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Two men arrested in SFO bribery probe into Rolls Royce Two men arrested during SFO raids linked to Rolls-Royce
(about 3 hours later)
Two men have been arrested in London as part of a probe by the Serious Fraud Office into Rolls Royce's dealings in Asia. Two men have been arrested in connection with an investigation understood to be related to Rolls-Royce’s dealings in Asia.
It is understood two individuals were taken for questioning to Snow Hill police station in central London after their homes were raided by police. The Serious Fraud Office said it had executed search warrants at “various properties in London” which had led to the arrests.
An SFO spokesperson said: "In connection with a Serious Fraud Office investigation, we can confirm a number of search warrants have been executed at various properties in London today. Two men were also arrested." The SFO said it was assisted by officers from both the National Crime Agency and the City of London Police. However, it declined to comment further and Rolls-Royce also offered no comment.
Officers from the National Crime Agency and City of London police assisted with the operation. The timing of the arrests, however, will come as an unwelcome distraction to the engineering firm ahead of today’s full-year results.
The watchdog confirmed it opened a formal investigation into allegations of bribery and corruption at Rolls Royce in December last year. The world’s second-largest maker of aircraft engines has made a habit of beating expectations, and is expected to produce a solid set of numbers. Its shares have surged by 24 per cent over the past 12 months and finished 3p ahead today at 1208p.
The investigation is understood to have begun around alleged bribes paid by intermediaries to local companies in Indonesia and China which provided sales, distribution, repair and servicing. Two days before Christmas Rolls-Royce said the SFO had launched a full-scale investigation into possible bribery and corruption in Indonesia and China.
Last year, Tommy Suharto, the son of the late Indonesian dictator, denied allegations of corruption after a former employee claimed he received a $20 million bribe (£12m) and a blue Rolls Royce luxury car to help the engine maker win a contract in 1990. A year earlier it said internal investigations had “identified matters of concern” in the two countries “and in other overseas markets” and said it would co-operate fully with the SFO.
In a letter to the SFO, Suharto's lawyers said:"For the record, an on behalf of Mr Suharto, we would like to state categorically that he did not, and has never, received monies or a car from Rolls-Royce and nor did he recommend their engines to Garuda." Such allegations have plagued the defence industry, notably BAE Systems, whose dealings in various countries led to a £286m fine in 2010. But Rolls-Royce’s record had been largely unscathed until Dick Taylor, a retired former engineer for the company, started to raise issues about its operations in Indonesia, regularly posting his concerns on websites.
The engine maker is set to release full year earnings tomorrow. The US Department of Justice was also informed – and its involvement in any probe can cause companies major headaches because it has the reputation of putting them through the wringer.
Rolls Royce declined to comment. However, experts cautioned that the SFO still faced challenges if the allegations eventually led to a prosecution.
“Unless relevant activities took place after June 2011 they won’t be covered by the Bribery Act but by the old bribery offences,” said Omar Qureshi at the law firm CMS Cameron McKenna. “These are more complex and difficult for prosecutors to prove, particularly in respect of corporates. If Rolls-Royce itself is to be prosecuted that would require evidence of senior management involvement.”