The Rolls-Royce image has been tarnished by accusations of corruption

Rolls-Royce cuts middlemen to tackle corruption

Aerospace giant Rolls-Royce says it has cut the number of middlemen it uses, in the face of an investigation by the UK's anti-fraud watchdog.

The move is part of efforts to prevent bribery and corruption and follows news that two men were arrested last month in relation to an investigation into the firm’s dealings in China and Indonesia.

The British company said in its annual report today that, as well as cutting down on the number of intermediaries it uses, it has re-launched a 24-hour ethics telephone line for staff and created a new role of head of risk training.

A year earlier, it had passed information to the SFO relating to bribery and corruption involving intermediaries in overseas markets and said it could face prosecution. The firm is also facing an investigation into state-run Hindustan Aeronautics Ltd's (HAL) orders from Rolls-Royce.

Rolls-Royce tasked lawyer David Gold with leading a review of its compliance procedures after the allegations emerged. He published his interim report in July. A final version is expected in due course.

"The number of intermediaries used by our businesses has continued to fall dramatically during the year," Rolls-Royce said in its annual report, adding that it was working to simplify its anti-bribery policies in line with Gold's recommendations.

Rolls-Royce said last month that US and European spending cuts would halt profit growth in 2014, bringing to an end the group's decade-long record of increasing annual profits. A pay freeze for top management will accompany the group's gloomier outlook for this year.

"There will be no increase in basic pay for most of the senior leadership team in 2014," the company said.

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