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Rolls-Royce apologises after £671m bribery settlement | Rolls-Royce apologises after £671m bribery settlement |
(about 3 hours later) | |
British engineering giant Rolls-Royce will pay £671m to settle corruption cases with UK and US authorities. | British engineering giant Rolls-Royce will pay £671m to settle corruption cases with UK and US authorities. |
The UK's Serious Fraud Office (SFO) found conspiracy to corrupt or failure to prevent bribery by Rolls-Royce in China, India and other markets. | The UK's Serious Fraud Office (SFO) found conspiracy to corrupt or failure to prevent bribery by Rolls-Royce in China, India and other markets. |
The firm apologised "unreservedly" for the cases spanning nearly 25 years. | The firm apologised "unreservedly" for the cases spanning nearly 25 years. |
A UK court ruled the aerospace firm would pay £497m plus costs to the SFO, which conducted its biggest ever investigation into the firm. | A UK court ruled the aerospace firm would pay £497m plus costs to the SFO, which conducted its biggest ever investigation into the firm. |
The SFO revealed 12 counts of conspiracy to corrupt or failure to prevent bribery in seven countries - Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia. | The SFO revealed 12 counts of conspiracy to corrupt or failure to prevent bribery in seven countries - Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia. |
Rolls-Royce said it would also pay $170m (£141m) to the US Justice Department, and a further $26m (£21.5m) to Brazilian regulators. | Rolls-Royce said it would also pay $170m (£141m) to the US Justice Department, and a further $26m (£21.5m) to Brazilian regulators. |
Described by the judge as "a jewel in the UK's industrial crown", Rolls-Royce makes engines for military and civil planes, as well as for trains, ships, nuclear submarines and power stations. | Described by the judge as "a jewel in the UK's industrial crown", Rolls-Royce makes engines for military and civil planes, as well as for trains, ships, nuclear submarines and power stations. |
The firm's shares finished nearly 4.5% higher on the news of the settlements and the company's announcement that its 2016 profits would beat expectations. | The firm's shares finished nearly 4.5% higher on the news of the settlements and the company's announcement that its 2016 profits would beat expectations. |
'Lavish accommodation' | 'Lavish accommodation' |
The agreement between the SFO and Rolls-Royce, approved by the court on Tuesday, is known as a deferred prosecution agreement (DPA). | The agreement between the SFO and Rolls-Royce, approved by the court on Tuesday, is known as a deferred prosecution agreement (DPA). |
It is only the third such agreement that the SFO has struck since they were first introduced into UK law in 2014. | It is only the third such agreement that the SFO has struck since they were first introduced into UK law in 2014. |
They allow organisations to pay huge penalties, but avoid prosecution, if they freely confess to economic crimes such as fraud or bribery. | They allow organisations to pay huge penalties, but avoid prosecution, if they freely confess to economic crimes such as fraud or bribery. |
The wrongdoing involved Rolls-Royce's "intermediaries", which are local companies that handle sales, distribution and maintenance in countries where the British firm does not have enough people on the ground. | The wrongdoing involved Rolls-Royce's "intermediaries", which are local companies that handle sales, distribution and maintenance in countries where the British firm does not have enough people on the ground. |
The cases of suspected corruption or bribery detailed by the SFO included: | The cases of suspected corruption or bribery detailed by the SFO included: |
'Zero tolerance' | 'Zero tolerance' |
In its statement, Rolls-Royce chief executive 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. | In its statement, Rolls-Royce chief executive 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. |
"The past practices that have been uncovered do not reflect the manner in which Rolls-Royce does business today. | "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," he added. | "We now conduct ourselves in a fundamentally different way. We have zero tolerance of business misconduct of any sort," he added. |
The company's lawyer, David Perry, told the court that it had undergone a "fundamental change" since the investigations began, overhauling systems, training, governance and ethics strategies. | The company's lawyer, David Perry, told the court that it had undergone a "fundamental change" since the investigations began, overhauling systems, training, governance and ethics strategies. |
Analysis: John Moylan, BBC Industry Correspondent | |
Who was responsible for the conduct which has tarnished the reputation of the UK's flagship engineering firm? | |
Approving this agreement between the SFO and Rolls-Royce, Sir Brian Leveson, President of the Queen's bench division, stated that "the conduct involved senior (on the face of it, very senior) Rolls-Royce employees". | |
Thirty eight employees have faced disciplinary proceedings. Eleven left the firm during the disciplinary process. Six were dismissed. | |
Rolls-Royce has also reviewed 250 intermediary relationships across the company - 88 have now been suspended. | |
The SFO says that investigations into individuals continue. | |
But until those who undertook these corrupt activities - and crucially those at a high level who signed them off - are brought before the courts, many will ask whether justice really has been served. | |
SFO director David Green said the £13m probe into Rolls-Royce was the biggest single investigation the office had carried out. | SFO director David Green said the £13m probe into Rolls-Royce was the biggest single investigation the office had carried out. |
"It allows Rolls-Royce to draw a line under conduct spanning seven countries, three decades and three sectors of its business," he said. | "It allows Rolls-Royce to draw a line under conduct spanning seven countries, three decades and three sectors of its business," he said. |
"I think it shows very clearly that the SFO has teeth and that the SFO will not go away," Mr Green told the BBC. | "I think it shows very clearly that the SFO has teeth and that the SFO will not go away," Mr Green told the BBC. |
He added: "On a positive side from a company's point of view it shows that co-operation, genuine co-operation with a SFO investigation, pays." | He added: "On a positive side from a company's point of view it shows that co-operation, genuine co-operation with a SFO investigation, pays." |
However, there are still questions about whether "justice has been served", said Robert Barrington, executive director at Transparency International UK. | However, there are still questions about whether "justice has been served", said Robert Barrington, executive director at Transparency International UK. |
"Individuals haven't been held to account and the markets - when the share price has gone up today - are perhaps suggesting this isn't really a punishment or deterrent," Mr Barrington said. | "Individuals haven't been held to account and the markets - when the share price has gone up today - are perhaps suggesting this isn't really a punishment or deterrent," Mr Barrington said. |
The SFO told the BBC it would consider prosecuting individuals in connection with the case now it had reached an agreement with the company. | The SFO told the BBC it would consider prosecuting individuals in connection with the case now it had reached an agreement with the company. |