The U.K. Serious Fraud Office on 22 February announced the closure of two long-running bribery and corruption cases against British engineering company Rolls-Royce and pharmaceutical giant GlaxoSmithKline.
The investigation into Rolls-Royce resulted in a deferred prosecution agreement, entered into in January 2017, with the company and one of its subsidiaries concerning bribery and corruption to win business in Indonesia, Thailand, India, Russia, Nigeria, China, and Malaysia. Rolls-Royce continues to comply with the terms of the DPA, including in relation to its compliance programme, the SFO said.
“Following further investigation, a detailed review of the available evidence, and an assessment of the public interest, there will be no prosecution of individuals associated with the company,” the SFO said.
The GlaxoSmithKline investigation focused on commercial practices by the company, its subsidiaries, and associated persons. “Again, following a detailed review of the available evidence and an assessment of the public interest there will be no prosecution in this case,” the SFO said.
“After an extensive and careful examination, I have concluded that there is either insufficient evidence to provide a realistic prospect of conviction or it is not in the public interest to bring a prosecution in these cases,” SFO Director Lisa Osofsky said in a statement. Cases are prosecuted when they pass the test in the Code for Crown Prosecutors.
“In the Rolls-Royce case, the SFO investigation led to the company taking responsibility for corrupt conduct spanning three decades, seven jurisdictions and three businesses, for which it paid a fine of £497.25m (U.S. $649 million),” Osofsky added.
In a statement, Rolls-Royce acknowledged the SFO’s decision, but said it would not comment further.
Some in the corporate defense community say this latest decision (following a similar outcome in a case involving Tesco) casts further doubt about the effectiveness of the SFO’s investigatory powers and raises questions about how a company can admit fraud but finding no one responsible.
“In his 2017 DPA judgment, Sir Brian Leveson, President of the Queen’s Bench Division, stated that the investigation revealed the most serious breaches of the criminal law in the areas of bribery and corruption, some of which implicated senior management and, on the face of it, controlling minds of the company.Yet, today, the SFO announced that there will be no prosecutions of any individuals for that criminal conduct,” says Francesca Titus, a corporate crime specialist at Fieldfisher.“This begs the question, when will the SFO get their investigations right?”
The SFO's decision to close the Rolls-Royce and GSK investigations follow another recent decision that resulted in no prosecution. On 23 January, the SFO also cleared former Tesco Finance Director Carl Rogberg of fraud and false accounting charges.
“Under the weight of SFO investigations, big business is paying hundreds of millions of pounds and entering DPAs to avoid prosecution for the criminal actions of their employees,” Titus adds. “The SFO is then failing to secure convictions against those employees, or not even bringing charges against them.”This is yet another decision that causes British companies to ask themselves why they should agree to a DPA in the first place. “As lawyers, we ask, ‘How can the public can be expected to have faith in the SFO and the DPA process if this is the outcome of such high-profile investigations?’” Titus says.
“Rolls-Royce offered ‘extraordinary’ cooperation to the SFO, even waiving legal professional privilege.It was rewarded with a DPA, requiring it to pay almost £500 million. At the time of the judgment, Sir Brian Leveson praised Rolls-Royce’s openness and encouraged other businesses to follow its example,” Titus says. “In light of what has happened today, defence lawyers will be cautious to recommend this approach.”