Rolls-Royce has been rocked by the resignation of its aerospace boss today, in the midst of an investigation into bribery allegations in Indonesia and China.
The departure of Mark King, who was only made president of the engine maker’s aerospace division in January, comes as former McKinsey man Ian Davis became chairman of Rolls-Royce today at its annual general meeting.
A leading aerospace analyst said that King had been considered the “rising star” of Rolls-Royce’s leadership team and did not accept the company’s official, but non-specific, claim that he had left for “personal reasons”.
The Serious Fraud Office has an ongoing probe into allegations that Rolls-Royce representatives paid bribes so as to win lucrative aerospace engine contracts in Asia.
King, who joined the company in 1986, was president of the civil aerospace division until taking on the entirety of the aerospace business at the start of the year.
The analyst added that the move might also help to “consolidate the position” of Rolls-Royce chief executive John Rishton, who succeeded long-term boss Sir John Rose in 2011. He also pointed out that Rolls-Royce has lost several decades-worth of experience recently, as the finance director of nine years, Andrew Shilston, also left at the end of 2011.
The news was released as part of Rolls-Royce’s statement on trading for the first three months of the year. The company said that it expected “modest growth” in its key revenue and profit numbers over the course of the whole year.
Rolls-Royce handed over the findings of its own inquiry into the scandal in Asia to the SFO earlier this year. There have been reports that the SFO is considering settling with Rolls-Royce through a civil recovery order, under which no criminal charges would be made.
As a non-executive director at BP, Davis helped the oil giant restore its finances and reputation in the wake of the Deepwater Horizon disaster in the Gulf of Mexico.
Sandy Morris, analyst at Jefferies, warned that King’s departure is “not going to be passed unremarked” and added that “unexpected management change is probably not welcome”. However, Morris approved of his replacement, Tony Wood, who he said “appears to be steeped in both experience of Rolls-Royce and the aerospace industry”.
Despite the problems in civil aerospace, the division that builds engines for airlines was still the key driver behind the group’s 24 per cent profit increase to £1.2 billion in 2012.
Shares in Rolls-Royce — which was born out of the electrical and mechanical business that Henry Royce established in 1884 — have soared this year, but the news of King’s departure meant that the stock took a slight 0.44 per cent hit today.