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SFO secures largest corporate crime fine

Latest DPA could sound the death knell for self-reporting, says white collar crime expert

18 January 2017

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The Serious Fraud Office has secured the UK’s largest corporate crime fine ever after a deferred prosecution agreement totalling £497m was approved by a court this week.

Sitting at Southwark Crown Court, Lord Justice Leveson approved a DPA with Rolls-Royce, following investigations into bribery and corruption overseas by the UK engineering group.

In addition to the fine, the London-based aerospace multinational must also pay £13m in costs to the SFO. Rolls-Royce will also pay $169m (£140m) in penalties to the US Department of Justice and $25m to the Brazilian authorities.

The deferred prosecution relates to 12 counts of conspiracy to corrupt, false accounting, and failure to prevent bribery over the sale of aero engines and energy systems, spanning three decades and seven jurisdictions.

In his judgment, Sir Brian Leveson said: ‘The investigation into the conduct of individuals continues and nothing in this agreement in any way affects the prospects of criminal prosecutions being initiated if the full code test for prosecution is met.

‘The question becomes whether it is necessary to inflict the undeniably adverse consequences on Rolls-Royce that would flow from prosecution because of the gravity of its offending even though it may now be considered a dramatically changed organisation.’

David Green CB QC, director of the SFO, said: ‘Bribery harms the reputation of the UK as a safe place to do business. I welcome this DPA, a significant enforcement action by the SFO, using relatively new statutory powers in respect of an important British company. It allows Rolls-Royce to draw a line under conduct spanning seven countries, three decades, and three sectors of its business.’

The US-style DPAs allow businesses which admit to involvement in corporate crime the possibility of avoiding a criminal investigation and prosecution, provided strict conditions agreed by a judge are met. The tool was first introduced in 2014. The SFO has since secured two of the agreements.

Barry Vitou, a partner and head of global corporate crime at Pinsent Masons, said this latest DPA placed the SFO in the big leagues when it comes to investigating and resolving bribery investigations.

‘By anyone’s standards this is one of the top 10 enforcement actions of all time. The amount dwarfs any amount previously contemplated by a UK court in the context of criminal law enforcement,’ he said. ‘The cost of investigation and the subsequent resolution of those investigations can be very significant.’

Vitou said the resolution of the case will be welcomed by Rolls-Royce but should also serve as a wakeup call to other companies: ‘The decision represents a win for the SFO and reinforces the idea that DPAs are here to stay. More will undoubtedly follow.’

Also commenting on the news, Tony Lewis, head of fraud and corporate crime at Fieldfisher, expressed concern at a potential unintended consequence of the DPA.

‘It is clear from the judgment of Lord Justice Leveson, and the statement of facts, that Rolls-Royce did not self-report,’ he explained. ‘Rather, the SFO came knocking, and Rolls-Royce responded cooperatively.

‘This cooperation, which the court and the SFO considered “extraordinary”, unlocked a DPA, and also an additional discount, in circumstances where objectively the agreed offending was at the egregious end of the scale.’

Lewis said the unintended consequence of this latest agreement ‘may be the death knell for self-reporting as businesses take the view that the full rewards of a DPA may be available to them in circumstances where they address corruption issues in a reactive rather than a proactive way’.

John van der Luit-Drummond is deputy editor of Solicitors Journal

john.vanderluit@solicitorsjournal.co.uk | @JvdLD

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