Dec. 24--The Serious Fraud Office has launched a criminal investigation into Rolls-Royce over allegations of bribery and corruption in China and Indonesia.
The engineering giant confirmed the news in an announcement to the stockmarket yesterday morning.
It said it had been informed by the SFO that 'it has now commenced a formal investigation into these matters'.
The US Department of Justice has also been alerted to the concerns, although the company said it had not taken any action.
This received a muted reaction from investors, with shares nudging up p to 1249p.
The SFO had been widely expected to launch a formal investigation since Rolls-Royce confirmed last December that it had been asked to hand over information by the white-collar crime agency.
This followed an internal investigation which identified matters of concern involving intermediaries in overseas markets.
These 'intermediaries' are local companies that handle sales, distribution, repair and maintenance in countries where the British firm does not have enough people on the ground.
Rolls-Royce last year said it had significantly strengthened its compliance procedures in recent years, including a new ethics code and an intermediaries policiy.
Ben Bourne, an aerospace analyst at Liberum Capital, said yesterday: 'It [Rolls-Royce] has taken a pretty hard line already. It would have dealt with any problems.'
But the news means that Rolls-Royce faces more negative publicity in 2014.
The reputation of the blue chip firm has been dragged through the mud following allegations made on websites by former employee-turned-whistleblower Dick Taylor.
He claimed that the aircraft engine-maker bribed Tommy Suharto, the son of Indonesia's former dictator General Suharto, with a Rolls-Royce car and pounds sterling 12.9m. In return Rolls is alleged to have wanted Garuda, the country's airline, to buy its Trent 700 engines for its Airbus wide-bodied aircraft.
These claims were rejected by Suharto, who was convicted in 2002 and served four years in jail for ordering the assassination of an Indonesian supreme court judge.
Rolls-Royce has also been accused of making bribes for a 2005 contract with Air China and a deal with China Easterm Airlines in 2010. In 2010, BAE Systems paid pounds sterling 286m in criminal fines, split between the US and UK, after it was accused of 'wilfully misleading' over payments made to win contracts.
Bourne said it would not be serious for Rolls if it was fined a similar amount.
The high-profile case will also turn the spotlight on the SFO, whose reputation has been tarnished by a string of blunders. These include the news that it had lost 32,000 pages of evidence and 81 audio tapes gathered as part of a bribery probe into BAE Systems.
Other blunders include the collapse of its fraud case into the property tycoon Tchenguiz brothers.
Rolls-Royce refused to comment last night. In a statement it said: 'Further to our announcement of December 6, 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.'
Copyright 2013 - Daily Mail, London
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