This tougher law introduced an offence of failure to prevent bribery, and clamps down on “facilitation payments” and disproportionate hospitality to oil the wheels of business.
Companies can be handed unlimited fines if they cannot show they have “adequate procedures” to prevent bribery, while guilty individuals face up to 10 years in prison and unlimited fines.
MATTERS OF CONCERN
Rolls-Royce’s profits have risen strongly in recent years due to soaring demand for more fuel-efficient engines for planes made by Airbus and Boeing. Luxury Rolls-Royce cars are made by a separate company belonging to BMW.
Aerospace and defense companies use intermediaries, which can be individuals or companies, in countries where they do not have a large presense. Intermediaries cover tasks from sales to coordinating maintenance and support contracts.
The SFO declined to give details of the investigation. “It’s up to Rolls-Royce to say what they think is right to say. It’s not something we would provide information about or comment on,” a spokesman said.
Allegations of corruption are not new to the defense and aerospace industry. BAE Systems, Europe’s biggest defense company, was fined $450 million by the United States and Britain in 2010, following long-running corruption investigations at home and abroad into defense deals in Saudi Arabia, Tanzania, Sweden, the Czech Republic and Hungary.
“BAE ended up with fines that were not exactly huge, so you would imagine that Rolls could end up with a fine that won’t trouble investors much,” said Espirito Santo analyst Ed Stacey, noting that the European Union has banned arms sales to China.
“China is involved and you can’t sell anything defense-related there, so it (the probe) has to concern its civil aerospace or energy businesses,” he said.