Rolls Royce Chief Executive Sir John Rose speaks during the opening ceremony of the new Rolls-Royce Mechanical Test Operations Centre (MTOC) in Dahlewitz, eastern Germany, Tuesday, May 4, 2010. (AP Photo/dapd/Eckehard Schulz)
Former Rolls-Royce chief executive Sir John Rose © AP

The four-year corruption investigation into past business practices at Rolls-Royce has entangled former chief executive Sir John Rose, one of Britain’s most prominent corporate executives, who has been questioned as a possible suspect by the Serious Fraud Office.

Sir John is one of dozens of former Rolls-Royce executives questioned “under caution” after the UK’s flagship engineering group reached a deal last month to pay £671m in fines to authorities in three countries, say people familiar with the SFO probe.

Questions under caution are put to suspects after they have been read their rights and are distinct from interviews with witnesses.

Rolls-Royce, the world’s second-biggest aero-engine maker, admitted to a litany of corruption allegations as part of the inquiry, including falsifying accounts to hide the illegal use of local middlemen, attempting to thwart investigations into malfeasance, and paying tens of millions in bribes to win engine and other deals in Indonesia, Thailand, China and Russia.

Evidence of corruption was found in its civil aerospace, military and former energy businesses over a period of more than 20 years.

Since last month’s admission, the focus of the inquiry has shifted from corporate to individual responsibility. In addition to Sir John, several former top brass at Rolls-Royce and middlemen the company deployed around the world have been interviewed under caution by the SFO, those with knowledge of the investigation told the Financial Times.

Sir John denies any wrongdoing and has not been charged. WilmerHale, the law firm representing him, declined to comment.

The expansion of the Rolls-Royce inquiry comes as the SFO has begun to look at other companies for improper payments to middlemen overseas. On Friday, the SFO said it had launched a criminal probe into ABB, the Swiss-Swedish conglomerate, as part of a widening investigation.

ABB said in a statement it was co-operating with the inquiry, adding that it preemptively contacted the SFO and US authorities about “certain of its past dealings” with Unaoil, a family-run Monaco-based business that the SFO is also scrutinising. ABB said it had reported “alleged improper payments” made by Unaoil and its subsidiaries.

Fairfax Media reported last year that Unaoil was used by various companies around the world in securing contracts, particularly in the Middle East. This included Rolls-Royce in Iraq and ABB in Iran, the news reports said at the time. Unaoil denies wrongdoing.

The UK share of last month’s penalty against Rolls-Royce — £497.2m, plus interest and costs — is the largest imposed on a British company for criminal conduct.

The SFO, which received special ringfenced funding from the Treasury for the probe, is gearing up for a fresh round of interviews. The prosecutor is expected to decide whether to bring formal charges against individuals in the next few months.

Previously, the only other individuals known to have been interviewed under caution in connection with the probe were Sudhir Choudhrie, the India-born tycoon and Liberal Democrat donor, and his son Bhanu. They were arrested and released without charge as part of the SFO’s bribery investigation. They deny wrongdoing.

The SFO used its recently-won power to reach so-called deferred-prosecution agreements with companies in the Rolls-Royce case.

The US has regularly employed such settlements, in which the company admits wrongdoing but avoids criminal charges if it abides by the settlement agreement, but authorities there have been criticised for failing to prosecute individuals.

Corruption Watch, the UK campaign group, said the Rolls-Royce settlement, the third such DPA in the UK, was “a failure of nerve” because the SFO opted not to bring criminal charges.

Handing down his judgment on the DPA last month, Sir Brian Leveson, senior judge in the English high court, said the investigation had revealed “the most serious breaches of criminal law in the areas of bribery and corruption (some of which implicated senior management and, on the face of it, controlling minds of the company)”.

He added that Rolls-Royce had been aware of indications of corruption in 2010 but decided not to notify authorities. It is not clear whether that decision would have been a legal violation.

But the judge’s focus on senior management has called into question the role of Sir John, once hailed as Britain’s leading industrialist, who headed the group from 1996 to 2011. Under his leadership the company’s order book grew from £7.6bn to almost £60bn.


Further reading on Rolls-Royce scandal

● Analysis: Rolls-Royce humbled by corruption offences
● Lombard: Rolls-Royce may be grateful for latest instalment
● FT View: Rolls-Royce scandal has not run its course
● The Top Line: Dilemma for under-fire executives

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