THE deputy chairman of defence contractor Babcock International was forced to resign in embarrassing circumstances yesterday after he called the Royal Navy’s procurement of two aircraft carriers the company is building a “disaster”.
Former trade minister Lord Hesketh, who has been deputy chairman of Babcock since 1996, was reported as saying the Navy’s two new aircraft carriers would make it a “laughing stock” and blamed “vested interests” at lead defence contractor BAE Systems for pushing up the price of the £5.2bn programme.
“We are paying twice as much as we should to get half the capability,” he said. Lord Hesketh added the contract was a “Looney Tunes” operation that was “about to turn into a classic British disaster”.
Babcock, which is part of the consortium building the two £3bn carriers, immediately distanced itself from Lord Hesketh’s comments, issuing a statement at the start of trading on the London stock exchange describing the comments as “personal” adding that they “do not in any respect reflect the views of the company”.
However, the statement did little to calm investors with Babcock’s share price falling 5.5p to close at 571.5p. By mid-afternoon Babcock had issued a statement to the stock market saying Lord Hesketh had resigned from the board with immediate effect.
Babcock chairman Mike Turner, who was a combative BAE chief executive for six years until 2008, said: “Lord Hesketh has been a long-standing and valued member of the Babcock board, and over this period has made a significant contribution to the development of the group. We thank him for his contribution and wish him well.”
Under last month’s strategic defence review, the UK’s fleet of Harrier jump jets will be decommissioned next year. As a result one aircraft carrier currently being built by Babcock will never carry fighter jets and will only be operational for three years. The other aircraft carrier will only become fully operational in 2020, when it receives a fleet of fighter jets from BAE.
TIME LINE | BABCOCK
8/11/2010 - 07.30am
Lord Hesketh’s comments about the aircraft carriers are published.
8/11/2010 - 08.00am
Babcock issues statement distancing itself from Lord Hesketh’s comments.
8/11/2010 - 09.00am
Babcock shares edge down 5.5p to 571.5p.
8/11/2010 - 02.11pm
Babcock issues statement that Lord Hesketh has resigned from the board with immediate effect.