UK: Rolls-Royce - Cooperation Not Confession Unlocks DPA

Last Updated: 22 February 2017
Article by Alexandra Underwood

The Serious Fraud Office has entered into a significant Deferred Prosecution Agreement (DPA) with Rolls-Royce PLC. Approved in principle by Sir Brian Leveson QC on 16 January 2017.

This is the third DPA entered into by the SFO and the first which sees them take a coordinated approach with international prosecutors: Rolls-Royce has also entered into a DPA with the US Department of Justice (DoJ), costing the company $170m (£141m), and a leniency agreement with Brazil's Ministerio Public Federal (MPF) resulting in a further fine of $26m (£21.5m).

Alexandra Underwood of Fieldfisher LLP considers the judgment; she has serious concerns.

Rubber stamping

The swiftness with which the Court approved the DPA in this case was unprecedented. The procedure followed by the SFO appeared to diverge from the process set out in the legislation (Schedule 17 of the Crime and Courts Act 2013 ("the 2013 Act")) and the associated Guidance on DPAs. By way of reminder the correct procedure is:

 Preliminary Investigation;

  • Prosecutor offers a DPA
  • Agreement in principle to use a DPA;
  • Preliminary hearing for the Court to decide whether it considers that the proposed DPA is "likely" to be in the interests of justice and its proposed terms are fair, reasonable and proportionate (Paragraph 7, the 2013 Act);
  • Negotiation of terms;
  • Final hearing after the prosecutor and the accused have agreed the terms of a DPA, for the Court to declare whether it considers (a) that the DPA is in the interests of justice, and (b) the terms of the DPA are fair, reasonable and proportionate (Paragraph 8, of the 2013 Act); and finally...
  • Publication of the DPA

In this case, the SFO diverted from the statutory procedure in the following ways:

  1. The Judgment leaves some doubt as to whether the SFO made the offer of the DPA on its own terms. It appears that the SFO asked Rolls-Royce to identify conduct which might be capable of resolution by a DPA prior to any invitation to enter into DPA negotiations being made. It seems that Rolls-Royce may have written its own invitation to avoid prosecution.
  2. The Court's declaration under Paragraph 7 of the 2013 Act that a DPA would, in principle, be in the interest of justice was given just one day before the final hearing to approve the precise terms of the DPA under Paragraph 8. One is left with the impression that the Court was invited to rubber stamp the deal done by the SFO. It is concerning that the Court was not afforded an opportunity to consider, at an earlier stage, whether the DPA was, in principle, in the interests of justice.
  3. The terms of the DPA were published by the press before the Court gave its final judgment under Paragraph 8.

There has been a clear disregard for the Court's role in the DPA process in this case.

DPA available for serious wrongdoing

The indictment, which has been suspended for the term of the DPA, identifies conduct which stands at the most serious end of the scale. The Judge refers to the offending as "egregious criminality over decades". It covers 12 counts of conspiracy to corrupt, false accounting and failure to prevent bribery. The conduct spans three decades and involves Rolls-Royce's Civil Aerospace and Defence Aerospace businesses and its former Energy business and relates to the sale of aero engines, energy systems and related services. The conduct covered by the UK DPA took place across seven jurisdictions: Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia.

In the case of such serious offending, the SFO were prepared nevertheless to agree to and the Judge gave his seal of approval to, a DPA. It seems that the reason for their approach was that it would not be in the public interest to prosecute. And why would it not be in the public interest to prosecute serious criminal activity? The answer appears to be that Rolls-Royce's size and reputation as a bastion of British engineering were simply too great. Put simply, it would not be in the interest of the British public to prosecute and damage the brand.

Of particular note was the importance that the Court placed on the risk to Rolls-Royce's future prosperity if it were prosecuted. The Judge noted that "It is well known that many countries operate public sector procurement rules which would debar participation following conviction." The Judge went on to accept evidence that 15% of the Rolls-Royce's order book would be put at risk of mandatory debarment and a further 15% would be at risk of discretionary debarment if Rolls Royce were convicted of a corruption offence. This was clearly a strong factor which swayed the Judge in his assessment of the "interests of justice" in approving the DPA.

The death of Self-Reporting

Rolls-Royce secured a DPA in circumstances where they did not proactively self-report the wrongdoing in question. The company admitted that the senior management team had been aware of allegations of bribery since 2010. However, no internal investigation into the allegations was launched at the time and no report was made to the SFO.

In the past, the SFO has been at pains to emphasise the importance of self-reporting. In its previous DPAs with Standard Bank and XYZ Ltd. the SFO attached great weight to the fact that the Defendants in those cases had come forward to report their own wrongdoing. The impression was given that self-reporting was a pre-condition to a DPA.

The Rolls-Royce DPA, however, dispels that myth with one fell swoop. Rolls-Royce did not come forward of its own volition. The SFO was tipped off about wrongdoing at the company by a whistleblower who, frustrated by previous attempts to engage the interest of the prosecutor and the company directly, started a blog outlining his concerns. On the back of information in the blog, the SFO launched an investigation and invited Rolls-Royce to comment.

By the time the SFO approached the company, Rolls-Royce was under new management and engaged in the investigation on a proactive and comprehensive basis. It is certainly true that Rolls-Royce went to extraordinary lengths to cooperate with the prosecutor. However, the fact that it did not begin to investigate the corruption of which it was aware until the SFO came knocking is significant.

The SFO has, perhaps inadvertently, undermined all of its hard work by demonstrating that if you wait until you are caught, and then start to cooperate, all the advantages of a DPA remain open to you. You may still avoid prosecution and obtain a 50% discount on a fine. It is difficult to see what incentive remains for a company to self-report wrongdoing before the SFO becomes aware of it.

Extraordinary cooperation

While a failure to self-report is clearly not fatal to a company being offered a DPA, certain factors at play in the Rolls-Royce case allowed Sir Leveson to overcome this shortcoming The most important of which was Rolls-Royce's cooperation with the prosecutor once it had been caught.

Rolls-Royce is commended in Sir Leveson's judgment, and also by Sir Edward Gamier QC acting for the SFO, for its "extraordinary cooperation", which included a comprehensive internal investigation, the results of which were made available to the SFO, disclosure of un-reviewed documents, access to witnesses not interviewed by the company and a waiver of any claim for legal professional privilege on a limited basis. The judgment records that the cooperation by Rolls-Royce brought to light conduct which otherwise may not have been exposed.

Size of the discount

It is notable that, in addition to unlocking access to a DPA, the "extraordinary cooperation" secured Rolls-Royce a discount of 50% on the potential penalty. The DPA guidelines provide for a discount of one third, but a further discount of 16.7% was approved by Sir Leveson specifically to account for the cooperation of the company. It is difficult to follow the logic of the deal in this regard. Nevertheless a discount in excess of one third makes a DPA more attractive than an early guilty plea and is to be welcomed.

In view of the discount of in excess of one third that was also approved in the XYZ Ltd. DPA in 2016, expectations of businesses may be raised by these developments.

Ditch the Board

The Judge and the SFO were also heavily influenced by the fact that the conduct complained of concerned former senior management no longer at the company. Rolls-Royce adequately demonstrated that the new senior management were not responsible for running the company during the relevant period and the company was now committed to instigating wholesale changes to its strategic direction, including implementing a new compliance regime. Further, the company agreed as a condition of the DPA to cooperate fully in assisting the SFO with the prosecution of its former employees.

Once again the SFO's approach is to create a divide between the interests of a company and its shareholders on the one hand and senior executives accused of improper behaviour on the other. The company can avoid prosecution and obtain a significant discount on its fine but it must first shed itself of the corrupt management team. In order to obtain a DPA the company must agree to a statement of facts which sets out the wrongdoing in detail. This should be a salutary lesson to any board member tempted to break the rules in the misguided belief that they are doing so for the benefit of the company. At the end of the day, it may well be in the company's interest to hang its directors out to dry.

Once a DPA has been agreed, the senior executive accused of wrongdoing is in an invidious position. Without the support of the company, he must defend himself against prosecution in circumstances where the company and the prosecutor have already agreed to a statement of facts about the allegations made against him. There is a serious risk that the prosecution of the individual will be prejudiced by this state of affairs.

Happily ever after?

We have not heard the end of this story. The detailed statement of facts in this case gives rise to the potential for follow up action in other jurisdictions and from third parties referred to (although not named) in the document. It is clear that the SFO intend to go after third party intermediaries and the senior executives they hold responsible for the wrongdoing.

This was first published on and will be in Fraud Intelligence, February/March 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.