Serious Fraud Office Makes Big Splash with UK Bribery Act Resolution with Rolls Royce

After years of fits and starts, and promises and disappointments, the Serious Fraud Office and the UK Bribery Act made its initial splash on the anti-corruption enforcement landscape.

Since 2011, companies have been warned that the SFO would begin enforcing the UK Bribery Act. There have been a few enforcement actions and important legal modifications in the UK authorizing deferred prosecution agreements. While it has taken years for the SFO to bring an important enforcement matter, the SFO has the tools and resources to bring important enforcement actions.

Rolls Royce agreed to a $800 million global settlement, including 497 million sterling under a deferred prosecution agreement (DPA) (DPA) with the UK SFO; $169 million under a DPA with the Justice Department; and approximately 25 million to Brazilian authorities for bribery committed in Brazil.

The UK Bribery Act settlement is the largest earned by the SFO and underscores risks for UK companies and individuals. A UK judge approved the DPA under new procedures governing review and approval of proposed DPAs by UK courts. The SFO’s investigation began in 2012 and took at least four years to complete.

The SFO is continuing its investigation against responsible individuals at Rolls Royce.

The multi-country resolution underscores the growing global coordination and cooperation among anti-corruption prosecutors and law enforcement. Like the recent Odebrecht/Braskem, the Rolls Royce case is another example of multi-jurisdiction cooperation and the leverage that multiple jurisdictions can gain in resolving a global bribery matter.

Rolls Royce is a UK-based manufacturer and distributor of power systems for aerospace, defense, marine and energy sectors. As set out in the factual statement, Rolls Royce employed third parties and bribes to secure lucrative contracts and business opportunities in numerous countries.

Rolls Royce joins the rank of global companies engaging in systemic bribery as a conscious business strategy to secure valuable business opportunities with foreign governments. Rolls Royce paid more than $35 million in bribes to obtain confidential information and securing contracts from foreign governments. Rolls Royce’s bribery conduct spanned 13 years and 22 countries. The facts are comprehensive and reveal that bribery was a way of life at Rolls Royce.

Rolls Royce paid approximately $11 million in bribes to officials at Thai government-owned oil and gas companies to earn seven contracts. In Brazil, Rolls Royce paid $9.3 million in bribes to foreign officials at Petrobas for multiple contracts.

In Kazakhstan, Rolls Royce paid $5.4 million though multiple third parties knowing that a portion of the commission payments to a joint venture between Kazakh and Chinese government officials that was developing a gas pipeline between the countries. Rolls Royce also hired a local Kazakh distributor that was owned by a high-ranking Kazakh government officials with decision-making authority over Rolls Royce’s business. The Kazakh-Chinese joint venture awarded several contracts to Rolls Royce.

In Angola, Rolls Royce used a third-party to pay $2.4 million in bribe to officials at Sonangol. In Iraq, Rolls Royce supplied turbines to a government owner oil company. The Iraqi company raised concerns about the turbines and threatened to blacklist Rolls Royce. To prevent blacklisting, Rolls Royce paid certain Iraqi officials bribes.

The SFO launched the investigation when media reports alleged corruption by Rolls Royce. As a result, Rolls Royce did not earn credit for voluntary disclosure.

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  1. January 31, 2017

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