UK Export Finance agency to investigate if company tainted by multimillion-pound bribery scandal used corrupt means to obtain public finance

This article is more than 3 years old

This article is more than 3 years old

Civil servants are carrying out an internal inquiry to establish whether the engineering giant Rolls-Royce fraudulently obtained financial support worth hundreds of millions of pounds from the government.

The inquiry was launched after the multinational manufacturer admitted last month it had used multimillion-pound bribes to secure export orders across the world over four decades.

Rolls-Royce has apologised and is paying £671m in penalties after the endemic corruption, implicating senior employees, was exposed by anti-corruption investigators in the UK, US and Brazil.

The internal review is being conducted by officials at the UK Export Finance (UKEF), the government’s credit agency which gives financial support to British exporters to help them win contracts around the world.

Rolls-Royce is one of the biggest customers of UKEF which extends loans to purchasers and their banks, and guarantees to step in and pay outstanding debts if buyers default on export contracts.



The inquiry is understood to be scrutinising whether Rolls-Royce complied with UKEF’s anti-bribery rules when it received financial support from the credit agency.

UKEF has the power in certain circumstances to force firms to repay money if they have broken the anti-bribery rules. Rolls-Royce said it did not anticipate having to repay money.

Rolls-Royce apologises in court after settling bribery case Read more

These rules require firms applying for financial backing to declare that they have not used corrupt payments to win export orders, or channelled payments through agents.



Sue Hawley, the policy director of Corruption Watch, said: “This is a key test of how robust UKEF’s anti-corruption procedures are and how willing UKEF is to enforce them.

“UKEF must get to the bottom of how much Rolls-Royce lied to them and look seriously at whether Rolls-Royce has defrauded the taxpayer.”

She added that Rolls-Royce should be blocked from receiving any support from UKEF for three years after confessing to the bribery.

Rolls-Royce struck deals with the Serious Fraud Office and prosecutors in the US and Brazil last month to end long-running investigations.

As part of the deals, which included paying the penalties, Rolls-Royce admitted that it had used a variety of corrupt schemes and cover-ups in 12 countries between 1989 and 2013 in what amounted to “egregious criminality”.

In four of these countries, Rolls-Royce had won contracts that were given financial support by the UKEF or its predecessor agency.

Rolls-Royce has told the Guardian that in three of these cases, it had declared to UKEF at the time it applied for financial support that it had not used corrupt methods to secure the orders.

UKEF backed a £330m contract for Rolls-Royce to supply the Russian state-owned company Gazprom with gas compression equipment in 2008. Rolls-Royce paid an £8m bribe to a Gazprom official to win the contract.

UKEF had also supported a £54m contract in 2004 to supply engines to Thai Airways which was won through a $7m bribe to middlemen. Bribes were also paid to land a £32m contract in 2005 to supply power generation equipment to Brazil.

Rolls-Royce also received financial support from the British government’s credit agency when it paid a $2m bribe to win a contract to supply aircraft engines to Indonesia in 1991. In this case, it was working in conjunction with another firm which had the responsibility of applying for support and making any necessary declarations.

Rolls-Royce said: “The behaviour uncovered in the course of the investigations by the Serious Fraud Office and other authorities is completely unacceptable and we have apologised unreservedly for it.

“The past practices that were uncovered do not reflect the manner in which Rolls-Royce does business today.

“We have taken extensive action to strengthen our ethics and compliance procedures so that high standards of business conduct are embedded as an essential part of the way we do business. We have co-operated fully with the authorities and will continue to do so.”

Anti-corruption campaigners have long argued that the government is allowing bribery to flourish by failing to uncover potentially improper payments when it gives financial backing to exporters.



Details of the corruption were published in legal documents when the settlements bringing an end to the investigations were announced in January. The documents, which are being examined by UKEF officials, did not identify who had organised the illicit payments, nor who had received them.



Calls for ex-Rolls-Royce CEO to lose knighthood after firm admits bribery Read more

The SFO is still deciding whether to prosecute individuals over the corruption.

A UKEF official said:“While UKEF is not a law enforcement agency and has no statutory investigatory powers, we rigorously follow Organisation for Economic Cooperation and Development standards and take all possible precautions to avoid supporting transactions that may be tainted by corruption.”

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