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Rolls-Royce apologises after £671m bribery settlement Rolls-Royce apologises after £671m bribery settlement
(about 1 hour later)
British engineering giant Rolls-Royce will pay a £671m penalty to settle corruption cases with UK and US authorities, a court has ruled. British engineering giant Rolls-Royce will pay £671m to settle corruption cases with UK and US authorities.
The aerospace firm will pay £497m plus costs to the UK's Serious Fraud Office (SFO), which conducted its biggest ever investigation into the firm. 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 SFO found conspiracy to corrupt or failure to prevent bribery in China, India, Thailand and other markets. The firm apologised "unreservedly" for the cases spanning nearly 25 years.
The firm apologised "unreservedly" for 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.
The investigation revealed 12 counts of conspiracy to corrupt or failure to prevent bribery in seven countries - Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia, according to the SFO. 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.
'Intermediaries' 'Lavish accommodation'
The agreement between the SFO and Rolls Royce, approved on Tuesday in a UK court, 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, repair 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.
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 and that 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 told the BBC. "I think it shows very clearly that the SFO has teeth and that the SFO will not go away, and that 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 told the BBC.
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.
The SFO told the BBC it would consider prosecuting individuals in connection with the case now it had reached an agreement with the company.