Photo Credit: Robert (via Flickr)
In January 2017, Rolls-Royce, one of the world’s largest luxury-car and aircraft engine manufacturers, agreed to pay $800 million in a global settlement with the United Kingdom’s Serious Fraud Office (SFO), the U.S. Department of Justice (DOJ), and Brazilian prosecutors. Rolls-Royce acknowledged that in the course of three decades it hired intermediaries who paid bribes in return for lucrative contracts in at least seven countries, including Indonesia, China, India, Russia, and Nigeria. The key role in this investigation belongs to the SFO. Rolls-Royce is the largest ever case carried out by the British anti-corruption agency. Over five years, 70 investigators examined more than 30 million documents related to the case and conducted about 200 interviews with Rolls-Royce employees. To a great extent, this case was a survival test for the SFO, which was under systematic abolition threats since 2011. The deferred prosecution agreement (DPA) with Rolls-Royce in the amount of £497.2 million placed the British agency among anti-corruption’s big-league players.
Over the last decade, investigations by the SFO have produced controversial results. The agency was criticized for lost dynamism, numerous investigative failures, and the lack of a capacity to prosecute large and powerful businesses involved in corrupt activities in emerging markets and developing countries. Perhaps, the most serious failure was a SFO investigation into Britain’s biggest arms manufacturer BAE that allegedly paid bribes to Saudi Arabian officials. In 2006, Robert Wardle, former SFO Director, testified that he had to halt the case against BAE because the Cabinet of Ministers headed by then Prime Minister Tony Blair “raised the possibility that Saudi Arabia’s cooperation with the UK on counter-terrorism would be prejudiced if the investigation continued.” The dropping of the case provoked widespread revulsion among the anti-corruption community. Another notable failure of the SFO was the collapse of the 2010 investigation against property developers Vincent and Robert Tchenguiz. In 2012, the High Court in London accused the SFO of “sheer incompetence” and ruled that its search warrants in the Tchenguiz case were illegally obtained “by misrepresentation and non-disclosure.”
David Green, current SFO Director, inherited the agency in 2012, probably at its lowest moment. In 2011, then Home Secretary Theresa May proposed to abolish the SFO by transferring its functions to the National Crime Agency (NCA), a British organization similar to the FBI. Due to little visible progress in anti-corruption enforcement, she consistently viewed the SFO as “an unsuccessful anachronism.” The future of this agency became even more uncertain when May became UK’s Prime Minister in 2016. However, the SFO managed to stay afloat due to its new proactive strategy targeting corrupt businesses. The most notable achievements under Green’s leadership include the UK’s first convictions under the Bribery Act of 2010, the continuation of the previously dropped case against bankers who manipulated Libor rates, and the introduction of DPA as a legal tool to encourage self-reporting by corrupt companies. Among these achievements, Rolls-Royce became a key test of the SFO’s ability to bring powerful and politically sensitive companies to justice.
Rolls-Royce is often called “the jewel in the UK’s industrial crown.” One can judge about the importance of Rolls-Royce for the British economy and defense sector from the fact that the company is governed by the so-called “golden share” agreement that allows the Government to veto any potential takeover and block any deal that threatens the national interest. Taking this political sensitivity into account, the record-breaking DPA with Rolls-Royce constitutes the greatest victory of the SFO, especially in comparison with the two previous agreements. The first DPA with ICBC Standard Bank Plc. did not exceed $33 million, while the second DPA with an anonymous company reached only £13 million. Former SFO prosecutor Robert Amaee commented about the Rolls-Royce case: “It is by far the largest penalty that has ever been levied by the SFO in a bribery matter, and the first time that the UK’s portion of the global settlement is higher than that of the US. With this DPA, the SFO is now playing in the big leagues.”
The Rolls-Royce case clearly demonstrates that the SFO has found a way to arrive at the post-Brexit critical juncture with the right assets in the right hands. This emblematic high-impact case made it more difficult for the British political elites to justify the abolishment of the SFO. The Rolls-Royce case is a major victory not only for the SFO itself, but also for anti-corruption agencies in other Commonwealth countries that are struggling to prosecute large companies involved in bribery. The SFO receives an increasing number of requests for assistance from Commonwealth countries, especially from South Africa, Australia, Canada, India, Kenya, and Zambia. The SFO’s investigation into Rolls-Royce sets a good example for anti-corruption agencies in these countries.
Yulia Krylova is a doctoral candidate at George Mason University