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Bribery – How driving down dangerous roads could prove costly

Friday, 03 February 2017 12:57

The Bribery Act 2010 remains one of the most far-reaching pieces of legislation dealing with the threat of bribery and corruption across the globe.

Proof of how far this anti-corruption legislation travels across international boundaries, was demonstrated recently in the High Court when the Serious Fraud Office (SFO) agreed a £671 million settlement with Rolls Royce plc and Rolls Royce Energy Systems Inc. to settle allegations of widespread bribery of foreign officials in Europe, South America, Middle East and Asia in exchange for help in securing government contracts.

This settlement, the biggest imposed under this legislation, reflects a positive shift towards enforcing this widespread and harmful type of fraud.

Members of Rolls-Royces former senior management were accused of “egregious criminality over decades, involving countries around the world, making truly vast corrupt payments”, the High Court had found. The High Court described how the company used intermediaries to pay bribes to win huge engineering deals in Russia, China and many other markets.

Rolls Royce had attempted to cover up criminal payments between 1989 and 2013 as it made more than £258m in illegal profits. In one incident in India, it bribed a tax inspector to retrieve a list of intermediaries and consultants it had used in tenders for defence contracts. The list had mysteriously been removed from its New Dehli offices in an earlier tax survey. The incident was just one of numerous attempts to cover up wrongdoing at the company, including the destruction of important information found in emails and memos.

High Court Judge Lord Justice Leveson advised that Rolls Royce’s senior management knew about corruption in 2010 and did not notify the SFO. In the aftermath of the investigation, the company launched disciplinary proceedings against 38 of their employees, of whom six were sacked.

As a result of the SFO’s investigation, Rolls Royce have agreed to implement a number of strict measures within their UK, USA and Brazil jurisdictions in order to defer prosecution action being taken against their global organisation. The deal allows Rolls Royce to avoid criminal convictions that would have stopped it from delivering on deals worth at least £11.5 billion, equivalent to 30% of its orders.

Rolls Royce have also intimated that they now have a zero tolerance policy in place to deal with the threat of bribery. However, this will be seen by many as too little too late.

One solution for businesses is to introduce clear whistleblowing policies and procedures to encourage staff to report fraud, bribery and corruption. An independent and external whistleblowing service provider will provide additional protection against this threat to their business.

Like many organisations exposed to fraud and corruption, Rolls Royce would appear to have only sought to take remedial action as a result of these breaches. Given the scope of the Bribery Act, businesses need to take action now to protect themselves from such breaches and not leave themselves exposed otherwise, as in the case of Rolls Royce, driving down such a dangerous road could prove costly.