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Last updated: February 12, 2014 7:11 pm
The criminal probe into whether Rolls-Royce committed bribery in Indonesia and China accelerated on Wednesday after the UK authorities arrested two men following dawn raids.
The two suspects, who are related and are not Rolls-Royce employees, were arrested and questioned at London’s Snow Hill police station on Wednesday.
One of the arrested men was an agent that the engine and turbine maker used in Indonesia, said two people familiar with investigation.
The move by the Serious Fraud Office – which was assisted by the City of London Police and the new National Crime Agency – represents a step-change in the criminal investigation, which was launched in December, more than a year after allegations first emerged. The NCA specialises in organised crime, particularly with overseas connections.
Since then, the SFO has been able to agree so-called blockbuster funding from the UK Treasury for its investigation – only one of three similar deals struck in recent times.
The SFO said: “In connection with a Serious Fraud Office investigation, we can confirm a number of search warrants have been executed at various properties in London today. Two men were also arrested. Officers from the National Crime Agency and City of London police assisted with the operation.”
The agency did not confirm the names of the suspects or provide details as to whether they have been bailed.
The SFO, which negotiated a mutual legal assistance treaty with Indonesia’s anti-corruption body, had previously been satisfied with Rolls-Royce’s internal reports into alleged bribes through intermediaries in Asia, which were sparked by claims made by a former employee.
According to one widely-reported allegation made by the ex-employee, in the early 1990s the company gave Tommy Suharto, son of the country’s former president, a blue Rolls-Royce car and $20m in the hope they would help prompt Garuda, the country’s airline, to buy its Trent 700 engine.
Mr Suharto wrote to the SFO in November to categorically deny all wrongdoing, adding that the accusations were false.
The US Department of Justice has also contacted the company over the allegations, said people familiar with the situation.
Rolls-Royce declined to comment, citing the ongoing nature of the investigation.
Many of the allegations predate the introduction in 2011 of the Bribery Act. Pre-Bribery Act cases “are more complex and difficult for prosecutors to prove, particularly in respect of corporates,” said Omar Qureshi, head of anti-corruption at CMS Cameron McKenna. “If Rolls-Royce itself is to be prosecuted that would require evidence of senior management involvement.”
One possible resolution to any prosecution, however, could be a so-called deferred prosecution agreement. These arrangements, which the SFO will be able to deploy from this month, involve a company paying a heavy fine and agreeing to overhaul its compliance procedures in exchange for prosecutors suspending any criminal charges. Criminal charges can bar a company from lucrative government tender lists.
Rolls-Royce will report its full-year results on Thursday.
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