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Judge approves £670m Rolls-Royce bribery claims deal

A deal that will see Rolls-Royce paying about £670 million to British, US and Brazilian authorities to settle bribery and corruption claims has been approved by a judge.

The engine maker reached a deferred prosecution agreement (DPA) with the UK's Serious Fraud Office (SFO) and the US Department of Justice (DoJ), and a leniency agreement with Brazil's Ministerio Publico Federal (MPF).

The deal was approved by Sir Brian Leveson, at Southwark Crown Court, sitting at the Royal Courts of Justice, on Tuesday.

Sir Brian handed down a written judgment in which he said it was "devastating and of the very greatest gravity that the conduct of this institution should fall to be examined within the context of a criminal investigation".

He said the investigation revealed "the most serious breaches of the criminal law in the areas of bribery and corruption".

The agreements relate to bribery and corruption scandals involving intermediaries in overseas markets such as Indonesia and China.

The company first passed information to the SFO in 2012 after facing "allegations of malpractice" in the two countries, after which the fraud squad launched a formal investigation.

Officials for the firm said at the time its own investigations had found "matters of concern" in additional overseas markets.

Rolls-Royce said the sums were "voluntary agreements" which result in the suspension of a prosecution, provided the company fulfils certain requirements, including the payment of a financial penalty.

The firm has agreed to make payments to the DoJ totalling 169 million US dollars (£140 million) and to the MPF totalling 25.6 million US dollars (£21.2 million).

Under the terms of the DPA with the SFO, Rolls-Royce will pay £497 million plus interest over five years, plus a payment in respect of the SFO's costs.

Rolls-Royce will pay £293 million in the first year of all three agreements.

The firm said it has co-operated fully with the authorities and will continue to do so.

Rolls-Royce will report full-year results in February, when it will update the market on the implications of the settlements to the balance sheet.

The firm said early indications show that the group has had a "good finish" to the year with both profit and, in particular, cash expected to come in ahead of expectations.

Meanwhile, anti-corruption group Transparency International UK executive director Robert Barrington called for individuals to face prosecution over the case.

He said: "Ultimately, whether or not this settlement is in the public interest, the key individuals responsible for corrupt behaviour must not be allowed to evade justice.

"In order to serve as a proper deterrent for companies who think it is acceptable to do business with bribery, those involved with or who sanctioned bribery must be prosecuted individually."

SFO director David Green said the Rolls-Royce probe was the largest single investigation carried out by the authority, costing £13 million.

"Bribery harms the reputation of the UK as a safe place to do business," he said.

"I welcome this DPA, a significant enforcement action by the SFO, using relatively new statutory powers in respect of an important British company.

"It allows Rolls-Royce to draw a line under conduct spanning seven countries, three decades and three sectors of its business."

Rolls-Royce said the board had now taken action to strengthen ethics and compliance throughout the firm.

Warren East, chief executive of Rolls-Royce, apologised "unreservedly" for the company's actions and said it did not reflect the way the firm does business today.

"The behaviour uncovered in the course of the investigations by the Serious Fraud Office and other authorities is completely unacceptable and we apologise unreservedly for it," he said.

"This was unworthy of everything which Rolls-Royce stands for, and that our people, customers, investors and partners rightly expect from us.

"The past practices that have been uncovered do not reflect the manner in which Rolls-Royce does business today.

"We now conduct ourselves in a fundamentally different way. We have zero tolerance of business misconduct of any sort."

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