Solicitors in Essex, Colchester, Chelmsford, London – Fisher Jones Greenwood

How the mighty (might) fall…

7 December 2012 by

Rolls Royce, a brand that has been a byword for reliability, quality and integrity for so many years, has fallen subject to an investigation by the Serious Fraud Office (SFO) after a ‘whistle-blower’ (probably an employee) passed information to it regarding alleged malpractices in Indonesia and China. Unsurprisingly, the company is said to be, ‘cooperating fully with the investigation’. The Chief Executive, John Rishton said, ‘I want to make it chrystal clear that neither I nor the board will tolerate improper business conduct of any sort and will take all necessary action to ensure compliance’.

The news of this investigation comes just sixteen months after the Bribery Act 2010, came into force and after businessmen had begun to sleep more easily in their beds following initial fears that the Act would stifle business and expose many to investigations and possible sanctions. It is unclear at present whether the investigation concerns offences under the new Act or whether the events that the SFO are investigating are historical and fall under the old laws of bribery and corruption.

The company has not been without controversy in the past. In November 1993, it announced it had signed a £110 million contract to build and operate a state-of-the-art gas fired power station in southern India. In 2003, it was at the centre of claims that multi-million pound payments were made to a secret company in the British Virgin Islands and another in order to secure the contract.

Conscious of the obligations the new Act imposes the company said that it had instituted policies and procedures in order to make it ‘Bribery Act compliant’ but in the light of these latest revelations it has now hired another consultancy to review its methods.

As predicted by Stephen Harvey QC in one of his many messages to the Quality Square business breakfast meeting in September, investigations under the new Act are now surfacing. The Act was not retrospective and the investigations under it (which take on average 15 – 20 months) are only now beginning to see the light of day.

Although Rolls Royce is a large business with some 40,000 employees and a presence in fifty counties, it is clear that the SFO intend to use the Act against all businesses and organisations regardless of size. David Green QC, the new Director of the SFO, said when he appeared before MPs last month that his predecessor’s preference for striking civil deals with multi-nationals had created a perception that the SFO was soft on corporate crime and he warned that companies found to be involved in serious misconduct would face the full weight of the law.

Where the talks with the SFO will lead is uncertain but a spokesman for the company said, ‘It is too early to predict the outcomes, but these could include the prosecution of individuals and of the company’.

Precisely what era of bribery and corruption is involved here perhaps doesn’t matter. This should be taken as a warning. No-one can afford to ignore the demands the Act places upon all businesses today.

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