Rolls Royce agrees to pay £671m to settle bribery case

Will Green is news editor of Supply Management
17 January 2017

Rolls Royce has agreed to pay a total of around £671m following an investigation into bribery by the Serious Fraud Office (SFO).

The amount is the highest ever agreed in an enforcement action by the SFO and covers the payment of millions of pounds in bribes to secure contracts around the sale of engines, energy systems and services.

A deferred prosecution agreement (DPA), agreed at the Royal Courts of Justice today, covers conduct over three decades by Rolls Royce’s civil aerospace and defence aerospace businesses and former energy business in Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia.

The investigation is the largest ever carried out by the SFO and it took four years. It continues into the conduct of individuals. Part of the payment will go to law enforcement agencies in the US and Brazil.

The indictment, which has been suspended for the term of the DPA, covers 12 counts of conspiracy to corrupt, false accounting and failure to prevent bribery.

According to agreed facts, in one instance Rolls Royce paid an intermediary $2.25m and supplied a Rolls Royce Silver Spirit II car to secure a contract to supply engines for six aircraft in Indonesia.

In Indonesia on another occasion a competitor consortium was paid to put in an uncompetitive bid so Rolls Royce would win a generator maintenance contract.

In Russia two intermediaries were paid £8m to secure a contract to provide gas compression equipment.

And in China, China Eastern Airlines (CES) was provided with $5m, connected to a contract to buy Rolls Royce engines, that was used to pay for a two-week business course in New York for various CES employees “including four-star hotel accommodation and lavish extra-curricular leisure activities”, said court documents.

Sir Brian Leveson, president of the Queen’s Bench division, agreed the settlement.

In his judgement Sir Brian said Rolls Royce “will have to suffer the undeniably adverse publicity that will flow from the facts of its business practices which will be exposed by the DPA so that the way in which it has done business will be obvious”.

“Any public procurement exercise will be conducted in the light of its history and it will doubtless only win contracts on the merits of its products.” 

Rolls Royce said the DPA recognised it had fully cooperated with the SFO and CEO Warren East said: “The behaviour uncovered in the course of the investigations by the Serious Fraud Office and other authorities is completely unacceptable and we apologise unreservedly for it. This was unworthy of everything which Rolls Royce stands for, and that our people, customers, investors and partners rightly expect from us.

“The past practices that have been uncovered do not reflect the manner in which Rolls Royce does business today. We now conduct ourselves in a fundamentally different way. We have zero tolerance of business misconduct of any sort.”

 Want to stay up to date with the news? Sign up to our daily bulletin.

LATEST
JOBS
West Yorkshire
£375-425 per day
Beaumont Select
London (Central), London (Greater)
£42,219 to £54,984 plus £3,216 location allowance + benefits
GPA Procurement
SEARCH JOBS
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates
GO TO CIPS KNOWLEDGE