The Serious Fraud Office has opened a formal criminal investigation into allegations of bribery and corruption at aircraft engine maker Rolls-Royce.
The aerospace and defence company has been under the spotlight since late 2012, when the company said the SFO had approached it about allegations of malpractice in Indonesia and China, prompting Rolls-Royce to commission an independent investigation that turned up "matters of concern".
Details of the allegations soon broke into the open through a whistleblower, who claimed that the world's second largest jet engine manufacturer had bribed Tommy Suharto, son of Indonesia's former president General Suharto, with $20m (£13m) and a blue Rolls-Royce car.
The SFO said on Monday that its director, David Green, had decided to step up its probe and had "opened a criminal investigation into allegations of bribery and corruption at Rolls-Royce".
The move comes in the same month that the SFO suffered another reversal, following a number of failed inquiries and trials, when it abandoned the corruption trial of British-Canadian billionaire Victor Dahdaleh.
The Suharto allegations were made by former Rolls-Royce employee Dick Taylor in a series of online comments. The Derby-based company is accused of paying bribes in the 1980s and 1990s in order to persuade the national airline, Garuda, to order Rolls-Royce Trent 700 engines.
Lawyers for Suharto, who was convicted of ordering the murder of a judge who tried him on separate corruption charges in 2000, said: "He [Suharto] did not, and has never, received monies or a car from Rolls-Royce and nor did he recommend their engines to Garuda, as alleged."
Taylor, who worked for Rolls for more than 30 years, including a stint in Indonesia, turned whistleblower after the company ignored concerns he raised internally.
After taking early retirement, Taylor said he decided to "tell the truth", and since 2006 has been posting comments below Rolls-Royce articles on newspaper websites around the world, including the Guardian's website.
Rolls-Royce appointed law firm Debevoise & Plimpton to investigate allegations made by Taylor that the company maintained a "secret slush fund". The inquiry uncovered concerns about the company's dealings in China, which have been passed to the SFO.
In order to demonstrate that it took the allegations seriously, in January Rolls-Royce appointed Lord Gold, a former City lawyer and Tory party peer, to review its anti-bribery and compliance procedures. He has yet to formally report back to the company's board.
In a statement on Monday Rolls-Royce said: "Further to our announcement of 6 December 2012 relating to concerns about bribery and corruption in overseas markets, we have been informed by the Serious Fraud Office that it has now commenced a formal investigation into these matters."
The SFO said the timing of the release two days before Christmas was decided by Rolls-Royce, not the agency. It has been reported that the company had been trying to avoid a formal SFO investigation by offering to pay a multimillion-pound fine.
An investigation could prove embarrassing for the prime minister and royal family, who have spoken of their pride in one of Britain's best-known companies.
David Cameron has praised Rolls as an enterprise "of which the whole country can be proud", and the Duke of Cambridge has described it as "one of the United Kingdom's great global companies".
Last year, Rolls-Royce's chief executive, John Rishton, stressed that the company would not tolerate illegal conduct. He said: "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."
Earlier this year, Mark King, head of Rolls's aerospace division, resigned just four months after being promoted to president of aerospace, the division beset by the allegations. Rolls did not explain why King, a 27-year company veteran, was leaving.
The company refused to state whether his departure was linked to the investigation, stating only that he was leaving for "personal reasons". Nick Cunningham, an analyst at Agency Partners, said the criminal investigation "can be very serious for individuals involved and they tend to result in cultural change in companies.
If you look at the financial cost of the fines, they are rarely very large." He said that even if Rolls were found guilty it would "have very little impact" on the company's financial performance.
Barry Vitou, partner and white-collar crime expert at law firm Pinsent Masons, said: "The SFO are making good on threats to investigate allegations of serious fraud.
The Rolls-Royce story has been in the news for over a year but the news that the SFO has formally opened an investigation underscores its resolve to actively take on big cases. Businesses should take note: the SFO will be keen to deliver results after recent losses."
theguardian.com
The aerospace and defence company has been under the spotlight since late 2012, when the company said the SFO had approached it about allegations of malpractice in Indonesia and China, prompting Rolls-Royce to commission an independent investigation that turned up "matters of concern".
Details of the allegations soon broke into the open through a whistleblower, who claimed that the world's second largest jet engine manufacturer had bribed Tommy Suharto, son of Indonesia's former president General Suharto, with $20m (£13m) and a blue Rolls-Royce car.
The SFO said on Monday that its director, David Green, had decided to step up its probe and had "opened a criminal investigation into allegations of bribery and corruption at Rolls-Royce".
The move comes in the same month that the SFO suffered another reversal, following a number of failed inquiries and trials, when it abandoned the corruption trial of British-Canadian billionaire Victor Dahdaleh.
The Suharto allegations were made by former Rolls-Royce employee Dick Taylor in a series of online comments. The Derby-based company is accused of paying bribes in the 1980s and 1990s in order to persuade the national airline, Garuda, to order Rolls-Royce Trent 700 engines.
Lawyers for Suharto, who was convicted of ordering the murder of a judge who tried him on separate corruption charges in 2000, said: "He [Suharto] did not, and has never, received monies or a car from Rolls-Royce and nor did he recommend their engines to Garuda, as alleged."
Taylor, who worked for Rolls for more than 30 years, including a stint in Indonesia, turned whistleblower after the company ignored concerns he raised internally.
After taking early retirement, Taylor said he decided to "tell the truth", and since 2006 has been posting comments below Rolls-Royce articles on newspaper websites around the world, including the Guardian's website.
Rolls-Royce appointed law firm Debevoise & Plimpton to investigate allegations made by Taylor that the company maintained a "secret slush fund". The inquiry uncovered concerns about the company's dealings in China, which have been passed to the SFO.
In order to demonstrate that it took the allegations seriously, in January Rolls-Royce appointed Lord Gold, a former City lawyer and Tory party peer, to review its anti-bribery and compliance procedures. He has yet to formally report back to the company's board.
In a statement on Monday Rolls-Royce said: "Further to our announcement of 6 December 2012 relating to concerns about bribery and corruption in overseas markets, we have been informed by the Serious Fraud Office that it has now commenced a formal investigation into these matters."
The SFO said the timing of the release two days before Christmas was decided by Rolls-Royce, not the agency. It has been reported that the company had been trying to avoid a formal SFO investigation by offering to pay a multimillion-pound fine.
An investigation could prove embarrassing for the prime minister and royal family, who have spoken of their pride in one of Britain's best-known companies.
David Cameron has praised Rolls as an enterprise "of which the whole country can be proud", and the Duke of Cambridge has described it as "one of the United Kingdom's great global companies".
Last year, Rolls-Royce's chief executive, John Rishton, stressed that the company would not tolerate illegal conduct. He said: "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."
Earlier this year, Mark King, head of Rolls's aerospace division, resigned just four months after being promoted to president of aerospace, the division beset by the allegations. Rolls did not explain why King, a 27-year company veteran, was leaving.
The company refused to state whether his departure was linked to the investigation, stating only that he was leaving for "personal reasons". Nick Cunningham, an analyst at Agency Partners, said the criminal investigation "can be very serious for individuals involved and they tend to result in cultural change in companies.
If you look at the financial cost of the fines, they are rarely very large." He said that even if Rolls were found guilty it would "have very little impact" on the company's financial performance.
Barry Vitou, partner and white-collar crime expert at law firm Pinsent Masons, said: "The SFO are making good on threats to investigate allegations of serious fraud.
The Rolls-Royce story has been in the news for over a year but the news that the SFO has formally opened an investigation underscores its resolve to actively take on big cases. Businesses should take note: the SFO will be keen to deliver results after recent losses."
theguardian.com
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