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Rolls-Royce fined AUD$1.1 billion in bribery and corruption crackdown

Rolls-Royce has been fined in a bribery and corruption case.

Rolls-Royce has paid $1.1 billion to settle bribery and corruption investigations with authorities in Britain, the United States and Brazil.

The investigation into Rolls-Royce by the US Department of Justice and the UK Serious Fraud Office came following a joint exposé from Fairfax Media and The Huffington Post into Unaoil, a Monaco-based oil industry fixer.

The wide-ranging bribery and corruption investigations revealed that billions of dollars in government contracts were awarded to a number of companies, including Rolls-Royce and an offshore arm of Australian company Leighton Holdings (now CIMIC), as a direct result of bribes.

The US and UK fines were the result of a Deferred Prosecution Agreement (DPA) whereby a company can admit corruption but not face court. For Britain’s Serious Fraud Office (SFO), it was the biggest settlement to date.

Australian authorities are involved in an ongoing global joint investigation with the FBI, US Department of Justice and the SFO into pervasive bribery in the oil industry, particularly involving Unaoil.

The Australian Federal Government is now considering introducing a DPA scheme following the settlement successes in the Rolls-Royce case.

This is not the first bribery and corruption scandal that Rolls-Royce has faced. Increasingly serious regulations and ongoing global cooperation in bribery and corruption investigations, highlight the importance of all organisations tackling bribery and corruption throughout their operations.

GRC Solutions offers an extensive library of online compliance training courses, including Anti-Bribery and Corruption training. Contact us today for more information about our off-the-shelf and customised course offerings.

 

 

 

For the Love of the Game: Corruption & Sports NGOs

tennis-player-1246768_1280This article, written by GRC Solutions Expertise Panel member Jeremy Sandbrook and co-authored with Liz Burton,  examines some of the types of corruption that has taken place within sports NGOs, why they are so susceptible to it, and what some of the potential solutions are to solving the problem.

While sport is now the dominating source of entertainment worldwide, it has a darker, shadier under-belly it just can’t seem to shake-off – Corruption.  Sports NGOs are particularly vulnerable with bribery, match-fixing, extortion, doping and money laundering now common place.

 

Sports NGOs and ‘Corruption as usual’

It seems that barely a month passes without yet another report of corruption in sports being splashed across newspaper headlines.  These include members of FIFA’s executive committee accepting bribes, a former president of CONCACAF charged with fraud and money laundering, hosting nations paying bribes to win Olympic hosting rights, match-fixing, and the IAAF’s involvement in corruption and cover ups.

This phenomenon isn’t just limited to football and athletics however, with the following examples showing just how wide spread the issue is:

  • Cricket has witnessed allegations of both spot-fixing and match-fixing involving players from Pakistan, England, New Zealand, India, South Africa, Sir Lanka and Kenya.  There have also been on-going match-fixing allegations made in relation to the Indian Premier League (the most lucrative cricket event in the world), with two of the league’s eight teams recently suspended for two years over a corruption scandal;
  • Tennis is also currently undergoing a crisis as allegations of match fixing engulf the sport;
  • Cycling has for many years been dogged with allegations of illegal doping, with the issue only coming to a head when the International Cycling Union was accused of knowingly protecting Lance Armstrong – cycling’s long time poster boy – against doping allegations; and
  • Badminton, boxing, handball and other sports, including US collegiate sports, have all suffered from similar credibility gaps.

It is clear from this that there are serious underlying issues that sports NGOs need to address in order to clean up their respective sports.

Small bribes, big headaches

bribery and corruption

Even relatively small bribes are taken seriously by the authorities, as the three cases below reveal.

The Independent Commission against Corruption (ICAC) announced proceedings against Eddie Obeid last Thursday over the former MP’s lobbying efforts, which concerned a series of secretly-owned Circular Quay cafes. The case serves as a fresh reminder that even small bribes can lead to big headaches.

“Just like Al Capone and tax evasion, it might seem ironic that Eddie Obeid, the ultimate NSW powerbroker who pulled off a corrupt $60 million coal scam, goes down for a contract for a couple of lousy restaurants,” Australian Financial Review (AFR) reporter Geoff Winestock commented. The ICAC reports that Obeid may be undone for misusing his position as a Member of Parliament to influence the decisions of public officials, which resulted in favourable outcomes for his businesses. According to the AFR, Obeid hoped to double, or triple, the value of his $2.4 million investments in Circular Quay.

Last July, in the US, the Securities and Exchange Commission (SEC) pursued firearms manufacturer Smith & Wesson Holding Corp for a bribe of $11,000 to a Pakistani police department, in order to secure a $107,852 contract. The SEC fined the arms manufacturer $2 million under the U.S. Foreign Corrupt Practices Act (FCPA).

Commenting on the case, Bill Michael, co-chairman of Mayer Brown’s global anti-corruption and FCPA practice, told Corporate Counsel the SEC’s decision to chase down Smith & Wesson for a relatively small bribe was indicative of the commission’s hard-line approach on anti-bribery law. “Apparently, no case may be too small,” he said.

And in 2011, Manir Yakub Patel, the first defendant prosecuted under the UK Bribery Act, received a shocking six-year prison sentence for accepting £500 bribe to conceal a traffic summons. At the time, the 22-year-old worked at the Magistrates’ Court as a clerk. His sentence has since been reduced to four years in prison on appeal.

These three cases demonstrate that even relatively minor breaches of the law can lead to criminal investigations, court proceedings and severe penalties. Whether you’re in Australia, Singapore, or the UK, it’s essential you understand and comply with your country’s anti-corruption legislation.

Does your organisation understand and adhere to corporate misconduct and white collar crime laws? Talk to us today about our Anti-Bribery and Corruption courses.

Source: Australian Financial Review, Corporate Counsel

Anonymous shell companies* siphon USD $1trillion from developing countries

$1 trillion, enough money to employ half a million primary school teachers, is lost to corrupt activities undertaken by multinational companies in developing countries, according to a study by international advocacy group ONE.

The group states the lost money could alternately educate an extra 10 million children every year, provide antiretroviral medication for over 11 million people living with HIV/AIDS, or pay for 165 million vaccinations in sub-Saharan Africa alone.

A 2011 report by the World Bank, titled The Puppet Masters, estimates anonymous shell companies made an appearance in 70 per cent of major corruption cases between 1980 and 2010.

Director and co-founder of Global Witness, a London-based anti-corruption NGO, Charmian Gooch told the Sydney Morning Herald the group had turned up similar results: shell companies were consistently at the centre of all sorts of scandals, from suspect oil deals to blood diamond transactions.

Research from the World Bank indicates setting up a shell company is a low-cost enterprise, costing corporations between $900 and $7,000 AUD. In countries like the United States, where regulations are particularly lax, large corporations can create shell companies within an hour.

The crusade against shell companies has recently found new life as G20 leaders recently pledged to pursue tougher anti-corruption policies and chase illegal tax evaders and money launderers. The G20 recently released an anti-corruption action plan for 2015-2016.

“At the end of 2014, corruption continues to represent a significant threat to global growth and financial stability,” the plan reads. “Corruption destroys public trust, undermines the rule of law, skews competition, impedes cross-border investment and trade, and distorts resource allocation.”

“As a group of the world’s largest economies, the G20 remains committed to reducing the incidence of corruption and building a global culture of intolerance towards corruption.”

* A shell company refers to a non-trading company used as a vehicle for various financial manoeuvres.

 


 

Dates for your Diary!

Support our leaders in their mission to reduce corruption by attending the G20 High Level Principles on Beneficial Ownership Transparency. It is a ‘high priority’ pledge.

TI Corruption Perception Index 2014 Launch
Date: 4 December
Location: Brisbane, Melbourne, Perth and Sydney

International Anti-Corruption Day
United Nations Campaign
Date: 9 December

http://www.anticorruptionday.org/