Rolls-Royce Faces China Bribery Probe

January 7, 2013

Uh oh. Stop me if you’ve heard this story before: foreign multinational, State-dominated industry sector, and State-owned enterprises. Corruption? You better believe it’s possible.

We won’t know whether this particular smoke will lead to an actual fire, but at this point, it doesn’t look like the allegations concerning bribes from Rolls-Royce to an executive at Air China and China Eastern are going to go away quietly without formal investigations.

From the Guardian:

The latest allegations are contained in postings by a blogger operating under the pseudonym of “soaringdragon” and related to deals worth a total of $2bn (£1.25bn) with Air China in 2005 and China Eastern in 2010. They claim an executive who worked at both airlines, Chen Qin, accepted payments as an intermediary in those deals.

Rolls-Royce revealed last month that the Serious Fraud Office had approached the company over allegations of malpractice in Indonesia and China, prompting the Derby-based manufacturer to conduct its own investigation through a law firm, Debevoise & Plimpton.

Stay tuned. We’ll have to wait and see whether the UK and/or U.S. authorities move on this. Apparently the Chinese airline executive was arrested over here some time ago, although it’s not clear what ultimately happened with the PRC investigation.