Swedish Club on internal anti-corruption guidelines

The latest issue of Triton from Swedish Club contains an article on the importance of internal anti-corruption guidelines, by Malin Högberg, Senior Claims Executive, P&I and FD&D, Team Gothenburg. The article analyzed Rolls Royce’s past problems in the field.

The Serious Fraud Office (SFO) had revealed 12 counts of conspiracy to corrupt or failure to prevent bribery in cases spanning over 25 years, in seven jurisdictions, involving three of Rolls-Royce’s business sectors. Following a four year investigation the SFO and Rolls Royce entered into a Deferred Prosecution Agreement (DPA), which was approved by the Queen’s Bench Division on January 17th this year. The author noted that “while the DPA concerns the Aviation and Energy branches of Rolls-Royce rather than its Marine Engine Business, the case showcases the powers of the UK authorities following the implementation of the UK Bribery Act 2010”.

The jurisdictions in which the conspiracy to corrupt or failure to prevent bribery had occurred were China, India, Indonesia, Malaysia, Nigeria, Russia and Thailand, relating to local companies handling sales, distribution and maintenance, acting as intermediaries of Rolls-Royce.

The offences were multi-jurisdictional, numerous and spread across the business of the Rolls-Royce branches involved. The offences had been persistent over 25 years and involved substantial funds being made available to fund bribe payments.

The court noted that the conduct displayed elements of careful planning and involved senior Rolls-Royce employees. In particular, the conduct related to the award of large value contracts earning Rolls-Royce in total over £250m in gross profit.

The DPA involves Rolls-Royce effecting payments of £497m (comprising disgorgement of profits of £258m and a financial penalty of £239m) plus interest and reimbursement of the costs incurred by the SFO. It was the largest penalty ever levied by the SFO.

Rolls-Royce is also paying £141m to the US Justice Department and £21.5m to Brazil’s Ministero Publico Federal. The penalties will be paid over five years.

Swedish Club noted that this was only the third DPA that the SFO had struck since the concept was first introduced into UK Law in 2014. A DPA allows an organization to avoid prosecution if it freely confesses to economic crimes such as fraud or bribery, but it does not hinder prosecution of individuals. It is a voluntary agreement regarding suspension of the prosecution of the company only, provided the company fulfils certain requirements, including the payment of a financial penalty. The author noted that Rolls-Royce “demonstrated extraordinary cooperation involving voluntary disclosure of vast amounts of internal information resulting in a substantial discount on the penalty levied. Without such far-reaching cooperation the penalty would have been twice the size of the penalty now imposed.”

The author concluded that the DPA showcases the far-reaching nature of the UK Bribery Act 2010 spanning across the international business of Rolls-Royce and

emphasizes the importance of thorough cooperation should any company find itself the subject of an investigation by the SFO. http://www.swedishclub.com/media_upload/files/Publications/Triton/TSCTriton1-2017w.pdf#page=28