Rolls-Royce admits bribery in Thailand

Rolls-Royce admits bribery in Thailand

Aircraft in Thailand use a variety of engines, with GE and Rolls-Royce (above) the clear favourites, including by Thai Airways International. (Photo via Thaiairways.com)
Aircraft in Thailand use a variety of engines, with GE and Rolls-Royce (above) the clear favourites, including by Thai Airways International. (Photo via Thaiairways.com)

LONDON - Jet engine maker Rolls-Royce has agreed to pay £671 million ($808 million, 28.5 billion baht) to settle bribery and corruption charges brought by authorities in Britain, the US and Brazil.

The case involved admitted bribery in Thailand, but authorities said no Thai complaint was filed, and no details were forthcoming.

But BBC reported on Wednesday that in the Thailand case, Rolls-Royce agreed to pay $18.8 million (663.3 million baht) to "regional intermediaries". The term refers to local companies that handle sales, distribution and maintenance in countries where the British firm does not have enough people on the ground.

Some of the money was for individuals who were "agents of the State of Thailand and employees of Thai Airways", it quoted the UK's Serious Fraud Office (SFO) as saying.

These agents "were expected to act in Rolls-Royce's favour with respect to a purchase by Thai Airways of T800 engines", the BBC report said.

UK High Court judge Brian Leveson approved a deferred prosecution agreement during a public hearing on Tuesday. The agreement follows a four-year investigation, which will continue to look at the conduct of individuals.

The SFO said the matter covers 12 counts of conspiracy to corrupt, false accounting and failure to prevent bribery in conduct spanning three decades. It was the largest ever investigation carried out by the Serious Fraud Office and cost £13 million.

"Bribery harms the reputation of the UK as a safe place to do business," said David Green, the SFO director. He said the agreement "allows Rolls-Royce to draw a line under conduct spanning seven countries, three decades and three sectors of its business."

Rolls' civil aerospace, defence aerospace businesses and former energy businesses were involved in matters relating to aero engines, energy systems and related services. The UK's agreement covered conduct in Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia.

Rolls-Royce said in a statement that the "voluntary agreements" will result in the suspension of prosecution. Company CEO Warren East apologised and said the behaviour of the past was "completely unacceptable."

"This was unworthy of everything which Rolls-Royce stands for, and that our people, customers, investors and partners rightly expect from us," he said in a statement. "The past practices that have been uncovered do not reflect the manner in which Rolls-Royce does business today."

The company said it had cooperated with authorities and would continue to do so.

Under the terms of the deal, the company will pay £497 million plus interest to British authorities on a schedule of up to five years. It will pay the US authorities $169 million and $25.6 million to the Brazilians.

Transparency International's UK executive director Robert Barrington says individuals should be prosecuted so the case serves as a deterrent to bribery.

He argued, however, that the hint of prosecutions of individuals involved is too vague to assess whether the public interest has really been served. "A fine is insufficient as a punishment and deterrent, because at face value, it sends an unfortunate message that large companies can escape criminal prosecution by paying their way out - somewhat ironically for a bribery case," Barrington said.

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