The reality behind the Rolls Royce DPA

Good on you, Dick Taylor: eleven years after you began your stint as whistleblower, your work has finally been vindicated and Rolls Royce hopes to sort out its "issues" by paying some $800mn through a Deferred Prosecution Agreement with the SFO and jointly the US Department of Justice and the MFP of Brazil. I sincerely hope that you get some form of recognition for what you have had to go through: if not a back-payment of the salary and benefits that you lost because you are an honorable man, perhaps an OBE for "services rendered" - if not a CB.

Good on you, the Serious Fraud Office, you have finally caught a very big fish and will now get the undivided attention of Corporate UK: and thank you Lord Rose for being the great lord that finally slayed the dragon.

Life in 'corporate UK' has now changed; as the Americans would add - period. This is a great moment.

But there are a few details and definitions that cause concern. 

1. Just how have the authorities managed to define this as being a legitimate DPA?  Be in no doubt, this is a fudge. Rolls Royce say that the matter is a self-reported issue brought up by the comapny themselves in 2012.  That is being somewhat economical with the truth. Mr. Taylor started banging the drum in 2006: don't take my word for it; here he is in 2009 saying for all to hear, in a comment attached to a press article regarding the company, that the company had paid Tommy Suharto $20mn in cash plus a sparkling blue Rolls Royce in the mid-90's (scroll down to the "reader's comments" at the end of the article) to aid Indonesian airline Garuda in its decision of which aircraft engines to buy.  The whole concept of a DPA is that the company "self-reports".  In the case of Rolls Royce it is more likely that the subject was brought kicking and screaming to the bench, rather than approaching cap in hand.
2. The company initially stated that it had uncovered issues in Asia; yet $26mn of the fines are being paid to the MPF in Brazil relating to bribes paid to Petrobras officials. This issue was not self-reported but came directly from the testimony of Pedro Barusco, who gave evidence to a Brazilian judge that he had been paid $200,000 by Rolls Royce to help secure a gas turbine contract with Petrobras. The going rate for bribing Petrobras in those days is well-documented as having been 3% hence RR will likely have shelled out $3mn for this one contract; not $200,000 - hence the scale of the $26mn payment to the Brazilian regulators. It was not the company's only business in Brazil.
3. China: oh dear. June 25th 2011. That was the day the whole sad affair of how Rolls Royce had broken into the Chinese market (and of who had been their accomplices) was publically aired. Here is the link to the bulletin board explaining the role of Chen Qin and his master Ma Xulun. Whilst Mr Chen is doing life for corruption, Mr Ma remains Chairman of China Eastern.

The truth of today's DPA is that Rolls Royce was in a corner. Judicial processes has gone against the company in China (perhaps "judicial" is an exaggeration) and in Brazil.  In India the finding were clear, and the DOJ has been collecting considerable information on Petrobras payments that implicated RR through its own investigation. So Rolls Royce had nowhere to hide and if Dick Taylor is to be believed, the Suharto case was but the tip of the iceberg.

Should that be the case then Rolls Royce has gotten off lightly; but in so doing they will have helped to ensure a better breed of British corporate: one that finally fears the law.  After all, $800 million  is no mean amount of money.