Rolls-Royce pays record £671m to settle global bribery scandal
ROLLS-ROYCE has agreed to pay a record £671million to British, US and Brazilian authorities to settle bribery and corruption claims.
In a landmark case, the engineering giant has agreed voluntary settlements over allegations it used middle-men to bribe officials to secure contracts in countries including China and Indonesia.
The deals with the Serious Fraud Office (SFO), US Department of Justice and Brazilian investigators mean Rolls-Royce will not be prosecuted over the claims – although in theory the SFO could still prosecute individuals.
Rolls-Royce is due to appear at London’s Royal Courts of Justice this morning to seek approval for its £497million settlement with the SFO, the largest out-of-court settlement for the agency.
The firm has also agreed to make payments of £140million to US investigators and £21.2million in Brazil. They will also face interest on the payments.
The payouts come after a series of scandals that have engulfed Rolls-Royce in recent years. It has issued its fifth profit warnings in 18 months, and appointed a new chief executive tasked with cleaning up the company. The deal with the SFO has been made under a deferred prosecution agreement which are more commonly used by US prosecutors. It is only the third time the SFO has taken such measures.
It is thought many of the allegations Rolls-Royce is faced with date back more than ten years. They involve the use of intermediaries – which are local companies that handle sales, distribution, repair and maintenance – in countries where Rolls-Royce does not have enough of its own employees.
Lisa Osofsky, European chairman of Exiger, a financial crime and risk adviser, said: ‘The total penalty dwarfs the first few agreements struck a year ago under new UK legal powers. This sends a clear signal that the UK means business in cracking down on global bribery and corruption.’
Allegations about bribery at RollsRoyce first surfaced in December 2012 when the SFO asked the company for information about ‘allegations of malpractice’ in Indonesia and China. At the time, officials for the firm said its own investigations had found ‘matters of concern’ in additional overseas markets.
Rolls-Royce had previously had a clean image as one of the giants of British engineering. It has major contracts across the globe, making plane engines and military equipment. In 2014 the company revealed it was also being probed by the Jus- tice Department in the US. Since then, the British investigation has expanded to include about a dozen countries, including Nigeria, India and Saudi Arabia. The SFO was granted extra Government funding for the case. Last year an investigation by BBC Panorama and the Guardian newspaper suggested intermediaries were bribing potential Rolls-Royce clients with illicit payments. Questions were raised about RollsRoyce’s relationship with Unaoil, a Monaco-based firm that has been accused of using bribes to win contracts for dozens of multinationals in Iraq, Iran, Kazakhstan, Angola and Azerbaijan.
Another agent hired by RollsRoyce was Fana Hlongwane, who is close to South Africa’s ANC government and in 2008 was implicated in a separate corruption scandal.
Anti-corruption experts said firms can use well-connected agents to channel bribes to key politicians or officials who are responsible for awarding contracts, although there are many different legitimate uses for agents in foreign countries.
Howard Wheeldon, a leading independent aerospace analyst said he thought the settlement would help the company move forward. He said: ‘They have cooperated with the authorities and I think this is what can happen if a company which is accused on any level co-operates with the investigation. For all its problems, it’s very financially strong, the fine is manageable.’