The Strange Bribery Investigation Into Rolls Royce

Dec 25 2013, 5:11am CST | by

I have to admit to being somewhat surprised about this bribery investigation into the historical actions of Rolls Royce (that’s the jet engine company, not the car one). For at least as far as I’m aware, and I have indeed checked this against UK law in the past to find out whether I can myself offer such commissions, the behaviour being looked into wasn’t actually illegal under UK law at the time.

Here’s the basic story:

The Serious Fraud Office has launched a formal investigation into allegations of bribery and corruption at engine maker Rolls-Royce that could lead to criminal prosecutions.

OK, bribery to gain contracts is a serious charge, yes of course people should look into allegations about them.

Britain’s fraud-busting agency has spent more than a year examining claims from a whistleblower over Rolls’ use of middle-men in winning multi-million pound contracts in Indonesia, China and elsewhere, dating back more than 20 years.

And there’s the problem. Bribery inside the UK has long been a criminal offence and one that is strictly monitored and prosecuted whenever it is seen. But until the 2010 Bribery Act bribing foreigners wasn’t a criminal offence. We didn’t have anything like the US FCPA at all.

You might think this a little strange but here’s how it all worked. We all, we Brits, agree and agreed that trying to bribe someone in Britain was a very bad idea. And this is culturally as well as legally. The vast majority of people that you tried to bribe would in fact report you for having tried to bribe them. It just wasn’t part of the culture at all. However, we all also knew that that’s not quite how it worked in other parts of the world….perhaps “some” other parts of the world is more accurate. There were places where paying the middle man, or the bureaucrat, or even the government of the day, were just what was expected of all people doing business in that place at that time.

The UK attitude was therefore that bribing foreigners, if you’re in the sort of place where bribery is commonplace, was just part and parcel of the costs of doing business. Indeed, bribes were tax deductible business expenses.

Now maybe this isn’t how it should have been but this is the way that it was. At least until that 2010 Bribery Act.

So I’m afraid I don’t really understand why we have the SFO looking at possible bribery 20 years ago in Indonesia as one example. Such behaviour might have broken Indonesian law at that time (although under Suharto that’s a difficult case to make) but it wasn’t illegal under UK law at that time. So why are they investigating it?

Source: Forbes Business


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