ROLLS-ROYCE HOLDINGS PLC
London Stock Exchange: RR Meeting Date: 5/01/2014
Rolls Royce’s reputation was dented after it announced that it had passed information to the UK Serious Fraud Office (“SFO”), following a request from the SFO regarding allegations of bribery and corruption in Indonesia and China. One widely reported claim of malpractice alleges that in the early 1990s, the Company gave Tommy Suharto, son of Indonesia’s former president, a Rolls-Royce car and $20 million in the hope that it would help secure a contract with Garuda, Indonesia’s airline. The Company concedes in its 2013 Annual Report that the highly competitive contract tenders in which it participates are often “highly susceptible to the risk of corruption”. As such, in January 2013, the Company appointed Lord Gold to lead a review of the Company’s processes and procedures regarding compliance and business ethics. Nonetheless, in December 2013, the SFO announced that it had upped its probe to a criminal investigation and two men, one of whom is reported to have been an agent that the Company used in Indonesia, were arrested following dawn raids in London. The Company states that it remains too early to predict the outcome of the SFO investigation at this time, but that it may result in the prosecution of individuals and the Company as well as other fines and penalties, including debarment from government contracts and suspension of export privileges.
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