Rolls-Royce – two arrested in UK fraud probe

The Serious Fraud Office (SFO) said: "In connection with an SFO investigation, we can confirm a number of search warrants have been executed at various properties in London today [Wednesday]. Two men were also arrested." The two suspects are understood to be related and 'intermediaries', but not employees of Rolls-Royce. The company declined to comment. Some of the allegations date back more than 10 years, according to the BBC. It added: "The investigation is focusing on 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." Rolls-Royce said in December 2012 that it had passed information to the SFO relating to concerns about bribery and corruption involving intermediaries in overseas markets. At that time it added: "The consequence of these disclosures will be decided by the regulatory authorities. It is too early to predict the outcomes, but these could include the prosecution of individuals and of the company. We will co-operate fully." The company added that it had "significantly strengthened" its compliance procedures in recent years, including a new Global Ethics Code and a new Intermediaries Policy, and it had also expanded the Compliance function. Meanwhile, Rolls-Royce has announced a 23% rise in full year pre-tax profit, but forecast 2014 profits to be flat on the back of declining defence and marine revenues, before growth resumes in 2015. Chief executive John Rishton said: "In 2014, we expect a pause in our revenue and profit growth, reflecting offsetting trends across the business. This is a pause, not a change in direction, and growth will resume in 2015. Cash flow is expected to be broadly similar to 2013. Our record order book underpins our confidence in the long-term growth of our business."