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The Rolls-Royce (of) Foreign Bribery Scheme(s)

By George Khoury, Esq. on November 13, 2017 | Last updated on March 21, 2019

This may be the Rolls-Royce of foreign bribery schemes, but only because it involves three former Rolls-Royce employees who pleaded guilty in a foreign bribery scheme. Interestingly, it was the UK company's U.S. subsidiary that was alleged to have bribed officials in Asia in order to secure a gas pipeline construction contract there.

Unfortunately for the U.S. based employees, their actions violated the Foreign Corrupt Practice Act which prohibits U.S. businesses from bribing foreign officials, or foreign government backed businesses for economic advantages.

Say It Ain't So Rolls? Royce?

The illustrious former automaker issued a statement saying: "Rolls-Royce has committed to full ongoing cooperation with the Department of Justice." But, it is worth noting that Rolls settled the charges against it for $800 million, with the majority of that money going to the UK for similar charges. It is also worth noting that this Rolls-Royce has nothing to do with auto-brand Rolls-Royce which is now made by BMW, though that only happened in 2003. Interestingly, some allegations do date back to 1999.

But that's besides the point, the trio that recently pleaded guilty used their commission payments in order to pay the bribes in the form of kickbacks to officials. They will likely be facing prison terms

Avoiding FCPA Liability

As an in-house attorney or general counsel, you may be able to make it your job to monitor for FCPA liability. Companies may not be able to retain the economic advantage that they gained from a greedy employee's bribe, but the damage will be much worse if the company does nothing to stop it, or intentionally turns a blind-eye.

Finding out that kickbacks or bribes are being paid is challenging, particularly as the bad actors generally go to great lengths to disguise them. Adding to the challenge, if you do uncover anything to raise your suspicions, you'll likely need to seek outside counsel to complete the investigation, which can get costly. However, due diligence for any foreign transaction should include an investigation into the biz-dev folks before the company's money leaves the company's hands.

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