The pantomime that is BAE Systems’ annual general meeting began today with little sign that the most vocal shareholders in Europe’s largest defence company had accepted its new enthusiasm for ethics.

The AGM came a day after Lord Woolf, the former chief justice, published a report that demanded higher ethical standards from BAE.

Dick Olver, the chairman, told shareholders that the company was dedicated to becoming a global leader in business ethics, which prompted hoots of derision from some members of the audience.

BAE’s AGM has become a forum for campaigners and protesters to berate senior executives directly, and at length.

There was the usual gathering of placard-waving, drum-beating protesters outside the QE2 conference centre in Westminster but a far larger number of anti-arms industry campaigners had made it inside under the guise of shareholders, owning just one share each.

These protesters now account for over half the shareholder audience and include members of the pacifist movement, Christians as well as leftwing radicals.

One shareholder wanted to know when BAE had stopped selling cluster bombs, another told Mr Olver that he had blood on his hands.

This is all normal at a BAE AGM and the only thing missing this year was the chanting and throwing of pig’s blood by student protesters.

However, amid the hyperbole were serious questions about BAE’s attitude to business ethics, which Lord Woolf has identified as being lacking in many areas.

BAE, one of the largest companies in the UK, has had its reputation trashed in recent years amid allegations of bribery and corruption in its dealings with foreign countries.

It remains under investigation by the Serious Fraud Office over four deals and the US Department of Justice is also looking into the company’s activities.

An SFO inquiry into BAE’s relationship with Saudi Arabia, which includes the £43 billion Al Yamamah arms contract, was halted by the government 18 months ago on the grounds of national security.

The High Court said last month that the decision to end this inquiry was unlawful - a judgement the government is set to appeal.

While this saga has continued, BAE’s reputation has taken a battering.

Mr Olver is attempting to repair the damage and Lord Woolf’s 23 recommendations for ethical improvement will form the blueprint for the way BAE addresses these issues in the future.

BAE will introduce a new company wide ethical code of practice based on Lord Woolf’s report at the start of next year.

Mr Olver is also keen to address the past allegations of corruption, which BAE has denied but has never been found guilty or innocent of.

He said yesterday that BAE would welcome the SFO doing a case review of the Saudi investigation to see if there was a case to answer.

Mr Olver said: “We want to deal with both the future and the past. Lord Woolf’s report deals with how we will confront ethics in the future but we also need to address the past. We will be asking the SFO to look at the investigation and say if there is a case to answer.”

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