Rolls-Royce: Serious Fraud Office launches probe

Rolls-Royce, the world's second-largest engine manufacturer, is under investigation by the SFO

The Serious Fraud Office (SFO) has started a formal investigation into Rolls-Royce over concerns about bribery and corruption in its overseas markets.

The aerospace firm said: "We have been informed by the Serious Fraud Office that it has now commenced a formal investigation into these matters."

It was asked by the SFO to provide information about possible bribery in China and Indonesia in December 2012.

Some of the allegations date back more than 10 years.

They involve Rolls-Royce's "intermediaries", which are local companies that handle sales, distribution, repair and maintenance in countries where the British firm does not have enough people on the ground.

In December 2012, when Rolls-Royce started talks with the SFO, it highlighted that it had been strengthening its internal compliance procedure since 2008.

It also said it had established a new code of conduct and would be hiring an independent consultant to review its current procedures.

The British company employs more than 40,000 people in 50 countries.

Likely impact

Ben Bourne, an aerospace analyst at Liberum Capital, said: "It [Rolls Royce] has taken a pretty hard line already. It would have dealt with any problems."

Mr Bourne said the probe shouldn't be problematic for the company if Rolls-Royce's engines are as "good as we think".

In 2010, BAE Systems paid £286m in criminal fines, split between the US and UK, after it was accused of "wilfully misleading" over payments made to win contracts.

Mr Bourne said if the fines for Rolls-Royce were similar, they would not be very serious for the company.