Harry Kenneth Woolf, Lord Chief Justice of England and Wales from 2000 until 2005, recommended internal and external monitoring to raise the company's ethical standards, The Times of London reported.

Woolf said company executives "acknowledged that the company did not in the past pay sufficient attention to ethical standards."

BAE Chairman Dick Olver called the report, "an important step towards BAE Systems' objective of achieving benchmark standards of governance."

The investigation came in the wake of an arms deal with Saudi Arabia that included allegations of fraud and corruption.

Britain's Serious Fraud Office dropped its investigation into the allegations, but the country's High Court ruled last month that it did so illegally.

The Serious Fraud Office is set to discuss the issue with the before the House of Lords, the report said.