On the face of it, BAE’s independent ethics panel looks like a copybook corporate whitewash.

Britain’s biggest defence company, battered as it is by allegations of widespread corruption, has finally taken the matter of reputation into its own hands. Yesterday it formally appointed Lord Woolf, the former Lord Chief Justice, to examine its standards of behaviour.

The terms of the Woolf committee’s mandate seem designed to avoid scrutiny of precisely the deals that have so damaged the company’s image. The al-Yamamah contract with Saudi Arabia is off-limits. The sale of Saab Gripen aircraft to South Africa is not going to be reviewed. In fact, there will be no examination of anything that BAE did in the past.

Instead, Lord Woolf will look at whether BAE’s existing procedures comply with anti-corruption laws and will recommend changes where they do not. The law prevents the panel from pursuing an investigation that overlaps with the ongoing inquiries of the Serious Fraud Office. Still, it looks like a case of recruiting one of the finest legal minds in the country specifically to ask all the easy questions.

The panel, too, is underwhelming. All three members are part of the British establishment. Another person will be appointed – probably an American – but it still does not have the heft of the Baker panel that considered BP’s safety record.

Nonetheless, this is a significant step forward for BAE. A company that has historically operated at an extraordinary level of secrecy has put itself on the couch. It has gone from being evasive about ethics to pro-active.

And the Woolf panel is likely to prove to be more critical and have more lasting repercussions than many people – including BAE insiders – expect. It signals that the faction looking to come clean and move on, which seems to be headed by Dick Olver, the chairman, is gaining ground over the faction generally associated with Mike Turner, the chief executive who has turned around the company’s operations in recent years but is still seen as one of the executives determined to defend the past whatever the cost. As the Woolf panel delves into patterns of behaviour in the company, it is more likely to expose the different agendas of BAE’s chairman and chief executive than bring them together.

Lord Woolf will be well aware that anything less than a thorough and challenging examination of the practices at the company will not only invalidate the ethics panel and further sap public confidence in BAE – it will also undermine Lord Woolf’s reputation. He stands to lose the most from a whitewash.

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