Ian King was appointed BAE Systems chief executive yesterday and immediately committed himself to improving the ethical standards of Europe’s largest defence company.

Mr King, the former chief operating officer, also said that BAE would continue to grow in its core markets, including the United States, while pushing into emerging markets such as India.

BAE is facing a challenging period, with a High Court hearing in two weeks that will determine whether a Serious Fraud Office (SFO) investigation into the company’s contracts with Saudi Arabia should be restarted. The original investigation into arms deals worth more than £43 billion was shut down by the Government at the end of 2006 over fears that it would harm national security.

Mr King was appointed after a seven-month search for a replacement for Mike Turner, who announced his retirement last year. The search was led by Egon Zehnder, the headhunter, and Mr King is understood to have been the only internal candidate.

Defence industry commentators had thought that the company’s board might favour an external candidate in an attempt to introduce a new culture at the former British Aerospace.

Rumours in the defence industry had identified Chris Kubasik, executive vice-president of America’s Lockheed Martin, and Andrew Inglis, chief executive of BP’s exploration and production division, as potential candidates. However, it is understood no other candidate was offered the job.

The company has faced repeated allegations of bribery and corruption in recent years and it remains under investigation by both the US Department of Justice and the SFO.

Lord Woolf, the former Lord Chief Justice, published a report on BAE’s ethics last month and offered 23 recommendations on how to improve its operations, which Mr King is committed to implementing.

Mr King said: “My big challenge will be to implement the Woolf recommendations and to get the changes into the DNA of the company. I am up for it. The big issue for us is reputation and we are raising that bar very high, so we are a global leader.”

Mr King, 52, started his career as a trainee accountant with Marconi in 1976 and joined BAE when the companies merged in 1999. He was head of group strategy and then became chief operating officer and head of BAE’s operations outside the US only 18 months ago. BAE has grown rapidly in the past ten years and has acquired numerous companies to give it a leading position in the UK, the US, Saudi Arabia, Australia, South Africa and Sweden. The company said that it had completed its A$775 million (£373 million) acquisition of Tenix, which will make it the largest defence contractor in Australia.

Mr King said: “The strategic plan is for a good combination of both organic growth and acquisition. We have a broad church of activity and will continue to grow in our home markets. We are also expanding our presence in emerging markets.”

Dick Olver, BAE’s chairman, said: “What we are going to see is BAE becoming the world’s most international defence company and we should also be the most ethically responsible.”

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