UPDATE 1-Rolls hires lawyer Gold for internal ethics review

Thu Jan 10, 2013 2:39am EST

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LONDON Jan 10 (Reuters) - Rolls-Royce has appointed lawyer David Gold to lead a review of its compliance procedures after allegations of possible corruption by some of its overseas intermediaries emerged last month.

The British aerospace and defence group may face prosecution after Britain's Serious Fraud Office (SFO) ordered it to hand over details of possible bribery and corruption in China, Indonesia and other overseas markets.

The world's second-largest maker of aircraft engines said Gold, who was a solicitor at international law firm Herbert Smith for 37 years, serving as a senior partner between 2005 and 2010, would report to the ethics committee of the board.

Gold, who is also a Conservative life peer in Britain's House of Lords, last year set up a strategic litigation advisory firm - David Gold & Associates.

"He (Gold) is one of the UK's most senior litigators and has extensive experience working at the highest levels with corporations, governments and regulators around the world," Rolls said on Thursday.

The SFO has asked Rolls to conduct an internal inquiry into dealings involving some of its intermediaries, and report the results.

Aerospace and defence companies use intermediaries, which can be individuals or companies, in countries where they do not have a large presence. Intermediaries cover tasks from sales to coordinating maintenance and support contracts.

Rolls-Royce's operations span the civil aerospace, defence, marine and energy sectors. The company has not disclosed which units are involved in the probe.

Allegations of corruption are not new to the defence and aerospace industry. BAE Systems, Europe's biggest defence company, was fined $450 million by the United States and Britain in 2010, following long-running corruption investigations at home and abroad into defence deals in Saudi Arabia, Tanzania, Sweden, the Czech Republic and Hungary.

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