Britain's international business reputation is in tatters this week after record fines for two of its most venerable firms raised serious questions about its corporate ethics.
The shock resignation Tuesday of Barclays CEO Bob Diamond comes amidst the escalating chaos in Britain's banking industry that may yet topple more of the City's financial elite and implicate the Bank of England in the Libor-rigging scandal.
"I think he's done the right thing for the bank and for the country more generally," said Chancellor George Osborne of Diamond's departure. "But it must be part of a change in culture in our financial services. It's Britain's largest private sector employer and we don't need its reputation tarnished. As a government, we're determined to play a part in this cultural change.
It's undoubtedly a huge issue for the British economy, given that inward investment from abroad is largely dicated by the reputation of the country's banking system, and the gravity of the scandal was not lost on Sir Roger Carr, President of the influential Confederation of British Business lobby group.
"The manipulation of the Libor arrangements is deplorable and undermines international trust in the integrity of the City. The weakness must be addressed and the culprits punished," he said. "We should be mindful however of the importance of banking to the UK economy and that throwing the baby out with bathwater is in no one's interest, providing the baby is clean."
But Monday's $3bn settlement between GlaxoSmithKline and US authorities, the embarrassing revelations of the Levenson inquiry into media ethics and the phone hacking allegations against Rupert Murdoch's News International and the on-going criminal proceedings and BP suggest the need to examine business culture goes well beyond the City of London.
GSK, Britain's biggest drugmaker, agreed to settle the largest healthcare fraud case in American history Monday with a $3bn cheque to end civil and criminal proceedings related to the marketing and reporting of three of its top-selling drugs - Acandia, Paxil and Wellbutrin - after a seven-year investigation by the US authorities.
The settlement comes shortly after British-based BP agreed to set aside nearly $8bn to pay for losses and clean-up costs related to its role in the fatal Deepwater Horizon explosion and oil spill that led to the biggest environmental disaster in US history. The ultimate cost for BP - aside from the nine employees it lost as a result of the blast - may be more than $60bn.
Meanwhile, the world has watched with equal amounts of fasciation and horror as Lord Justice Levenson's inquiry into media ethics has laid bare the unsavoury tactics of not only one of the world's biggest media empires - Rupert Murdoch's News Corp. - but the broader British press in general.
The events, which included the lurid admission of hacking into the phone messages of murdered schoolgirl Milly Dowler, led to the closing of Britain's biggest Sunday newspaper, the News of the World, and the launch of criminal proceedings against the CEO of Murdoch's UK -based News International, Rebecca Brooks.
The litany of charges and allegations brought against BAE System, Europe's biggest defence company, is too long to recite, but the group was forced to pay nearly £290m to the US and UK authorities after a six-year investigation into bribery allegations relating to winning contracts in six different countries, including Tanzania and the Czech Republic. The US portion of the fine was related to breaking military export rules and making false statements regarding the sale of fighter jets to the Middle East and Eastern Europe.
British firms both big and small, it seems, are finding their activities under increasing scrutiny as a result.
US-based law firm Fullbright & Jaworski LLP says more than third of UK businesses faced regulatory investigations last year - up from only 9 percent in in 2009 - while nearly half of those surveyed had embarked on an internal investigation with the assistance of outside legal counsel.
"Businesses are operating in a global climate of enhanced supervision, intense scrutiny, and significant enforcement including increasing penalties," said Fullbright partner and co-chair of the firm's International Investigations group, Lisa Cannon. "As a result, companies and their advisers in the U.S., U.K. and internationally are handling increasing numbers of internal investigations and regulatory proceedings often as a result of whistleblowing allegations, at substantial cost to the business.
Not to mention the broader economy.
Chancellor Osborne's £1tn plan to pull the Britain out of its first double-dip recession since the 1970s - by doubling exports by the end of the decade - will be harder to achieve if UK firms find they're missing out on orders as a result of the reputational risk foreign buyers assign them.
"(Britain) must turn net trade into a growth asset," the CBI wrote in a January report entitled Rebalancing the Economy. "The UK has missed past opportunities to target export markets in high growth economies such as the BRICS. Reaching these markets now is a prerequisite for net trade to deliver substantial economic growth."
That task may have just become a lot more challenging.