Rolls-Royce disclosure

Press, Volume CXI, Issue 32677, 5 August 1971, Page 13

Rolls-Royce disclosure

(N.Z. Press Assn.—Copyright) LONDON, August 4. A secret report showing that Rolls-Royce was heading for financial disaster was compiled a year before the engineering firm was placed in receivership, it was disclosed last night. The report cited monetary confusion and management, and Government shortcom-

ings, but the 50-page indictment was withheld from the Government, a committee of Parliamentarians was told.

The existence of the report, by the now-defunct Industrial Reorganisation Corporation, was disclosed in evidence published as an official document by a Parliamentary committee on expenditure. Sir Joseph Lockwood, the former I.R.C. chairman, said it demonstrated that the corporation did not believe forecasts made by Rolls-Royce; that it did not believe the

company knew what was happening to its finances; and that the then-Labour Administration had been very foolish in its dealings with Rolls-Royce over a number of years. Rolls-Royce was declared virtually bankrupt in February of this year; it was crippled largely by soaring costs on a fixed-price contract to supply engines for America’s Lockheed TriStar airbus.

The I.R.C. report was commissioned by Mr Harold Wilson’s Labour Government

; late in 1969, and was com- ; piled in January, 1970. In May, 1970, the government agreed to lend Rolls-Royce i £2om, of which the company used half. Earlier, the Labour Administration had said that it would give “launching” aid for the RB2II engine to ; the extent of 70 per cent i of the estimated production ; cost of £6sm. In November, 1970, five

months after the Conservative Government came to power, it was announced that another £42m in aid would be made available. Three months later, RollsRoyce crashed. Sir Joseph Lockwood said that the full report was not given to the Government because Rolls-Royce had provided information on the understanding that it would not be passed on to the administration, and because it contained many statements which might have led to libel or slander actions. Instead, the Government received a summary for discussion. Sir Joseph Lockwood’s evidence to the committee is protected by Parliamentary privilege.