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| Britain Investigates Claims Of Bribery at Rolls-Royce | |
| (about 3 hours later) | |
| LONDON — Britain’s Serious Fraud Office said on Monday that it had opened a criminal investigation into accusations of bribery and corruption at Rolls-Royce, the maker of jet engines and other power systems. | LONDON — Britain’s Serious Fraud Office said on Monday that it had opened a criminal investigation into accusations of bribery and corruption at Rolls-Royce, the maker of jet engines and other power systems. |
| The government agency, which is responsible for prosecuting large-scale corruption and other crime, is stepping up a long-running inquiry into the company, one of the largest in Britain. The agency had spent about a year weighing the evidence before its director, David Green, decided there were sufficient grounds to begin a criminal investigation. | |
| Rolls-Royce said on Monday that it had been notified by the fraud office “that it has now commenced a formal investigation.” | Rolls-Royce said on Monday that it had been notified by the fraud office “that it has now commenced a formal investigation.” |
| The case threatens to tarnish the reputation of one of Britain’s few world-leading technology companies. Rolls-Royce engines power 30 types of civil airliners as well as 24 military engine programs. The company is also a major maker of turbines for the electrical power and energy industries. | The case threatens to tarnish the reputation of one of Britain’s few world-leading technology companies. Rolls-Royce engines power 30 types of civil airliners as well as 24 military engine programs. The company is also a major maker of turbines for the electrical power and energy industries. |
| Financial analysts were not expecting immediate fallout. “This news isn’t a surprise and should not detract from a company with such a healthy long-term outlook,” said Ben Bourne, an aerospace analyst at Liberum Capital, a London brokerage firm. Shares of Rolls-Royce closed at 1,249 pence in London trading. | Financial analysts were not expecting immediate fallout. “This news isn’t a surprise and should not detract from a company with such a healthy long-term outlook,” said Ben Bourne, an aerospace analyst at Liberum Capital, a London brokerage firm. Shares of Rolls-Royce closed at 1,249 pence in London trading. |
| Rolls-Royce said last December that it had been asked by the Serious Fraud Office about “allegations of malpractice in Indonesia and China” and acknowledged that its own investigations had identified “matters of concern in these and in other overseas markets.” | Rolls-Royce said last December that it had been asked by the Serious Fraud Office about “allegations of malpractice in Indonesia and China” and acknowledged that its own investigations had identified “matters of concern in these and in other overseas markets.” |
| At the time, the company said it had passed information to the fraud office “relating to concerns about bribery and corruption involving intermediaries in overseas markets.” The concerns appear to center on payments made to agents regarding contracts in China, Indonesia and other markets that the company has declined to identify. | At the time, the company said it had passed information to the fraud office “relating to concerns about bribery and corruption involving intermediaries in overseas markets.” The concerns appear to center on payments made to agents regarding contracts in China, Indonesia and other markets that the company has declined to identify. |
| As it has for many companies, China has become a major market for Rolls-Royce in recent years, accounting for 9 percent of the company’s global revenues of £12.2 billion, ($20 billion) in 2012. The company reported strong growth for the half-year ending in June. Revenue rose 27 percent year-on-year to £7.3 billion, while pretax earnings increased 34 percent to £840 million. | As it has for many companies, China has become a major market for Rolls-Royce in recent years, accounting for 9 percent of the company’s global revenues of £12.2 billion, ($20 billion) in 2012. The company reported strong growth for the half-year ending in June. Revenue rose 27 percent year-on-year to £7.3 billion, while pretax earnings increased 34 percent to £840 million. |
| In January, Rolls-Royce appointed David Gold, a former senior partner at the law firm Herbert Smith, to lead a review of the company’s compliance procedures. He continues to advise the company. | In January, Rolls-Royce appointed David Gold, a former senior partner at the law firm Herbert Smith, to lead a review of the company’s compliance procedures. He continues to advise the company. |
| Rolls-Royce also said it had strengthened its compliance procedures in recent years. “I want to make it crystal clear that neither I nor the board will tolerate improper business conduct of any sort,” the company’s chief executive, John Rishton, said in a statement last December. | Rolls-Royce also said it had strengthened its compliance procedures in recent years. “I want to make it crystal clear that neither I nor the board will tolerate improper business conduct of any sort,” the company’s chief executive, John Rishton, said in a statement last December. |