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Deferred prosecution agreements

25 January 2017

The High Court’s approval of a Deferred Prosecution Agreement between Rolls Royce and the Serious Fraud Office is only the third such agreement that the SFO has secured. It is however by far and away the largest and most wide ranging.

Under the DPA Rolls Royce agreed to pay a penalty totalling £497m which includes disgorgement of profit and a financial penalty together with payment of a sum towards the SFO’s costs in the region of £13m. Rolls Royce also entered into DPA equivalents in other jurisdictions totalling approximately a further £196m.

Whilst the alleged criminality is wide ranging and includes conspiracy to corrupt, false accounting and failure to prevent bribery, the final penalty in fact reflects a discount for the “extraordinary” cooperation of Rolls Royce during the investigation. That cooperation included carrying out an internal investigation which in fact disclosed details of further bribery and corruption of which the SFO was unaware.

Three points of note:

  1. Despite the DPA with the corporate entity the SFO have made it clear that investigations into individuals continue and indeed one condition of the DPA is that Rolls Royce cooperate in full with any subsequent prosecution of former employees. If prosecution of individuals follows the details of alleged criminality will become more widely publicised.
  2. This penalty will no doubt serve to encourage the use of DPA’s by the SFO which is in accordance with last year’s remarks of the Director of SFO, David Green, that more DPA’s were on the way.
  3. The significant penalty is a reminder to companies of the consequences of failing to have in place robust systems to identify and prevent bribery and corruption. Clear and enforced policies within businesses are key to early identification of attempted or actual wrong doing.

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