Rolls-Royce is investigated by the SFO over alleged bribery abroad

Analysts think the company could be in line for a multimillion-pound penalty

The Serious Fraud Office has launched a criminal investigation into allegations of bribery and corruption at the defence and aerospace giant Rolls-Royce.

The move comes just over a year after Rolls-Royce first admitted that it was holding talks with the SFO over allegations made on the internet. At that time the company said: “It is too early to predict the outcomes, but these could include the prosecution of individuals and of the company.”

The SFO’s move suggests it believes it has found sufficient evidence to mount a more detailed investigation. 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. An internal investigation by Rolls-Royce in 2012 uncovered the possibility of similar infringements of bribery and corruption laws in a number of other countries Some of the allegations stretch back more than 10 years.

Rolls-Royce declined to comment any further. An SFO spokesman said: “We confirm that the director of the Serious Fraud Office has opened a criminal investigation.”

When the company revealed its talks with the SFO in December 2012, its chief executive John Rishton said: “I want to make it crystal clear that neither I nor the board will tolerate improper business conduct of any sort.”

The escalation of the SFO’s investigation suggests David Green, its director, has decided the agency has seen enough evidence for it to invoke its Section 2 powers that enable it to search property and compel people to answer questions and produce documents.

Rolls-Royce shares, which have risen more than 40 per cent in the year since the SFO inquiry was first announced, ended up 6p at 1,249p yesterday.

Analysts said Rolls-Royce could be in line for a multimillion pound financial penalty. Other recent settlements include BAE Systems’ £30m SFO fine in February 2010 when it pleaded guilty to a charge of breach of duty to keep accounting records of payments made to a former marketing adviser in Tanzania over the sale of a radar system in 1999.

One analyst said: “These investigations are always negative for sentiment because it creates an unknown.”

In July GlaxoSmithKline referred itself to the SFO over allegations that it had bribed doctors to use its drugs. It made no admission of guilt, but said the allegations were “shameful and we regret this has occurred”.

Under the 2010 Bribery Act, the SFO has powers to investigate and prosecute corruption at home or abroad. Companies can be considered for immunity if they can demonstrate they alerted the SFO to evidence of wrongdoing.