Thursday, 2 December 2021

Rolls-Royce to pay £671m to settle bribery probes

LONDON: Rolls-Royce has reached a deal to pay £671m to regulators around the world to settle allegations of bribery and corruption, including the largest UK fine ever imposed on a company for criminal conduct. The UK’s flagship engineering company has been under investigation in the US and UK for alleged bribery and corruption in China, Brazil and Indonesia and other markets. Brazilian authorities have also been probing allegations there. Rolls-Royce said that it had reached deferred prosecution agreements with the Department of Justice in the US, the Serious Fraud Office in the UK and Brazil’s Ministério Público Federal. “These agreements relate to bribery and corruption involving intermediaries in a number of overseas markets,” the company said in a statement. The UK share of the settlement, which amounts to £497.2m, plus interest and costs, will go before a judge for approval at a court hearing in London on Tuesday. Some $170m will be paid to the US Department of Justice and $25.6m to Brazilian regulators. In such court-approved deals, the company admits wrongdoing, pays a fine and agrees to various other compliance measures.

If the company meets these requirements, there is no prosecution at the end of the agreement term. While common in the US, the DPA was introduced to the UK in 2014 and only two have so far been agreed, at significantly lower levels. Standard Bank’s total fine in November 2015 came to less than $40m. The fact that Rolls-Royce has agreed to the DPA is a huge coup for David Green, the SFO director, who has sought to make deferred prosecution agreements a key weapon in the SFO’s anti-corruption armoury since his appointment in 2012. It follows criticism that the SFO has made little headway since the 2011 Bribery Act, which made companies criminally liable for failing to prevent bribery. The fine far eclipses the SFO’s annual budget of £34m. “You can’t underestimate the political significance of this for the SFO,” one lawyer said. As a flagship UK company and household name, the Rolls-Royce investigation was one of the SFO’s most important. The company has been dogged by allegations of bribery for years, largely relating to the use of agents to win foreign business. In Indonesia, the widely reported allegations included that the company had given Tommy Suharto, son of the country’s former president, a blue Rolls-Royce car and $20m to encourage Garuda, the country’s airline, to buy its Trent 700 engine. Mr Suharto’s attorney wrote to the SFO in 2013 to deny any wrongdoing. In Brazil, Rolls-Royce was named in the investigation into bribery and kickbacks at Petrobras, Brazil’s state-controlled oil producer.

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