How to avoid receiving the Rolls-Royce treatment: The need for proper anti-bribery policies and procedures

By Jane Marsden and Ryan Lynch, Memery Crystal LLP

In February, it was announced that Rolls-Royce had agreed to pay GBP 671 million to escape prosecution in the UK, US and Brazil for bribery offences committed in 12 jurisdictions around the world including Indonesia, Thailand and India.

Rolls-Royce admitted that employees of its foreign subsidiaries and middlemen had paid bribes of millions of dollars to officials and others to secure contracts on Rolls- Royce's behalf.

Other bribes consisted of the donation of a Silver Spirit Rolls-Royce and the provision of an MBA course for employees of China Eastern Airlines which included lavish extracurricular activities!

This case follows the case last year of UK construction and professional services company Sweett Group PLC, which received a conviction and a fine of GBP 2.25 million as a result of bribes being paid by its UAE subsidiary in Abu Dhabi to secure a contract for the construction of a hotel in Abu Dhabi.

Both cases were brought under The Bribery Act 2010 of the UK and are notable for being the first major cases involving the new bribery offence where UK companies can be found guilty of failing to prevent bribes being paid on their behalf.

This offence (known as Section 7 offence) rightly caused concern when it was introduced, as it enables the UK's Serious Fraud Office to prosecute companies operating in the UK where a bribe has been paid on their behalf anywhere in the world, even if the company being prosecuted knew nothing about the bribe and did not authorise it. So for instance, a rogue employee of a foreign subsidiary or a rogue consultant or middleman could lead to a company operating in the UK having to take the blame and receiving a conviction and fine for bribery in the UK under The Bribery Act.

Both Rolls-Royce and Sweett Group were found to have failed to prevent bribes being paid on their behalf by middlemen/employees of foreign subsidiaries. In the case of Rolls-Royce, moreover, the bribery was clearly longstanding, involving a number of employees and authorisations of improper payments by persons in the UK as well as elsewhere.

The Sweett Group felt the full force of the Section 7 offence, even though there was no suggestion that the UK parent company itself was aware that bribes were being paid on its behalf by an employee of its UAE subsidiary.

How can companies protect themselves?

Under The Bribery Act 2010, if a company has "adequate procedures" in place designed to prevent bribes being paid this can be used as a defence to the Section 7 offence of failing to prevent bribes being paid on the company´s behalf. In the run up to The Bribery Act being introduced, many companies rushed to put an anti-bribery policy in place. However, it is becoming increasingly clear that simply having a policy is not sufficient. A company must have proper procedures in place, including financial controls, to prevent bribery and must have due diligence processes before entering into contracts with third parties if it wants to be able to rely on the adequate procedures defence. It must also train its staff worldwide and ingrain the anti-bribery message in the company's culture.

In the case of Sweett Group, the company was unable to rely on the adequate procedures defence as accounting firm KPMG had produced two reports for the company during the relevant period when bribes were paid which notified the company of numerous weaknesses and failings in their anti-bribery systems and financial controls. However, Sweett Group had failed to implement changes to their policies and procedures. As a result, Sweett Group pleaded guilty as they had no viable defence of adequate procedures.

In the case of Rolls-Royce, a number of different anti-bribery policies were introduced over the years, paying lip service to the concept but in practice bribery was a longstanding issue over a 24-year period. Whilst Rolls-Royce agreed to accept its GBP 671 million fine to avoid being prosecuted and did not therefore go to trial, it is clear that it did not consider itself to have any viable defence to the bribery allegations, based on the fact that bribery had occurred for a number of years and the fact that senior management and possibly even Board members knew that bribes were being paid.

In short, having a policy will count for nothing if the culture and financial and other controls are not put in place and regularly reviewed to seek to prevent bribes from being offered.


All companies carrying out any part of their business in the UK that fail to have in place not just an anti-bribery policy, but also adequate financial and other controls and a genuine proactive anti-bribery culture, actively promoted top down by the Board, are running the risk of a bribery prosecution for which they will have no defence.

Jane Marsden

Jane Marsden

Memery Crystal LLP, London, UK
T: +44 207 400 3217
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Ryan Lynch

Ryan Lynch

Memery Crystal LLP, London, UK
T: +44 207 400 3217
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Published: March 2017 l  Photo: kreativeart -


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