This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.
After years of fits and starts, and promises and disappointments, the Serious Fraud Office and the U.K. Bribery Act made its initial splash on the anti-corruption enforcement landscape.
Since 2011, companies have been warned that the SFO would begin enforcing the U.K. Bribery Act. There have been a few enforcement actions and important legal modifications in the U.K. authorizing deferred prosecution agreements. While it has taken years for the SFO to bring an important enforcement matter, the SFO has the tools and resources to bring important enforcement actions.
Rolls Royce agreed to a $800 million global settlement, including 497 million sterling under a deferred prosecution agreement (DPA) (DPA) with the U.K. SFO; $169 million under a DPA with the Justice Department; and approximately 25 million to Brazilian authorities for bribery committed in Brazil.
The U.K. Bribery Act settlement is the largest earned by the SFO and underscores risks for U.K. companies and individuals. A U.K. judge approved the DPA under new procedures governing review and approval of proposed DPAs by U.K. courts. The SFO’s investigation began in 2012 and took at least four years to complete.
The SFO is continuing its investigation against responsible individuals at Rolls Royce.
The multi-country resolution underscores the growing global coordination and cooperation among anti-corruption prosecutors and law enforcement. Like the recent Odebrecht/Braskem, the Rolls Royce case is another example of multi-jurisdiction cooperation and the leverage that multiple jurisdictions can gain in resolving a global bribery matter.
Rolls Royce is a U.K.-based manufacturer and distributor of power systems for aerospace, defense, marine and energy sectors. As set out in the factual statement, Rolls Royce employed third parties and bribes to secure lucrative contracts and business opportunities in numerous countries.
Rolls Royce joins the rank of global companies engaging in systemic bribery as a conscious business strategy to secure valuable business opportunities with foreign governments. Rolls Royce paid more than $35 million in bribes to obtain confidential information and securing contracts from foreign governments. Rolls Royce’s bribery conduct spanned 13 years and 22 countries. The facts are comprehensive and reveal that bribery was a way of life at Rolls Royce.
Rolls Royce paid approximately $11 million in bribes to officials at Thai government-owned oil and gas companies to earn seven contracts. In Brazil, Rolls Royce paid $9.3 million in bribes to foreign officials at Petrobas for multiple contracts.
In Kazakhstan, Rolls Royce paid $5.4 million though multiple third parties knowing that a portion of the commission payments to a joint venture between Kazakh and Chinese government officials that was developing a gas pipeline between the countries. Rolls Royce also hired a local Kazakh distributor that was owned by a high-ranking Kazakh government officials with decision-making authority over Rolls Royce’s business. The Kazakh-Chinese joint venture awarded several contracts to Rolls Royce.
In Angola, Rolls Royce used a third-party to pay $2.4 million in bribe to officials at Sonangol. In Iraq, Rolls Royce supplied turbines to a government owner oil company. The Iraqi company raised concerns about the turbines and threatened to blacklist Rolls Royce. To prevent blacklisting, Rolls Royce paid certain Iraqi officials bribes.
The SFO launched the investigation when media reports alleged corruption by Rolls Royce. As a result, Rolls Royce did not earn credit for voluntary disclosure.
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Michael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services. He can be reached at email@example.com. His practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters. He is a former federal prosecutor with almost 30 years of experience in a variety of government positions and private practice.
Michael maintains a well-known blog: Corruption Crime & Compliance which is frequently cited by anti-corruption professionals and professionals in the compliance industry.Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues.
Michael has assisted clients with design and implementation of compliance programs to reduce risk and respond to global and US enforcement programs.
Michael has built a strong reputation for his practical and comprehensive compliance strategies.Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for 5 years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice.
Michael also has extensive trial experience and has been lead attorney in more than 75 jury trials, including some lasting more than six months. His clients have included corporations, officers, directors and professionals in, internal investigations and criminal and civil trials. He has handled a number of high-profile criminal cases involving a wide‐range of issues, including the FCPA and compliance matters, environmental crimes, and antitrust cartel investigations in countries all around the world.