Business

Rolls-Royce in bribery talks with Serious Fraud Office

  • 6 December 2012
  • From the section Business
Rolls-Royce engine
Image caption Rolls-Royce said it was "cooperating fully"

Rolls-Royce has said that it is in talks with the Serious Fraud Office over possible bribery and corruption.

"It is too early to predict the outcomes, but these could include the prosecution of individuals and of the company," the British firm said.

The aircraft engine manufacturer said it had passed on information about alleged malpractice by intermediaries.

It followed a request from the SFO for information about possible bribe-paying in Indonesia and China.

The BBC understands that the request prompted Rolls-Royce to bring in a legal firm to conduct an internal investigation earlier this year, which uncovered potential misbehaviour in other countries as well as the two named by the SFO.

The "intermediaries" involved are local companies that provide sales and distribution, and repair and maintenance services for Rolls-Royce in countries in which the UK firm does not have enough of its own people on the ground.

Some of the allegations date back more than 10 years. The company was keen to highlight that it has strengthened its internal compliance rules in the last five years, including the creation of a new chief compliance officer role in 2010.

Shares in the company fell 5% at the start of trading in London on Thursday, before partially rebounding.

Ethics review

Rolls-Royce said it was cooperating fully with the investigation.

"I want to make it crystal clear that neither I nor the board will tolerate improper business conduct of any sort and will take all necessary action to ensure compliance," said chief executive John Rishton.

"This is a company with exceptional prospects, and I will not accept any behaviour that undermines its future success."

The company said that it had recently instituted a new ethics code of conduct, and would be hiring an independent consultant to carry out a review of its current procedures.

Rolls-Royce is a major international player in civil aerospace and defence, and employs over 40,000 people in 50 countries.

It is the world's second largest manufacturer of aircraft engines after General Electric.

China and Indonesia were ranked 80 and 118 respectively out of 174 countries in the corruption perceptions index published by Transparency International on Wednesday, ranking from the least down to the most corrupt.

China is Rolls Royce's fourth biggest market, and the firm employs almost 2,000 people in the country, mainly selling civil aerospace and energy industry products.

Indonesia is a relatively small market for the company.

Britain's other major aerospace company, BAE Systems, had to pay fines worth £286m in 2010 following investigations in the US and UK of alleged bribe-paying in Saudi Arabia, Africa and central Europe.

Other international companies from the sector to have become embroiled in corruption scandals in recent years include Boeing, General Electric and Siemens.

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