BAE Systems BAE Systems plc is a British multinational defence , security and aerospace company headquartered in London in the United Kingdom and with operations worldwide . It is among the world ' s largest defence contractor s ; it ranked as the second - largest based on applicable 2012 revenues . Its largest operations are in the United Kingdom and United States , where its BAE Systems Inc . subsidiary is one of the six largest suppliers to the US Department of Defense . Other major markets include Australia , India and Saudi Arabia . The company was formed on 30 November 1999 by the £ 7 . 7 billion merger of two British companies ; Marconi Electronic Systems ( MES ) – the defence electronics and naval shipbuilding subsidiary of the General Electric Company plc ( GEC ) – and British Aerospace ( BAe ) – an aircraft , munitions and naval systems manufacturer . BAE Systems is the successor to various aircraft , shipbuilding , armoured vehicle , armaments and defence electronics companies , including The Marconi Company , the first commercial company devoted to the development and use of radio ; A . V . Roe and Company , one of the world ' s first aircraft companies ; de Havilland , manufacturer of the world ' s first commercial jet airliner ; British Aircraft Corporation , co - manufacturer of the Concorde supersonic transport ; Supermarine , manufacturer of the Spitfire ; Yarrow Shipbuilders , builders of the Royal Navy ' s first destroyers ; and Vickers Shipbuilding and Engineering , builders of the Royal Navy ' s first submarines . Since its formation it has made a number of acquisitions , most notably of United Defense and Armor Holdings of the United States , and sold its shares in Airbus , Astrium , AMS and Atlas Elektronik . BAE Systems is involved in several major defence projects , including the F - 35 Lightning II , the Eurofighter Typhoon , the and the s . The company has been the subject of criticism , in terms of general opposition to the arms trade and particularly specific allegations of unethical and corrupt practices . BAE Systems is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index . History . Heritage . BAE Systems was formed on 30 November 1999 by the £7 . 7 billion merger of British Aerospace ( BAe ) and Marconi Electronic Systems ( MES ) . As a result , BAE Systems is the successor to many of the most famous British aircraft , defence electronics and warship manufacturers . Predecessor companies built the Comet , the world ' s first commercial jet airliner ; the Harrier " jump jet " , the world ' s first operational Vertical / Short Take - Off and Landing ( VTOL ) aircraft ; the " groundbreaking " Blue Vixen radar carried by Sea Harrier FA2s and which formed the basis of the Eurofighter ' s CAPTOR radar ; and co - produced the iconic Concorde supersonic airliner with Aérospatiale . British Aerospace was a civil and military aircraft manufacturer , as well as a provider of military land systems . The company had emerged from the massive consolidation of UK aircraft manufacturers since World War II . British Aerospace was formed on 29 April 1977 by the nationalisation and merger of The British Aircraft Corporation ( BAC ) , the Hawker Siddeley Group and Scottish Aviation . Both BAC and Hawker Siddeley were themselves the result of various mergers and acquisitions . Marconi Electronic Systems was the defence subsidiary of British engineering firm The General Electric Company ( GEC ) , dealing largely in military systems integration , as well as naval and land systems . Marconi ' s heritage dates back to Guglielmo Marconi ' s Wireless Telegraph & Signal Company , founded in 1897 . GEC purchased English Electric ( which included Marconi ) in 1968 and thereafter used the Marconi brand for its defence businesses ( as GEC - Marconi and later Marconi Electronic Systems ) . GEC ' s own defence heritage dates back to World War I , when its contribution to the war effort included radios and bulbs . World War II consolidated this position , as the company was involved in important technological advances , notably the cavity magnetron for radar . Between 1945 and 1999 , GEC - Marconi / Marconi Electronic Systems became one of the world ' s most important defence contractor s . GEC ' s major defence related acquisitions included Associated Electrical Industries in 1967 , Yarrow Shipbuilders in 1985 , Plessey companies in 1989 , parts of Ferranti ' s defence business in 1990 , The rump of Ferranti when it went into receivership in 1993 / 1994 , Vickers Shipbuilding and Engineering in 1995 and Kværner Govan in 1999 . In June 1998 , MES acquired Tracor , a major American defence contractor , for £830 million ( approx . US $ 1 . 4 billion c . 1998 ) . Formation . The 1997 merger of American corporations Boeing and McDonnell Douglas , which followed the forming of Lockheed Martin , the world ' s largest defence contractor in 1995 , increased the pressure on European defence companies to consolidate . In June 1997 British Aerospace Defence managing director John Weston commented " Europe . . . is supporting three times the number of contractors on less than half the budget of the U . S . " . European governments wished to see the merger of their defence manufacturers into a single entity , a European Aerospace and Defence Company . As early as 1995 British Aerospace and the German aerospace and defence company DaimlerChrysler Aerospace ( DASA ) were said to be keen to create a transnational aerospace and defence company . The two companies envisaged including Aérospatiale , the other major European aerospace company , but only after its privatisation . The first stage of this integration was seen as the transformation of Airbus from a consortium of British Aerospace , DASA , Aérospatiale and Construcciones Aeronáuticas SA into an integrated company ; in this aim British Aerospace and DASA were united against the various objections of Aérospatiale . As well as Airbus , British Aerospace and DASA were partners in the Panavia Tornado and Eurofighter Typhoon aircraft projects . Merger discussions began between British Aerospace and DASA in July 1998 , just as French participation became more likely with the announcement that Aérospatiale was to merge with Matra and emerge with a diluted French government shareholding . A merger was agreed between British Aerospace chairman Richard Evans and DASA CEO Jürgen Schrempp in December 1998 . Meanwhile GEC was also under pressure to participate in defence industry consolidation . Reporting the appointment of George Simpson as GEC managing director in 1996 , " The Independent " had said " some analysts believe that Mr Simpson ' s inside knowledge of BAe , a long - rumoured GEC bid target , was a key to his appointment . GEC favours forging a national ' champion ' defence group with BAe to compete with the giant US organisations . " When GEC put MES up for sale on 22 December 1998 , British Aerospace abandoned the DASA merger in favour of purchasing its British rival . The merger of British Aerospace and MES was announced on 19 January 1999 . Evans stated that in 2004 that his fear was that an American defence contractor would acquire MES and challenge both British Aerospace and DASA . The merger created a vertically integrated company which " The Scotsman " described as " [ a combination of British Aerospace ' s ] contracting and platform - building skills with Marconi ' s coveted electronics systems capability " , for example combining the manufacturer of the Eurofighter with the company that provided many of the aircraft ' s electronic systems ; British Aerospace was MES ' largest customer . In contrast , DASA ' s response to the breakdown of the merger discussion was to merge with Aérospatiale to create the European Aeronautic Defence and Space Company ( EADS ) , a horizontal integration . EADS has since considered a merger with Thales to create a " fully rounded " company . Seventeen undertakings were given by BAE Systems to the Department of Trade and Industry which prevented a reference of the merger to the Monopolies and Mergers Commission . These were largely to ensure that the integrated company would tender sub - contracts to external companies on an equal basis with its subsidiaries . Another condition was the " firewalling " of former British Aerospace and MES teams on defence projects such as the Joint Strike Fighter ( JSF ) . In 2007 the government , on advice from the Office of Fair Trading , announced it had agreed to release BAE Systems from ten of the undertakings due to " a change in circumstances " . BAE Systems inherited the " special " shareholding that was established when British Aerospace was privatised . This special share , with a nominal value of £1 , is held on behalf of the Secretary of State for Trade and Industry . This shareholding prevents amendments of certain parts of the company ' s Articles of Association without the permission of the Secretary of State . These Articles require that no foreign person or persons acting together may hold more than 15 % of the company ' s shares or control the majority of the board and that the CEO and the Chairman of BAE Systems must be British nationals . British Aerospace ' s head office was in Warwick House , Farnborough Aerospace Centre in Farnborough , Hampshire . BAE Systems retains this but the registered office , and base for the senior leadership team , is in the City of Westminster . Expansion and restructuring . BAE Systems ' first annual report identified Airbus , support services to militaries and integrated systems for air , land and naval applications as key areas of growth . It also stated the company ' s desire to both expand in the US and participate in further consolidation in Europe . BAE Systems described 2001 as an " important year " for its European joint ventures , which were reorganised considerably . The company has described the rationale for expansion in the US ; " [ it ] is by far the largest defence market with spend running close to twice that of the Western European nations combined . Importantly , US investment in research and development is significantly higher than in Western Europe . " When Dick Olver was appointed chairman in July 2004 he ordered a review of the company ' s businesses which ruled out further European acquisitions or joint ventures and confirmed a " strategic bias " for expansion and investment in the US . The review also confirmed the attractiveness of the land systems sector and , with two acquisitions in 2004 and 2005 , BAE moved from a limited land systems supplier to the second largest such company in the world . This shift in strategy was described as " remarkable " by the " Financial Times " . Between 2008 and early 2011 BAE acquired five cyber security companies in a shift in strategy to take account of reduced spending by governments on " traditional defence items such as warships and tanks " . In 2000 Matra Marconi Space , a joint BAE Systems / Matra company , was merged with the space division of DASA to form Astrium . On 16 June 2003 BAE sold its 25 % share to EADS for £84 million , however due to the lossmaking status of the company , BAE Systems invested an equal amount for " restructuring " . In January 2001 Airbus Industrie was transformed from an inherently inefficient consortium structure to a formal joint stock company . BAE Systems sold its 54 % majority share of BAE Systems Canada , an electronics company , in April for $ CAD310 ( approx . £197 million as of December 2010 ) . In November 2001 , the company announced the closure of the Avro Regional Jet ( Avro RJ ) production line at Woodford and the cancellation of the Avro RJX , an advanced series of the aircraft family , as the business was " no longer viable " . The final Avro RJ to be completed became the last British civil airliner . In November 2001 BAE sold its 49 . 9 % share of Thomson Marconi Sonar to Thales for £85 million . A further step of European defence consolidation was the merger of BAE ' s share of Matra BAe Dynamics and the missile division of Alenia Marconi Systems ( AMS ) into MBDA in December . MBDA thus became the world ' s second largest missile manufacturer . Although EADS has been reported to be interested in acquiring full control of MBDA , BAE has said that , unlike Airbus , MBDA is a " core business " . In June 2002 , BAE Systems confirmed it was in takeover discussions with TRW , an American aerospace , automotive and defence business . This was prompted by Northrop Grumman ' s £4 . 1 billion ( approx . US $ 6 billion c . 2002 ) hostile bid for TRW in February 2002 . A bidding war between BAE Systems , Northrop and General Dynamics ended on 1 June when Northrop ' s increased bid of £5 . 1 billion was accepted . On 11 December 2002 , the company issued a shock profit warning due to cost overruns of the Nimrod MRA4 maritime reconnaissance / attack aircraft and the projects . On 19 February 2003 BAE took a charge of £750 million against these projects and the Ministry of Defence ( MOD ) agreed to pay a further £700 million of the cost . In 2000 the company had taken a £300 million " loss charge " on the Nimrod contract which was expected to cover " all the costs of completion of the current contract " . The UK government , following a cabinet row described as " one of the most bitter Cabinet disputes over defence contracts since the Westland helicopter affair in 1985 " , ordered 20 BAE Hawk trainer aircraft with 24 options in July 2003 in a deal worth £800 million . The deal was significant because it was a factor in India ' s decision to finalise a £1 billion order for 66 Hawks in March 2004 . Also in July 2003 BAE Systems and Finmeccanica announced their intention to set up three joint venture companies , to be collectively known as Eurosystems . These companies would have pooled the avionics , C4ISTAR and communications businesses of the two companies . However the difficulties of integrating the companies in this way led to a re - evaluation of the proposal ; BAE Systems ' 2004 Annual Report states that " recognising the complexity of the earlier proposed Eurosystems transaction with Finmeccanica we have moved to a simpler model " . The main part of this deal was the dissolution of AMS and the establishment of SELEX Sensors and Airborne Systems ; BAE Systems sold its 25 % share of the latter to Finmeccanica for €400 million ( approx . £270 million c . 2007 ) in March 2007 . In May 2004 , it was reported that the company was considering selling its shipbuilding divisions , BAE Systems Naval Ships and BAE Systems Submarines . It was understood that General Dynamics wished to acquire the submarine building facilities at Barrow - in - Furness , while VT Group was said to be interested in the remaining yards on the Clyde . However in 2008 BAE Systems merged its Surface Fleet arm with the shipbuilding operations of VT Group to form BVT Surface Fleet , an aim central to the British Government ' s Defence Industrial Strategy . On 4 June 2004 , BAE Systems outbid General Dynamics for Alvis Vickers , the UK ' s main manufacturer of armoured vehicles . Alvis Vickers was merged with the company ' s RO Defence unit to form BAE Systems Land Systems . Recognising the lack of scale of this business compared to General Dynamics , BAE Systems executives soon identified the US defence company United Defense Industries ( UDI ) , a major competitor to General Dynamics , as a main acquisition target . On 7 March 2005 BAE announced the £2 . 25 billion ( approx . US $ 4 . 2 billion c . 2005 ) acquisition of UDI . UDI , now BAE Systems Land and Armaments , manufactures combat vehicles , artillery systems , naval guns , missile launchers and precision guided munitions . In December 2005 , BAE Systems announced the sale of its German naval systems subsidiary , Atlas Elektronik , to ThyssenKrupp and EADS . The sale was complicated by the requirement of the German government to approve any sale . The " Financial Times " described the sale as " cut price " because French company Thales bid €300 million , but was blocked from purchasing Atlas on national security grounds . On 31 January 2006 the company announced the sale of BAE Systems Aerostructures to Spirit AeroSystems , Inc , having said as early as 2002 that it wished to dispose of what it did not regard as a " core business " . On 18 August 2006 Saudi Arabia signed a contract worth £6 billion to £10 billion for 72 Eurofighter Typhoons , to be delivered by BAE Systems . On 10 September 2006 the company was awarded a £2 . 5 billion contract for the upgrade of 80 Royal Saudi Air Force Tornado IDSs . One of BAE Systems ' major aims , as highlighted in the 2005 Annual Report , was the granting of increased technology transfer between the UK and the US . The F - 35 ( JSF ) programme became the focus of this effort , with British government ministers such as Lord Drayson , Minister for Defence Procurement , suggesting the UK would withdraw from the project without the transfer of technology that would allow the UK to operate and maintain F - 35s independently . However , on 12 December 2006 , Lord Drayson signed an agreement which allows " an unbroken British chain of command " for operation of the aircraft . On 22 December 2006 BAE received a £947 million contract to provide guaranteed availability of Royal Air Force ( RAF ) Tornados . On 7 May 2007 the company announced its subsidiary BAE Systems Inc . was to purchase Armor Holdings for £2 . 3 billion ( approx . US $ 4 . 5 billion c . 2007 ) and completed the deal on 31 July 2007 . The company is a manufacturer of tactical wheeled vehicles and a provider of vehicle and individual armour systems and survivability technologies . BAE Systems ( and British Aerospace previously ) was a technology partner to the McLaren Formula One team from 1996 to December 2007 . The partnership originally focused on McLaren ' s F1 car ' s aerodynamics , eventually moving on to carbon fibre techniques , wireless systems and fuel management . BAE Systems ' main interest in the partnership was to learn about the high speed build and operations processes of McLaren . The company announced the acquisition of Tenix Defence , a major Australian defence contractor on 18 January 2008 . The purchase was completed on 27 June for A $ 775 million ( £373 million ) making BAE Systems Australia that country ' s largest defence contractor . The UK Ministry of Defence awarded BAE Systems a 15 - year munitions contract in August 2008 worth up to £3 billion . The contract guarantees supply of 80 % of the UK Armed Forces ' ammunition and required BAE to modernise its munitions manufacturing facilities . BAE Systems expanded its intelligence and security business with the £531 million purchase of Detica Group in July 2008 . It continued this strategy with purchases of Danish cyber and intelligence company ETI for approximately $ 210 million in December 2010 , and Norkom Group PLC the following month for €217 million . The latter provides counter fraud and anti - money laundering solutions to the global financial services industry where its software assists institutions to comply with regulations on financial intelligence and monitoring . In February 2010 BAE Systems announced a £592 million writedown of the former Armor Holdings business following the loss of the Family of Medium Tactical Vehicles contract in 2009 . It was outbid by Oshkosh Corporation for the £2 . 3 billion ( $ 3 . 7 billion ) contract . Land and Armaments had been the " star performer " of BAE Systems ' subsidiaries , growing from sales of £482 million in 2004 to £6 . 7 billion in 2009 . BAE Systems inherited British Aerospace ' s 35 % share of Saab AB , with which it produced and marketed the Gripen fighter aircraft . In 2005 it reduced this share to 20 . 5 % and in March 2010 announced its intention to sell the remainder . " The Times " stated that the decision brought " to an end its controversial relationship with the Gripen fighter aircraft " . Several of the export campaigns for the aircraft were subject to allegations of bribery and corruption . Meanwhile the company was increasing its presence in India with the formation of Defence Land Systems India in April , a joint venture with Mahindra & Mahindra Limited . BAE Systems holds just 26 % of the equity due to Indian foreign direct investment regulations . The company continued its move into support services in May 2010 with the purchase of the marine support company Atlantic Marine for $ 352 million . In September 2010 BAE Systems announced plans to sell the Platform Solutions division of BAE Systems Inc . , which the " Financial Times " said could yield as much as £1 . 3 billion . However , despite " considerable expressions of interest " , the sale was abandoned in January 2011 . On 19 October 2010 the British government cancelled the Nimrod project as part of its Strategic Defence and Security Review . The purchases of , the Astute class submarines , and the Type 26 frigate s were all confirmed . A new generation of nuclear missile submarines will be built , however the final decision will be delayed until after the next election . BAE Systems sold the regional aircraft lease portfolio and asset management arm of its BAE Systems Regional Aircraft business in May 2011 . This unit leases the BAe 146 / Avro RJ family , BAe ATP , Jetstream and BAe 748 . The company retained the support and engineering activities of the business as part of the transaction . In September 2011 , BAE Systems began consultation with unions and workers over plans to cut nearly 3 , 000 jobs , mostly in the company ' s military aircraft division . In its 2012 half - year report , the company revealed a 10 % decline in revenue in the six months up to the 30 June due to falling demand for armaments . In May 2012 the governments of the UK and Saudi Arabia reached an agreement on an arms package which saw a £1 . 6 billion contract awarded to BAE for the delivery of 55 Pilatus PC - 21 and 22 BAE Systems Hawk aircraft . The Sultanate of Oman ordered Typhoon and Hawk aircraft worth £2 . 5 billion in December 2012 . On 13 September 2012 , it was reported that BAE Systems and EADS had entered possible merger talks . In case of a potential tie - up , BAE shareholders would own 40 % and EADS ' 60 % of the new organisation . However , on 10 October 2012 , the companies said the merger talks had been called off . Airbus shareholding . BAE Systems inherited British Aerospace ' s share of Airbus Industrie , which consisted of two factories at Broughton and Filton . These facilities manufactured wings for the Airbus family of aircraft . In 2001 Airbus was incorporated as Airbus SAS , a joint stock company . In return for a 20 % share in the new company BAE Systems transferred ownership of its Airbus plants ( known as Airbus UK ) to the new company . Despite repeated suggestions as early as 2000 that BAE Systems wished to sell its 20 % share of Airbus , the possibility was consistently denied by the company . However on 6 April 2006 BBC News reported that it was indeed to sell its stake , then " conservatively valued " at £2 . 4 billion . Due to the slow pace of informal negotiations , BAE Systems exercised its put option which saw investment bank Rothschild appointed to give an independent valuation . Six days after this process began , Airbus announced delays to the A380 with significant effects on the value of Airbus shares . On 2 June 2006 Rothschild valued the company ' s share at £1 . 87 billion , well below its own analysts ' and even EADS ' expectations . The BAE Systems board recommended that the company proceed with the sale . On 4 October 2006 shareholders voted in favour and the sale was completed on 13 October . BAE Systems ' sale of its Airbus share saw the end of UK owned involvement in civil airliner production . Airbus Operations Ltd ( the former Airbus UK ) continues to be the Airbus " Centre of Excellence " for wing production , employing over 9 , 500 , but is entirely owned by EADS . Products . BAE Systems plays a significant role in the production of military equipment . In 2008 , 95 % of BAE Systems ' total sales were military related . It plays important roles in military aircraft production . The company ' s Typhoon fighter and Tornado fighter - bomber are both front line aircraft of the RAF . The company is a major partner in the F - 35 Lightning II programme . Its Hawk advanced jet trainer aircraft has been widely exported . In July 2006 , the British government declassified the HERTI ( High Endurance Rapid Technology Insertion ) , an Unmanned Aerial Vehicle ( UAV ) which can navigate autonomously . BAE Systems Land and Armaments manufactures the M2 / M3 Bradley fighting vehicle family , the US Navy Advanced Gun System ( AGS ) , the M113 armoured personnel carrier ( APC ) , the M109 Paladin , the British Army ' s Challenger II , Warrior Tracked Armoured Vehicle , M777 howitzer and the Panther Command and Liaison Vehicle Major naval projects include the " Astute " class nuclear submarine , Type 45 air defence destroyer and " Queen Elizabeth " class aircraft carrier . Areas of business . BAE Systems defines its " home markets " to be Australia , India , Saudi Arabia , the UK and the US . United Kingdom . BAE Systems is the predominant supplier to the UK Ministry of Defence ; in 2009 / 2010 BAE Systems companies in the list of Top 100 suppliers to the MOD received contracts totalling £3 . 98 billion , with total revenue being higher when other subsidiary income is included . In comparison the second largest supplier is Babcock International Group and its subsidiaries , with a revenue of £1 . 1 billion from the MOD . Oxford Economic Forecasting states that in 2002 the company ' s UK businesses employed 111 , 578 people , achieved export sales of £3 billion and paid £2 . 6 billion in taxes . These figures exclude the contribution of Airbus UK . Since its creation BAE Systems had a difficult relationship with the MOD . This was attributed to deficient project management by the company , but also in part to the deficiencies in the terms of " fixed price contracts " . CEO Mike Turner said in 2006 " We had entered into contracts under the old competition rules that frankly we shouldn ' t have taken " . These competition rules were introduced by Lord Levene during the 1980s to shift the burden of risk to the contractor and were in contrast to " cost plus contracts " where a contractor was paid for the value of its product plus an agreed profit . BAE Systems was operating in " the only truly open defence market " , which meant that it was competing with US and European companies for British defence projects , while they were protected in their home markets . The US defence market is competitive , however largely between American firms , while foreign companies are excluded . In December 2005 the MOD published the Defence Industrial Strategy ( DIS ) which has been widely acknowledged to recognise BAE Systems as the UK ' s " national champion " . The DIS identifies key industrial capabilities which must be maintained within the UK through long - term government commitments to support research spending and procurement . Of these capabilities , several are dominated by BAE Systems , including naval vessels and submarines , combat vehicles , fixed - wing aircraft , general munitions ( with the exception of certain " niche capabilities abroad " ) and Network Enabled Capability ( defined as C4ISTAR in the DIS ) . The company maintains an interest in future UAV technologies through its collaborative FLAVIIR research programme with EPSRC . After the publication of the DIS BAE Systems CEO Mike Turner said " If we didn ' t have the DIS and our profitability and the terms of trade had stayed as they were . . . then there had to be a question mark about our future in the UK " . Lord Levene said in the balance between value for money or maintaining a viable industrial base the DIS " tries as well as it can to steer a middle course and to achieve as much as it can in both directions . . . . We will never have a perfect solution . " In May 2012 , BAE Systems was awarded a £328m contract to design the UK ' s next generation nuclear - armed submarines , by Ministry of Defence . United States . The attraction of MES to British Aerospace was largely its ownership of Tracor , a major American defence contractor . Since its creation the company has steadily increased its investment in and revenues from the US . BAE Systems Inc . now sells more to the US Department of Defense ( DOD ) than the UK MOD . The company has been allowed to buy important defence contractors in the US , however its status as a UK company requires that its US subsidiaries are governed by American executives under Special Security Arrangement s . The company faces fewer impediments in this sense than its European counterparts , as there is a high degree of integration between the US and UK defence establishments . BAE Systems ' purchase of Lockheed Martin Aerospace Electronic Systems in November 2000 was described by John Hamre , CEO of the Center for Strategic and International Studies and former Deputy Secretary of Defense , as " precedent setting " given the advanced and classified nature of many of that company ' s products . The possibility of a merger between BAE Systems Inc . and major North American defence contractors has long been reported , including Boeing , General Dynamics , Lockheed Martin , and Raytheon . Rest of world . BAE Systems Australia is the largest defence contractor in Australia , having more than doubled in size with the acquisition of Tenix Defence . The Al Yamamah agreements between the UK and Saudi Arabia require " the provision of a complete defence package for the Kingdom of Saudi Arabia " ; BAE Systems Australia employs 4 , 600 people in the kingdom . BAE Systems Land Systems South Africa , 75 % owned by BAE Systems , is the largest military vehicle manufacturer in South Africa , and is currently taking part in the US MRAP programme . BAE Systems ' interests in Sweden are a result of the purchases of Alvis Vickers and UDI , which owned Hägglunds and Bofors respectively ; The companies are now part of BAE Systems AB and have a combined workforce of approximately 1 , 750 . Also , BAE Systems owns 49 % of Air Astana , Kazakhstan . Shareholders . As of 8 October 2012 BAE Systems listed the following as " significant " shareholders : Invesco Perpetual ( 13 . 38 % ) , BlackRock ( 4 . 66 % ) , Franklin Templeton Investments , ( 3 . 95 % ) and Legal & General , ( 3 . 62 % ) . Organisation . BAE Systems has its head office and its registered office in City of Westminster , London . In addition to its central London offices , it has an office in Farnborough , Hampshire that houses functional specialists and support functions . The company divides its business into five business groups : Electronic Systems , Cyber & Intelligence , Platforms & Services ( US ) , Platforms & Services ( UK ) , and Platforms & Services ( International ) . Corporate governance . BAE Systems ' chairman is Dick Olver . The executive directors are Ian King ( CEO ) , Linda Hudson , and George Rose . The non - executive directors are Harriet Green , Michael Hartnall , Sir Peter Mason , Carl Symon , Roberto Quarta , Paul Anderson and Nick Rose . The company ' s first CEO , John Weston , was forced to resign in 2002 in a boardroom " coup " and was replaced by Mike Turner . " The Business " reported that Weston was ousted when non - executive directors informed the chairman that they had lost confidence in him . Further , it was suggested that at least one non - executive director was encouraged to make such a move by the MOD due to the increasingly fractious relationship between BAE Systems and the government . As well as the terms of the Nimrod contract , Weston had fought against the MOD ' s insistence that one of the first three Type 45 destroyers should be built by VT Group . " The Business " said he considered this " competition - policy gone mad " . It is understood that Turner had a poor working relationship with senior MOD officials , ( for example with former Defence Secretary Geoff Hoon ) Significantly the first meeting between Olver and Hoon was said to have gone well , a MOD official commented " He is a man we can do business with . We think it is good to be taking a fresh look at things . " It has been suggested that relations between Turner and Olver were tense . On 16 October 2007 the company announced that Mike Turner would retire in August 2008 . " The Times " called his departure plans " abrupt " and a " shock " , given previous statements that he wished to retire in 2013 at the age of 65 . Despite suggestions that BAE Systems would prefer an American CEO due to the increasing importance of the United States defence market to the company and the opportunity to make a clean break from corruption allegations and investigations related to the Al Yamamah contracts the company announced on 27 June 2008 that it had selected the company ' s Chief operating officer Ian King to succeed Turner with effect from 1 September 2008 ; " The Financial Times " noted that King ' s career at Marconi distances him from the British Aerospace - led Al Yamamah project . Financial information . Financial information for the Company is as follows : [ a ] : Restated to exclude Airbus contributions . Included for comparison . [ b ] : Data prepared using UK GAAP guidelines . Recent data prepared using International Financial Reporting Standards . [ c ] : Reflects £750 million charges for problems with Nimrod MRA4 ( £500 million ) and Astute class submarine ( £250 million ) programmes . Corruption investigations . Serious Fraud Office . BAE Systems has been under investigation by the Serious Fraud Office , into the use of political corruption to help sell arms to Chile , Czech Republic , Romania , Saudi Arabia , South Africa , Tanzania and Qatar . In response , BAE Systems ' 2006 Corporate Responsibility Report states " We continue to reject these allegations . . . We take our obligations under the law extremely seriously and will continue to comply with all legal requirements around the world . In June 2007 Lord Woolf was selected to lead what the BBC described as an " independent review . . . [ an ] ethics committee to look into how the defence giant conducts its arms deals . " The report , " Ethical business conduct in BAE Systems plc – the way forward " , made 23 recommendations , measures which the company has committed to implement . The finding stated that " in the past BAE did not pay sufficient attention to ethical standards in the way it conducted business , " and was described by the BBC as " an embarrassing admission . " In September 2009 , the Serious Fraud Office announced that it intended to prosecute BAE Systems for offences relating to overseas corruption . " The Guardian " claimed that a penalty " possibly of more than £500m " might be an acceptable settlement package . On 5 February 2010 , BAE Systems agreed to pay £257m criminal fines to the US and £30m to the UK . The UK had already massively benefited from £43 billion contract in tax receipts and jobs in the UK , and dropped an anti - corruption investigation into the Al Yamamah contracts later taken up by US authorities . Crucially , under a plea bargain with the US Department of Justice , BAE Systems was convicted of felony conspiracy to defraud the United States government and sentenced in March 2010 by U . S . District Court Judge John D . Bates to pay a $ 400 million fine , one of the largest fines in the history of the DOJ . U . S . District Judge John Bates said the company ' s conduct involved " deception , duplicity and knowing violations of law , I think it ' s fair to say , on an enormous scale " . BAE Systems did not directly admit to bribery , and is thus not internationally blacklisted from future contracts . Some of the £30m penalty the company will pay in fines to the UK will be paid ex gratia for the benefit of the people of Tanzania . On 2 March 2010 Campaign Against Arms Trade and The Corner House were successful in gaining a High Court injunction on the Serious Fraud Office ' s settlement with BAE Systems . The High Court may order a full review of the settlement . Saudi Arabia . BAE Systems ( and British Aerospace previously ) has long been the subject of allegations of bribery in relation to its business in Saudi Arabia . The UK National Audit Office ( NAO ) investigated the Al Yamamah contracts and has so far not published its conclusions , the only NAO report ever to be withheld . The MOD has stated " The report remains sensitive . Disclosure would harm both international relations and the UK ' s commercial interests . " The company has been accused of maintaining a £60 million Saudi slush fund and was the subject of an investigation by the Serious Fraud Office ( SFO ) . However , on 14 December 2006 it was announced that the SFO was " discontinuing " its investigation into the company . It stated that representations to its Director and the Attorney General Lord Goldsmith had led to the conclusion that the wider public interest " to safeguard national and international security " outweighed any potential benefits of further investigation . The termination of the investigation has been controversial . In June 2007 , the BBC ' s Panorama alleged BAE Systems " paid hundreds of millions of pounds to the ex - Saudi ambassador to the US , Prince Bandar bin Sultan " in return for his role in the Al Yamamah deals . In late June 2007 the United States Department of Justice ( DOJ ) began a formal investigation into BAE ' s compliance with anti - corruption laws . On 19 May 2008 BAE Systems confirmed that its CEO Mike Turner and non - executive director Nigel Rudd had been detained " for about 20 minutes " at two US airports the previous week and that the DOJ had issued " a number of additional subpoenas in the US to employees of BAE Systems plc and BAE Systems Inc as part of its ongoing investigation " . " The Times " suggested that such " humiliating behaviour by the DOJ " is unusual toward a company that is co - operating fully . A judicial review of the decision by the SFO to drop the investigation was granted on 9 November 2007 . On 10 April 2008 the High Court ruled that the SFO " acted unlawfully " by dropping its investigation . " The Times " described the ruling as " one of the most strongly worded judicial attacks on government action " which condemned how " ministers ' buckled ' to ' blatant threats ' that Saudi cooperation in the fight against terror would end unless the . . . investigation was dropped . " On 24 April the SFO was granted leave to appeal to the House of Lords against the ruling . There was a two - day hearing before the Lords on 7 and 8 July 2008 . On 30 July the House of Lords unanimously overturned the High Court ruling , stating that the decision to discontinue the investigation was lawful . Others . In September 2005 " The Guardian " reported that banking records showed that BAE Systems paid £1 million to Augusto Pinochet , the former Chilean dictator . " The Guardian " has also reported that " clandestine arms deals " have been under investigation in Chile and the UK since 2003 and that British Aerospace and BAE Systems made a number of payments to Pinochet advisers . In 2003 , HMS " Sheffield " was sold to the Chilean Navy for £27 million , however the government ' s profit from the sale was £3 million , after contracts worth £24 million were placed with BAE Systems for upgrade and refurbishment of the ship . BAE Systems is alleged to have paid " secret offshore commissions " of over £7 million to secure the sale of HMS " London " and HMS " Coventry " to the Romanian Navy . The company received a £116 million contract for the refurbishment of the ships prior to delivery ; however the British taxpayer only received the scrap value of £100 , 000 each from the sale . BAE Systems ran into controversy in 2002 over the abnormally high cost of a radar system sold to Tanzania . The sale was criticised by several opposition MPs and the World Bank ; Secretary of State for International Development Clare Short declared that BAE Systems had " ripped off " developing nations . In December 2010 , leaked US diplomatic communications revealed that Edward Hoseah , the Tanzanian prosecutor investigating misconduct by BAE Systems , had confided in US diplomats that " his life may be in danger " and was being routinely threatened . In January 2007 , details of an investigation by the Serious Fraud Office into BAE Systems ' sales tactics in regard to South Africa were reported , highlighting the £2 . 3 billion deal to supply Hawk trainers and Gripen fighters as suspect . In May 2011 , as allegations of bribery behind South Africa ' s Gripen procurement continued , the company ' s partner Saab AB issued strong denials of any illicit payments being made ; however in June 2011 Saab announced that BAE Systems had made unaccounted payments of roughly $ 3 . 5 million to a consultant , this revelation prompted South African Opposition parties to call for a renewed inquiry . The Gripen ' s procurement by the Czech Republic was also under investigation by the Serious Fraud Office in 2006 over allegations of bribery . In September 2003 " The Sunday Times " reported that BAE Systems had hired a private security contractor to collate information about individuals working at the Campaign Against Arms Trade and their activities . In February 2007 , it again obtained private confidential information from CAAT . Criticism . The company was reported to be the target of cyber espionage that may have stolen secrets related to the Lockheed Martin F - 35 Lightning II . Like many arms manufacturers , BAE Systems has received criticism from various human rights and anti - arms trade organisations due to the human rights records of governments to which it has sold equipment . These include Indonesia , Saudi Arabia , and Zimbabwe . In 2006 , BAE Systems was excluded from the portfolio of the government pension fund of Norway " because they develop and / or produce central components for nuclear weapons " . " According to the ethical guidelines for the Government Pension Fund – Global , companies that produce weapons that through normal use may violate fundamental humanitarian principles shall be excluded from the fund . " BAE Systems is indirectly engaged in production of nuclear weapons – through its 37 . 5 % share of MBDA it is involved with the production and support of the ASMP missile , an air - launched nuclear missile which forms part of the French nuclear deterrent . The company is also the UK ' s only nuclear submarine manufacturer and thus produces a key element of the UK ' s nuclear weapons capability . BAE Systems has in recent times been criticised for its role in the production of cluster bombs , due to the long term risk for injury or death to civilians . However , after pressure campaigns from various human rights groups , BAE Systems recently stated it no longer produces land mines or cluster bombs .