Defence giant Cobham faces investigation over 'irregular practices' in Asia

Cobham warns US Department of Justice of concerns at its TracStar unit

Cobham yesterday became the latest UK defence giant to admit it had uncovered "potentially irregular sales practices" in Asia at one of its subsidiaries.

The 80-year Dorset based group said it had notified the US Department of Justice late on Monday night after it internally investigated concerns regarding overseas sales at its Florida-based TracStar Systems subsidiary.

Cobham is perhaps best known for manufacturing airborne refuelling equipment but it also builds gunshot detection systems and surveillance gear. TracStar is a fairly obscure part of its business, building satellite-tracking systems that account for only £15m of sales a year – less than 1 per cent of the group's revenue.

The problems echo those at the aircraft engine manufacturer Rolls-Royce, which is also said to have passed to the DoJ concerns about its own sales practices in Asia. Rolls-Royce's Asian issues, though, have also come under scrutiny from the UK's Serious Fraud Office.

In both instances, an employee is thought to have blown the whistle; and Cobham's website reveals it has a business ethics policy that encourages staff to report improper conduct.

A City source suggested that voluntarily going to US authorities with information about their own staff's potential misconduct was now virtually "a rite of passage" for British manufacturers with significant US operations. It is understood that the DoJ has acknowledged Cobham's approach, but that any further investigations are likely to take months.

Yesterday's announcement was deliberately vague in detail as the company does not want to pre-judge what has occurred, but its chief executive, Robert Murphy, has been warned that he can expect questions over the disclosure at Cobham's results next week.

Zafar Khan, an aerospace and defence analyst at Société Générale, said: "This is a surprise, but it is one of the risks [with] these kinds of defence companies that are involved in developing markets. This whole investigation is inevitably going to take considerable time, as we have seen with other situations."

Christophe Menard, the head of aerospace and defence sector research at Kepler Cheuvreux, added that the news was a "negative" for Cobham, but that the scope of the irregularities was likely to be small given the size of the subsidiary. He added that the voluntary approach to the DoJ demonstrated Cobham's "intention to fully co-operate with the investigation".

Early self-reporting to US authorities is considered a wise and conservative tactic in order to keep the Pentagon onside and to distance executives from problems not of their own making. Although the US is making huge defence cuts, it remains the world's most important market for the sector.

News
Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features staging of a playground gun massacre
Travel
travel
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
PROMOTED VIDEO
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
News
i100This Instagram photo does not prove Russian army is in Ukraine
News
Morrissey pictured in 2013
people
Sport
sportVan Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
filmReview: Sometimes the immersive experience was so good it blurred the line between fiction and reality
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
art
News
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Environment
Tyred out: should fair weather cyclists have a separate slow lane?
environmentFormer Labour minister demands 'pootling lanes' for women cyclists
News
people
News
i100  ... he was into holy war way before it was on trend
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices