest manufacturer, was no longer British. His comments came after last month’s dispute between BAE and the Ministry of Defence (MoD) and, crucially, ahead of the imminent award of a number of large contracts, including a £10 billion order for two aircraft carriers. BAE is bidding against Thales, a French rival.
Analysts said that Mr Hoon’s comments were part of a running dispute between the MoD and BAE over whether contracts should be open to tender by foreign companies.
Mr Hoon said that BAE was no longer British because a majority of its shares were held overseas. He said that BAE had no political advantage over foreign companies when tendering for a contract.
Unions and opposition MPs reacted furiously, and BAE described Mr Hoon’s comments as “regrettable and disappointing”. A spokesman for the former British Aerospace added: “We say this more in sadness than anger.”
The spokesman said: “The Government has a ‘golden share’, and we have rules governing the size of individual foreign shareholdings and the British composition of the board. I think we are British.”
About 54 per cent of BAE’s shares are foreign-held. However, no single overseas institution can own more than 15 per cent of the company. About 47,000 of BAE’s 72,000 employees work in Britain.
Jack Dromey, national organiser of the T&G union, said: “What planet does he (Mr Hoon) live on? As well as its direct employees, a further 100,000 British workers depend on BAE contracts.” Before Christmas, BAE and the MoD were in dispute about cost overruns on two contracts for Nimrod aircraft and the Astute submarine.