Bribery Penalty Kills Profits at Rolls-Royce

business_ethics_highlights_2The article below is about the bottom-line implications of getting caught engaging in bribery. It describes how a legal penalty related to bribery drove Rolls-Royce’s financials into the red. Those not familiar with the ethico-legal jargon may not see the significance of the judge’s reference to the “controlling minds of the company.” Very roughly, this is reference to the idea that whether the company (as opposed to merely one of its employees) is responsible for criminal behaviour (or unethical behaviour, for that matter) depends in part on whether the employees who actually did the thing are sufficiently high up in the organization to count as the “controlling minds” — that is, the actual brains making the company do what the company does. And in the present case, the judge determined that the answer was “yes.” >>>

LINK: Bribery and Brexit propel Rolls-Royce towards historic losses (by Graham Ruddick for The Guardian)

…Warren East, Rolls’s chief executive, will face questions about the corruption scandal when he presents the results, such as how it was allowed to happen, what has been done to ensure it does not happen again, and whether the company could lose contracts due to the damage to its reputation.

He has already apologised and called the behaviour that was uncovered “completely unacceptable”. However, an industry source said he was prepared to “address the issue front and centre and not shy away from it”.

Rolls agreed to the settlement over allegations that it bribed middlemen around the world between 1989 and 2013 to win contracts.

Sir Brian Leveson, who approved the so-called deferred prosecution in court, said the SFO’s investigation into Rolls had revealed “the most serious breaches of the criminal law in the areas of bribery and corruption” and that some of the charges “implicated senior management and, on the face of it, controlling minds of the company”.

However, the judge praised the co-operation of the company’s existing management, which allowed Rolls to settle with the SFO rather than face a damaging criminal trial…..

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