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Rolls-Royce faces Nigeria corruption probe

A UK probe into suspected bribery at Rolls-Royce, the engineering group, has spread to Nigeria in the latest blow to a company already facing investigations in multiple countries.

Britain’s Serious Fraud Office is examining Rolls-Royce’s former energy operations in the oil-rich west African state, as part of a wider inquiry that also covers Brazil, Indonesia and China, the Financial Times has learnt.

The addition of Nigeria underscores the seriousness of allegations against Rolls-Royce and highlights the growing focus by western investigators on suspected misconduct by businesses outside their home states.

The expanded probe comes as Rolls-Royce seeks to re-establish credibility with investors after five profit warnings in less than two years. It also throws light on another side to graft problems in countries such as Nigeria, which David Cameron, UK prime minister, unguardedly declared to be “fantastically corrupt” in remarks overheard last week.

Both the Serious Fraud Office and Rolls-Royce said they did not comment on ongoing investigations.

The company added that it was co-operating with relevant authorities. “We have made it clear that Rolls-Royce will not tolerate business misconduct of any kind,” it said.

Rolls-Royce was first approached by the SFO in 2012 regarding allegations of corruption in Indonesia and China. The company then appointed law firm Debevoise & Plimpton to investigate. Certain businesses in those countries and others were “red flagged” and files were passed to the SFO, which launched a criminal investigation a year later. The US Department of Justice is also looking at the issue.

Warren East, the chief executive appointed last July, has said unethical behaviour will not be tolerated and the group has cut the number of third-party agents used abroad significantly over the past few years.

The SFO Nigeria investigation is examining whether Rolls-Royce and its agents were involved in any bribery of government officials up to the year 2013 in connection with energy tenders in the country and a Nigerian company called PSL Engineering & Control, people familiar with the situation said.

PSL acted for Rolls-Royce on projects in Nigeria to supply gas turbines to power plants in the oil states of Bayelsa and Delta, according to PSL’s website.

Rolls-Royce sold its energy business to Siemens of Germany in 2014, after the period under investigation, and it no longer does business with PSL.

A PSL official who answered the phone at the company’s Lagos headquarters said he was not aware of any investigation. He said PSL would deal with emailed questions from the FT, but the company has not yet responded.

One focus of the SFO investigation is a Delta state government project known as the Oghareki power plant, the FT has learnt. The venture has cost more than $100m but has never been completed and has been plagued by corruption claims, according to Nigerian media reports.

The project was awarded in 2009 to Davnotch Nigeria, a company founded by Victor Ochei, a flamboyant former speaker of the Delta state house of assembly. Mr Ochei’s website describes him as an “uncommonly well-rounded man of letters, experience and character with well-honed leadership skills and a passion for public service”.

Norbert Osodi, Davnotch’s managing director, said by email that the company was not aware of the SFO investigation. He said Davnotch had won the Oghareki tender through proper processes. He added that past allegations of corruption against the project were “not credible” and had been mounted by Mr Ochei’s political enemies.

Mr Osodi said there was no conflict of interest between Mr Ochei’s simultaneous holdings of a majority shareholding in Davnotch and his political seat, because the parliamentary position was part-time. Mr Ochei divested his interest in Davnotch in June 2011, when he became house speaker.

Attempts to reach Mr Ochei were unsuccessful. Neither he nor the Delta state government responded to requests for comment submitted through their websites.

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Timeline: Rolls-Royce corruption trail

December 2012: Rolls-Royce discloses it has handed the findings of an internal investigation “relating to concerns about bribery and corruption involving intermediaries in overseas markets” to the UK Serious Fraud Office. It said this followed SFO requests for information “about allegations of malpractice in Indonesia and China”.

January 2013: Company appoints Lord Gold, a Conservative peer, to review compliance procedures

December 2013: SFO launches a criminal investigation into allegations of bribery and corruption.

February 2014: Liberal Democrat donor Sudhir Choudhrie and his son Bhanu are arrested as part of the SFO investigation into alleged bribery at Rolls-Royce. Both deny any wrongdoing and are released without charge.

March 2014: Rolls-Royce’s annual report discloses that the US Department of Justice is also investigating bribery allegations but adds in a clarification that it has “received no notification of a formal inquiry being launched in the US.”

May 2016: FT reports that the SFO probe has expanded to include Nigeria.

By Michael Peel, Peggy Hollinger and Caroline Binham. This article was first published in the Financial Times

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