Published December 06, 2012
LONDON – British aerospace and defense group Rolls-Royce said it had passed information to Britain's Serious Fraud Office relating to concerns about bribery and corruption involving its intermediaries overseas.
Rolls, the world's second-largest maker of aircraft engines behind U.S. group General Electric , said on Thursday this followed a request for information from the SFO about allegations of malpractice in Indonesia and China.
The company said its investigations had identified matters of concern in these, and in other overseas markets.
"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," chief executive John Rishton said in a statement.
"This is a company with exceptional prospects and I will not accept any behavior that undermines its future success."
Rolls said the consequence of these disclosures would be decided by the regulatory authorities and that it was too early to predict the outcome. Certain individuals could be prosecuted, said the company, adding that it would fully cooperate with the probe.
A source with knowledge of the events said the SFO had asked Rolls to investigate allegations of corruption in China and Indonesia earlier this year. Rolls hired an independent body to do this and passed the results to the SFO, the source added.
Rolls-Royce has almost 2,000 employees across Greater China, including joint ventures, and the country's operations contributed 934 million pounds ($1.50 billion) in revenue in 2011, making it the group's fourth biggest market.
BAE Systems , Europe's biggest defense company, was fined $450 million by the United States and Britain in 2010, following long-running corruption investigations at home and abroad into defense deals in Saudi Arabia, Tanzania, Sweden, the Czech Republic and Hungary.
Rolls-Royce, which also operates in the marine and energy sectors, said it had significantly strengthened its compliance procedures in recent years, including the introduction of a new global ethics code and a new intermediaries policy.
The British company said it would appoint an independent senior figure who would lead a review of current procedures and report to the ethics committee of the board.
Shares in Rolls-Royce, which have risen 25 percent this year, closed at 913.50 pence on Wednesday, valuing the group at around 17 billion pounds.
Rolls has delivered strong profit growth in recent years on the back of soaring demand for more fuel-efficient engines for planes made by Airbus and Boeing .
($1 = 0.6214 British pounds)
(Reporting by Rhys Jones; Editing by Kate Holton and Elaine Hardcastle)