APPOINTMENT ARRANGEMENTS AND CONFLICT
OF INTEREST
4. When our predecessor Committee examined the appointment
of Mr Alan Thomas as the then new HDES in 1989, it noted that
the MoD had not advertised the post openly, and that a factor
in this decision was a requirement to reassure certain overseas
customers. Two (unnamed) countries in particular had been 'kept
informed' of the recruitment process. At that time the Committee
had concluded that—
In relation to some sensitive posts, it may be necessary
to strike a balance between the requirement for fair competition
and public accountability, and the need to maintain confidence
overseas. It is understandable that, in the particular circumstances
of this appointment, the MoD felt it necessary to forgo an open
competition. The manner of this appointment should not, however,
be taken as a precedent for future appointments to this or other
posts.[6]
5. In that same inquiry of 10 years ago, the MoD
acknowledged that the remuneration arrangements for the outgoing
HDES (Sir Colin Chandler)[7]
might have left him open to suspicion of partiality in dealings
with his own employer (British Aerospace), because he received
more than half his salary from them. As a consequence, the MoD
directly employed the subsequent HDES—Mr Alan Thomas.[8]
6. In its evidence to this Committee, on the current
appointment of Mr Tony Edwards, the MoD was able to reassure us
that his appointment was the result of an open competition, with
the post publicly advertised.[9]
We welcome the open nature of the selection process adopted
in this case.
7. The MoD told us that no 'overseas sensitivities'
arose, or were taken into account, in this case.[10]
The MoD is now also clearly alive to the importance of avoiding
possible conflicts of interest in the appointment; even the appearance
of any such possible conflict.[11]
There were three main measures intended to minimise conflicts
of interest in Mr Edwards' case:
- his MoD salary will be topped up to the level
he would otherwise have received in industry,[12]
but this will come from the Defence Industries Council[13]
rather than Mr Edwards' firm—the new HDES did not regard
himself beholden to any firm, including his current employer TI
Group;[14]
- his share holdings and share options in TI Group
have been put into the hands of independent agents—'blind
trusts'[15]—and
Mr Edwards also pointed out that TI Group, who held his employment
contract, was not one of the first-tier defence firms like British
Aerospace, Rolls-Royce or GEC but a second-tier supplier that
only had a small proportion of its turnover in defence related
products—as such, he did not foresee any opportunity to
influence their products directly;[16]
- links to bodies that might have presented conflicts
of interest with his position as HDES have been put into abeyance[17]—Mr
Edwards resigned his non-executive directorship with Messier-Dowty,
for example, because they make landing gear for military aircraft.[18]
8. It is of great importance that personnel in
key positions within the MoD which involve close relationships
with defence manufacturers, such as the Head of Defence Export
Services, are seen not to have conflicting interests. We
therefore welcome the measures that the MoD and Mr Edwards have
taken to minimise any appearance of potential conflicts and the
way the new HDES has acknowledged these requirements.
6 First Report, 1989-90, HC 14, The Appointment of
the Head of Defence Export Services, paragraph 9 Back
7 On
secondment from British Aerospace, but taking up an appointment
with Vickers plc on leaving his HDES post Back
8 HC
14 op cit, paragraph 12 Back
9 Ev
p 23 Back
10 Ev
p 24 Back
11 Q
22 Back
12 Reported
to be £315,000 pa Back
13 The
DIC, on the industry side, is an umbrella for defence firms and
trade associations Back
14 Q
16 Back
15 Q
19 Back
16 Q
16 Back
17 Ev
p 24 Back
18 Q
19 Back
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