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Rolls-Royce sent agent to 'retrieve' document from India tax office Rolls-Royce sent agent to 'retrieve' document from India tax office
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Rolls-Royce sent an agent to “retrieve” an incriminating document from tax officials in India to avoid the investigation and prosecution of its employees.Rolls-Royce sent an agent to “retrieve” an incriminating document from tax officials in India to avoid the investigation and prosecution of its employees.
The agent told the engineering giant that he paid a large sum to get the document from authorities, avoiding the company being banned from operating in India for 25 years.The agent told the engineering giant that he paid a large sum to get the document from authorities, avoiding the company being banned from operating in India for 25 years.
The revelation is contained in court documents filed by the Serious Fraud Office as part of the admission by Rolls-Royce that it had acted corruptly in 12 countries, including India.The revelation is contained in court documents filed by the Serious Fraud Office as part of the admission by Rolls-Royce that it had acted corruptly in 12 countries, including India.
According to the statement of facts on corruption, which was put to the court by the SFO and Rolls-Royce, the individual – identified only as “Intermediary 4” in court documents – was the company’s agent on at least two major deals in India, including the sale of engines for BAE Systems Hawk aircraft in 2004.According to the statement of facts on corruption, which was put to the court by the SFO and Rolls-Royce, the individual – identified only as “Intermediary 4” in court documents – was the company’s agent on at least two major deals in India, including the sale of engines for BAE Systems Hawk aircraft in 2004.
False accounting and conspiracy to bribe foreign officials in India were part of a series of admissions by Rolls-Royce, as Britain’s leading multinational manufacturer agreed to pay £671m in penalties to settle a long-running corruption investigation by the SFO and regulators in Brazil and the US.False accounting and conspiracy to bribe foreign officials in India were part of a series of admissions by Rolls-Royce, as Britain’s leading multinational manufacturer agreed to pay £671m in penalties to settle a long-running corruption investigation by the SFO and regulators in Brazil and the US.
However, investigators are still considering whether to prosecute individuals over the endemic corruption at the company that extended over four decades and involved multimillion-dollar bribes to land huge contracts.However, investigators are still considering whether to prosecute individuals over the endemic corruption at the company that extended over four decades and involved multimillion-dollar bribes to land huge contracts.
The engineering giant is under pressure to explain who was responsible for what the high court judge, Sir Brian Leveson, called “egregious criminality over decades”.The engineering giant is under pressure to explain who was responsible for what the high court judge, Sir Brian Leveson, called “egregious criminality over decades”.
In the settlement with the SFO, Rolls-Royce stated it had used Intermediary 4 as an agent for several years. In January 2006, Indian tax inspectors visited Rolls-Royce’s Delhi office and removed a list of Rolls-Royce’s advisers.In the settlement with the SFO, Rolls-Royce stated it had used Intermediary 4 as an agent for several years. In January 2006, Indian tax inspectors visited Rolls-Royce’s Delhi office and removed a list of Rolls-Royce’s advisers.
The list included several companies connected to Intermediary 4.The list included several companies connected to Intermediary 4.
By February, Rolls-Royce employees in London were discussing the retrieval of the list, because of concerns that an investigation could subject the company to “vigorous and possibly public hostile scrutiny”.By February, Rolls-Royce employees in London were discussing the retrieval of the list, because of concerns that an investigation could subject the company to “vigorous and possibly public hostile scrutiny”.
According to Intermediary 4, “some [Rolls-Royce] employees, including one based in India, would have gone to jail and [Rolls-Royce] would have been closed out of the Indian market for 25 years.”According to Intermediary 4, “some [Rolls-Royce] employees, including one based in India, would have gone to jail and [Rolls-Royce] would have been closed out of the Indian market for 25 years.”
At the time, it was illegal for companies to use unregistered intermediaries in defence deals in India, so there were concerns that the adviser list could trigger a more extensive investigation.At the time, it was illegal for companies to use unregistered intermediaries in defence deals in India, so there were concerns that the adviser list could trigger a more extensive investigation.
Intermediary 4 was told to retrieve the document from the tax authorities.Intermediary 4 was told to retrieve the document from the tax authorities.
“There is an inference that this involved payment to a tax inspector,” stated the SFO.“There is an inference that this involved payment to a tax inspector,” stated the SFO.
The SFO also noted that “while [Rolls-Royce] could accept no legal or fiscal liability for Intermediary 4’s action, they were however grateful and should look to see if mutually beneficial future business through which [Rolls-Royce] could give tangible form to that gratitude”.The SFO also noted that “while [Rolls-Royce] could accept no legal or fiscal liability for Intermediary 4’s action, they were however grateful and should look to see if mutually beneficial future business through which [Rolls-Royce] could give tangible form to that gratitude”.
By the end of April, senior Rolls-Royce figures were informed that the situation had been resolved.By the end of April, senior Rolls-Royce figures were informed that the situation had been resolved.
The next month, seven contracts were signed and “it is accepted that these contracts were the mechanism by which [Rolls-Royce] made payments to Intermediary 4 in connection to the adviser list”.The next month, seven contracts were signed and “it is accepted that these contracts were the mechanism by which [Rolls-Royce] made payments to Intermediary 4 in connection to the adviser list”.
Over a period of five months, Rolls-Royce paid £1.85m to entities connected to Intermediary 4.Over a period of five months, Rolls-Royce paid £1.85m to entities connected to Intermediary 4.
In 2007, Rolls-Royce agreed to enter into an agreement with one of Intermediary 4’s companies to establish a warehouse facility in Dubai.In 2007, Rolls-Royce agreed to enter into an agreement with one of Intermediary 4’s companies to establish a warehouse facility in Dubai.
According to the SFO, the warehouse facility had an “ancillary purpose” which was to provide “a means of remunerating Intermediary 4 for assistance provided on [defence] contracts”.According to the SFO, the warehouse facility had an “ancillary purpose” which was to provide “a means of remunerating Intermediary 4 for assistance provided on [defence] contracts”.
Intermediary 4 had been involved in brokering an agreement between Rolls-Royce and Hindustan Aeronautics, an Indian state-owned defence company, helping increase a licensing fee from the Indian government from £4m to £7.5m. Hindustan Aeronautics declined to comment.Intermediary 4 had been involved in brokering an agreement between Rolls-Royce and Hindustan Aeronautics, an Indian state-owned defence company, helping increase a licensing fee from the Indian government from £4m to £7.5m. Hindustan Aeronautics declined to comment.
Four years later Rolls-Royce decided to terminate the relationship with Intermediary 4.Four years later Rolls-Royce decided to terminate the relationship with Intermediary 4.
At this point, Intermediary 4 reminded Rolls-Royce executives about his assistance with the adviser list.At this point, Intermediary 4 reminded Rolls-Royce executives about his assistance with the adviser list.
According to court documents: “At the meeting, Intermediary 4 mentioned the help Intermediary 4 had given to RR in resolving the tax difficulty in the RR India office in 2006, that Intermediary 4 had paid out a lot more than received from RR to resolve the matter.”According to court documents: “At the meeting, Intermediary 4 mentioned the help Intermediary 4 had given to RR in resolving the tax difficulty in the RR India office in 2006, that Intermediary 4 had paid out a lot more than received from RR to resolve the matter.”
Anti-corruption campaigners have said that while Rolls-Royce has accepted criminality on a corporate basis, it is also crucial that the individuals responsible are held to account in the criminal courts.
A Rolls-Royce spokesperson said:“Rolls-Royce has committed to full ongoing co-operation with the authorities and must avoid the risk of prejudicing any potential future prosecutions. As a result, we cannot comment on individuals or the specific conduct set out in the statement of facts included in the collective agreements.”