Rolls-Royce middlemen may have used bribes to land major contracts
Guardian/BBC investigation finds that blue-chip manufacturer may have benefited from use of alleged payments by network of intermediaries for years
A Rolls-Royce mechanic working on a plane engine in the factory in Dahlewitz, Germany. The multinational is worth an estimated £14bn. Photograph: EPA
Rob Evans,
Holly Watt and
David Pegg
Monday 31 October 2016 17.00 GMT Last modified on Tuesday 1 November 2016 00.50 GMT
Rolls-Royce plc, Britain’s leading manufacturing multinational, hired a network of agents to help it land lucrative contracts in at least 12 different countries around the world, sometimes allegedly using bribes.
An investigation by the Guardian and the BBC has uncovered leaked documents and testimony from insiders that suggest that Rolls-Royce may have benefited from the use of illicit payments to boost profits for years.
The network of agents is now the focus of large-scale investigations by anti-corruption agencies in the UK and the US.
The Guardian understands the inquiries are looking into specific allegations that these hired intermediaries were bribing people.
Rolls-Royce, which sells turbines and engines for passenger jets and military aircraft and is worth an estimated £13bn, declined to answer detailed questions.
A spokesman said: “Concerns about bribery and corruption involving intermediaries remain subject to investigation by the Serious Fraud Office (SFO) and other authorities. We are fully cooperating with the authorities and we cannot comment on ongoing investigations.”
An Airbus A350 with a Rolls-Royce engine. Photograph: Regis Duvignau/Reuters
The Guardian and the BBC understand that Choudhrie family companies were paid millions by Rolls-Royce.
Labour and Conservative administrations have forged close relations with Rolls-Royce and have often lobbied foreign governments to give large export contracts to the manufacturer.
David Cameron once praised it as “a world leader in the development of advanced technologies … of which the whole country can be proud”. The Duke of Cambridge called it “one of the United Kingdom’s great global companies”.
The investigation into Rolls is likely to concern ministers – a situation that has echoes of the controversy that enveloped the SFO’s inquiry into the arms manufacturer BAE Systems. In 2006,
Tony Blair’s government pulled the plug on that inquiry, saying Britain’s security would be put in danger if it was allowed to continue.
Tony Blair’s government halted the SFO’s inquiry into BAE in 2006, saying Britain’s security would be put in danger if it was allowed to continue. Photograph: Alastair Grant/AP
The SFO’s entirely separate investigation into Rolls-Royce became public in 2012 when the firm announced that the agency had requested information about allegations of malpractice in Indonesia and China.
The following year, the SFO, backed by special funding from the Treasury, disclosed that its director, David Green, had opened a
criminal investigation into allegations of bribery and corruption. It emerged in 2014 that the Department of Justice in the US had opened its own inquiry.
A legal source said 30 investigators in the UK were now focused on the multinational’s use of agents, or middlemen, to clinch export contracts in a number of countries across several strands of its business.
Part of the SFO investigation is likely to centre on Rolls-Royce’s relationship with Unaoil, a Monaco-based firm that has been accused of using bribes to win contracts in a series of countries for dozens of multinationals.
This year, the SFO
opened a criminal investigation into Unaoil over allegations of bribery, corruption and money laundering.
Leaked documents, obtained by Fairfax Media in Australia, suggest Rolls-Royce hired Unaoil to seal contracts in Iraq, Iran, Kazakhstan, Angola and Azerbaijan.
Unaoil said it was not “involved in corrupt practices relating to its business relationship with Rolls-Royce”. It said that some of the information that formed the basis of the allegations against it “has been gathered as a result of criminal activity including extortion”.
Another agent hired by Rolls-Royce is Fana Hlongwane, who is close to South Africa’s ANC government and in 2008 was
implicated in a separate corruption scandal.
A confidential contract shows that in 2005, Rolls-Royce signed up Hlongwane as a commercial consultant to promote its business in South Africa. Hlongwane has previously denied that he or his companies have been involved in any corruption or wrongdoing. He has not been prosecuted for any offences and did not respond to a request for comment.
Large ship propeller by Rolls-Royce. Photograph: Gary Marshall/Rolls-Royce plc
Anti-corruption experts say that firms can use well-connected agents to channel bribes to key politicians or officials who are responsible for awarding contracts, although there are many different legitimate uses for agents in foreign countries.
Rolls-Royce has said that since the bribery allegations began to surface, it has dramatically culled the number of agents it uses, although it has not specified how many. Admitting in its annual report two years ago that the allegations were a “body blow”, Rolls-Royce has said its employees now have more direct responsibility for selling its products.
In a statement, Rolls-Royce plc said: “We have made it clear that Rolls-Royce will not tolerate business misconduct or inappropriate behaviour of any kind and in recent years we have intensified our focus on ethics and compliance, which are foundations of our culture.”
“Our global code of conduct, which applies to all of our employees, makes it clear that we have zero tolerance to bribery and corruption.
“In 2014, our anti-bribery and corruption compliance team, working with internationally respected independent authority on ethics and compliance Lord Gold, completed a thorough review and update of the group’s anti-bribery and corruption policies including those concerning the use of advisers and intermediaries.”
The SFO said it “is conducting major investigations into allegations of bribery and corruption involving both Rolls-Royce and Unaoil. We cannot comment further at this time.”
