Rolls-Royce faces bribery claim inquiry

Serious Fraud Office looking into allegations that include the payment of a bribe to the son of a former Indonesian president

Rolls-Royce is being investigated by the Serious Fraud Office over allegations that include the payment of a $20m (£12.5m) bribe to the son of a former Indonesian president, who then secured an aircraft engine order for the manufacturer.

Several allegations of malpractice involving the Derby-based company in Indonesia, China and other countries are being probed by the SFO. The most serious charge so far was levelled by a former Rolls-Royce employee, Dick Taylor, who claimed that Tommy Suharto – a son of the late President Suharto – received $20m and a Rolls-Royce car to persuade the national airline, Garuda, to order Rolls-Royce Trent 700 engines in 1990. Rolls-Royce declined to comment.

Taylor's allegations have been widely disseminated online, largely through their attachment to comments beneath Rolls-Royce news stories.

Rolls-Royce admitted last week that the SFO had approached the company over allegations of bribery and corruption in Indonesia and China, prompting the firm – the world's second largest aircraft engine maker – to hire US law firm Debevoise & Plimpton to investigate.

Rolls-Royce indicated in its statement that the allegations unearthed by the firm's probe went beyond Indonesia and China, saying that the legal investigation had found "matters of concern" in the countries flagged by the SFO but also in other unspecified markets. The company said the concerns related to the use of "intermediaries" in those markets.

"The consequence of these disclosures will be decided by the regulatory authorities. It is too early to predict the outcomes, but these could include the prosecution of individuals and of the company. We will co-operate fully," said Rolls-Royce last week.

The SFO has yet to confirm whether it has launched a formal investigation, but legal experts say the SFO's new director, David Green, has signalled an end to a perceived trend that the SFO has recently preferred settlements to prosecutions in recent times.

Rolls-Royce emphasised how seriously it was treating the allegations last week, announcing plans to appoint an "independent senior figure" to review its compliance regime and report to the board's ethics committee.

Rolls-Royce's chief executive, John Rishton, added that the company would not tolerate "improper business conduct of any sort".

The allegations could lead to multi-million pound fines on both sides of the Atlantic after Rolls-Royce confirmed that the US department of justice had been made aware of the company's findings. The DoJ has shown an active interest in pursuing bribery allegations recently, with Avon and News Corporation among the companies placed under scrutiny.

The DoJ's most high profile case involving a UK company of recent times saw BAE Systems, the defence contractor, pay $400m to settle corporate bribery charges after pleading guilty to making false statements to the US authorities.

It is understood that the allegations passed by Rolls-Royce to the SFO related to the "past and distant past", starting in the 1980s and 1990s, although some of the concerns discovered by the company arose after 2000.

Timings are important because Rolls-Royce cannot be prosecuted under the Bribery Act – a tough new law – for offences that occurred before July 2011. Rolls-Royce therefore faces the threat of prosecutions under the Theft Act or for conspiracy to defraud, according to legal experts.

Contributor

Dan Milmo, industrial editor

The GuardianTramp

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