Two men arrested during SFO raids linked to Rolls-Royce

 

Two men have been arrested in connection with an investigation understood to be related to Rolls-Royce’s dealings in Asia.

The Serious Fraud Office said it had executed search warrants at “various properties in London” which had led to the arrests.

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.

The timing of the arrests, however, will come as an unwelcome distraction to the engineering firm ahead of today’s full-year results.

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.

Two days before Christmas Rolls-Royce said the SFO had launched a full-scale investigation into possible bribery and corruption in Indonesia and China.

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.

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 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.

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.”

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