The leadership of Rolls-Royce knew in 2010 about allegations regarding corruption within the company but decided not to notify the Serious Fraud Office, according to the damning judgment on the scandal from Lord Justice Leveson. The verdict raises questions for the board of directors at the time about the extent of their knowledge of irregular activities and why no action was taken.
One major City investor said the charges and fine against Rolls raise further issues about corporate governance in Britain, a topic that is already being investigated by a Commons select committee.
The investor said the scandal inside the UK’s most respected engineering business created a “study of fundamental flaws in UK corporate governance. Those responsible walk away into the sunset, leaving everyone else to pick up the pieces.”
The Rolls board has changed significantly since 2010. The judge stated that he had been “informed (and accept) that no current member of the board was involved in any of the conduct described in the statement of facts” and that there had been “cultural change” at the FTSE 100 engineering group.
But the board in 2010 contained some heavyweight City figures alongside the management team led by then chief executive Sir John Rose, who retired the following year, and Andrew Shilston, then finance director, who is now the senior independent non-executive director at BP. The other directors included:
Sir Simon Robertson
Chairman of Rolls-Royce from 2005 to 2013 and the former deputy chairman of HSBC. Robertson is an investment banker who was managing director of Goldman Sachs International and chair of UK-based investment bank Dresdner Kleinwort Benson. He now leads his own advisory firm, Simon Robertson Associates, as well as holding a string of other external positions, including honorary director of the Royal Opera House. He declined to comment about the corruption scandal and why information was not passed to the SFO in 2010.
Iain Conn
The chief executive of Centrica, owner of British Gas, was the senior independent director at Rolls in 2010 and was on the board from 2005 to 2014. When asked by the Guardian at the World Economic Forum in Davos, Switzerland, on Wednesday what he was told in 2010, Conn said: “I’m not an officer of the company. I can’t speak for the company. You’ll have to ask them.”
Peter Byrom
Non-executive director of Rolls from 1997 to 2013 as well as a member of its ethics committee. Another investment banker, he was a director at Rothschild for nearly 20 years before joining the board of engineering group Amec and Domino Printing Sciences. Byrom could not be reached for comment.
Dame Helen Alexander
Former president of the CBI, the biggest business trade body in Britain, and a former director at some of the country’s most high-profile companies, including BT and Centrica. Alexander was a member of the Rolls ethics committee in 2010 and left the company last May. She declined to comment.
Sir Peter Gregson
Held a string of senior positions at British universities and is now chief executive and vice-chancellor of Cranfield University. A board member at Rolls from 2007 to 2012. He declined to comment.
John McAdam
Still on the board of Rolls after joining nine years ago. McAdam is chairman of United Utilities, the energy group, and the pest control firm Rentokil Initial. McAdam declined to comment, but the statements from the judgment suggest that as an existing director he has been absolved of any blame.
John Neill
The brains behind car parts group Unipart for 40 years. Neill took over as a 29-year-old and is today chairman and chief executive. On the board of Rolls from 2008 to 2015. He declined to comment.
John Rishton
A non-executive of Rolls in 2010 after joining in 2007, he replaced Rose as chief executive in 2011. As CEO, Rishton reported the allegations of corruption within the company to the SFO. He left the company in 2015 as its financial performance deteriorated. Now non-executive director at leading UK companies Unilever, Serco and Informa. He declined to comment.
Ian Strachan
Chairman of the ethics committee at Rolls in 2010. Strachan, a veteran of the mining and energy industries, was on the board for a decade until departing in 2014. He could not be reached for comment.
International advisory board
As well as a standard board of directors, Rolls also had a panel that advised the company on “emerging political, business and economic trends”. Members of the panel included Lord Powell, a former adviser to Margaret Thatcher and John Major; the former president of Brazil Fernando Henrique Cardoso; Sir Rod Eddington, who used to run British Airways; General Sir Mike Jackson, a former chief of general staff for the Ministry of Defence; and Ratan Tata, then the chairman of Tata Sons, owner of Jaguar Land Rover and Tata Steel.
