Corruption at Rolls-Royce: can it happen again?
| DOI | https://doi.org/10.1108/JFC-01-2020-0002 |
| Date | 13 March 2020 |
| Pages | 433-447 |
| Published date | 13 March 2020 |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
| Author | Dominic Peltier-Rivest |
Corruption at Rolls-Royce:
can it happen again?
Dominic Peltier-Rivest
John Molson School of Business, Concordia University, Montreal, Canada
Abstract
Purpose –This study aims to analyseRolls-Royce’s (RR) recent corruption case,its 2017 global anti-bribery
and corruption (ABC) manual, and its 2017 annual report to assess whether it has put the best corruption
preventionstrategies into place.
Design/methodology/approach –This is a legal case study based on RR’s 2017 deferred prosecution
agreement (DPA) with the UK serious fraud office. It uses the new ISO 37001 standard as a theoretical
framework.
Findings –RR’s DPA suspendsan indictment covering 12 counts of conspiracyto corrupt, false accounting
and failure to prevent bribery. RR’s ABC manual exhibits significant shortcomings as compared to ISO
37001’s requirements. RR’s ABC manual does not provide any reference to the setting, reviewing and
achievement of measurable anti-bribery objectives; does not state that anti-bribery training is provided at
planned intervals to employees and externalbusiness associates that pose more than a low risk of bribery;
does not explain the authority and independence of its head of ethics and compliance; does not state any
maximum for gifts and hospitality given or received;does not provide clear assurances that reports made
through its main internal channels will be treated confidentially and that complaints about senior
management will be investigated by an outside firm; and does not subject its advisers to a formal due
diligenceprocess. RR’s annual report notes that it operates in an industryprone to corruption. Finally, internal
control failure and compliance fatigue mean that no anti-bribery management system can be completely
effective.
Research limitations/implications –This paper extends previous research by analysing the best
corruption prevention strategiesthat organizations can implement. It does not endeavourto certify whether
RR is ISO 37001compliant, and it analyses only publiclyavailable documents.
Practical implications –This study’s prevention strategies will help deter corruption and improve
internalcontrols within organizations.
Originality/value –No previous study has used the new ISO 37001 standard as a framework for such
corruptioncase analysis.
Keywords Bribery, Corruption, Anti-bribery management systems,
Deferred prosecution agreements, ISO 37001, Rolls-Royce
Paper type Research paper
Introduction
The prevention and detectionof corruption is on the agenda of many countries today. There
have been significant anti-bribery enforcement actions brought aroundthe globe, including
in Germany, Italy, France, the Netherlands,China, Mexico, the USA and the UK (EY, 2014).
International companies are under increased scrutiny, as they are subject to various anti-
bribery and corruption (ABC) laws applicable in each jurisdiction where they do business.
Over the past few years, new legislation has been enacted in several markets, including
The author thanks the participants of the 2019 Irish Accounting and Finance Association (IAFA)
Annual Conference and the 2019 British Accounting and Finance Association (BAFA) Workshop on
Accounting and Finance in Emerging Economies for their helpful comments.
Corruption at
Rolls-Royce
433
Journalof Financial Crime
Vol.28 No. 2, 2021
pp. 433-447
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-01-2020-0002
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