On January 16, British engineering group Rolls-Royce Plc announced a global settlement of more than $800 million dollars with anti-corruption authorities in Britain, the U.S. and Brazil, making it the fifth-largest global enforcement fine ever paid by a corporation. The Department of Justice will receive nearly $170 million from the settlement, while the Brazilian Ministério Público Federal will be paid $25.6 million. This is the third deferred prosecution agreement ever issued by the Serious Fraud Office, which will get around $600 million—the largest SFO settlement ever, and one that strongly refutes earlier characterizations of the agency as toothless.
The settlement resolves multiple investigations into bribery and corruption perpetrated in overseas markets and accomplished through the use of intermediaries. In recently unsealed court papers, Rolls-Royce admitted using third parties to pay more than $35 million in bribes to government officials between 2000 and 2013. The money was most commonly paid in exchange for confidential information or contract awards in several countries, including Brazil, Azerbaijan, Kazakhstan, Thailand, Nigeria, Iraq, China, Malaysia, India, Russia, Indonesia and Angola.
The settlement was positively affected by the company’s cooperation with the authorities, the termination of employees and third parties involved in the wrongful conduct, and Rolls-Royce’s implementation of more comprehensive compliance policies and procedures. However, Rolls-Royce was faulted for not readily disclosing the criminal conduct, but instead waiting until after the SFO investigation commenced and allegations of corruption were reported by several media organizations. It has been reported that senior figures at the company were aware of the corruption as early as 2010, but did not report it. As a result, while the company received a deferred prosecution agreement from the SFO, thirty or more Rolls-Royce employees could still face criminal charges.
This settlement demonstrates the necessity of ensuring that a company's anti-corruption compliance program comprehensively reviews third party agents. A company should ensure that appropriate due diligence procedures are taken before retaining any third party agent. Moreover, a company should review its existing third party agents to ensure that there are no red flags associated with their use, and, if there are any red flags, they have been appropriately addressed. Finally, the entire due diligence procedure should be well-documented.