Aerospace-defence major Rolls-Royce got a reprieve this week when a British court approved a significant Deferred Prosecution Agreement (DPA) between the company and the Serious Fraud Office (SFO), which was investigating its corrupt practices in India and six countries.
Valid for five years, the DPA enables the company to avoid potential criminal conviction in court, which would have barred it from bidding contracts in various countries. The SFO investigation spanned over three decades and cover 12 counts of conspiracy to corrupt, false accounting and failure to prevent bribery.
Rolls-Royce, which has secured large defence and other contracts in India over the years, has also been under investigation by the Central Bureau of Investigation, among other Indian authorities. Of the 12 counts, two relate to its activities in India, and highlight the nature of its past unethical activities.
The DPA, approved in the interests of justice by Judge Leveson, president of the Queen’s Bench Division, involves a settlement of £497.25 million plus interest and the SFO’s legal costs of £13 million. The company has entered into similar agreements with authorities in the US and Brazil.
Rolls-Royce apologised for its behavior and termed the activities uncovered as “completely unacceptable”. Warren East, chief executive, Rolls-Royce, 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 first India-related count of conspiracy related to ‘false accounting’ in the company’s activities between 2005 and 2009, while the second count relates to conspiracy to corrupt between 2006 and 2007.
Leveson said in his ruling: “Breach of the undertaking entitled the Indian authorities to cancel agreements, and prevent bidding for future contracts. Notwithstanding these undertakings and the developing procurement rules, Rolls-Royce continued to use one of its key intermediaries in relation to relevant defence contracts.”