Case study: Rolls-Royce and the ethics of bribery

A photo of a Rolls-Royce car
By Jennifer Cloke, Lecturer

13 March 2017

Rolls-Royce has been back in the news for agreeing, under a deferred prosecution agreement, to pay a record-breaking £671m fine. Lecturer Jennifer Cloke reveals the ethical issues behind this fine.  

The luxury car and aero-engine company paid a huge amount of money to the Serious Fraud Office (SFO), after admitting to a number of corruption charges which included falsifying accounts, interfering with investigations and paying tens of millions of pounds in bribes to win contracts in Indonesia, Thailand, China and Russia over a 25 year period.

As explained in the Advanced Finance course, the Bribery Act 2010 identifies four different offences, namely: paying bribes, receiving bribes, the bribery of foreign public officials and the failure of a commercial organisation to prevent bribery. The company is now being investigated under the latter offence.  

Agreeing to pay the fine and admitting the offences saves on a length trial, but also permits Rolls-Royce to bid on future government contracts in the UK and abroad, something which would not have been possible if they had received a criminal conviction.  

Would it have been better for a full conviction to be made, possibly leading to the failure of the company and the loss of hundreds of jobs and a significant contributor to the UK economy?

The decision by the courts to permit Rolls-Royce to pay a fine and avoid a conviction was based on a number of factors, including improvements made at the company and the cooperation of current management with the investigation, but it raises an interesting ethical quandary: whilst the fine is clearly not insignificant, (and is, in fact, the largest fine ever levied by the SFO), Rolls-Royce have been able to limit the future impact their past behaviour will have.   

Would it have been better for a full conviction to be made, possibly leading to the failure of the company and the loss of hundreds of jobs and a significant contributor to the UK economy?  

Or is the agreed treatment acceptable, given those involved in the bribery are no longer at the company and would not feel the impact of a conviction? 

This sort of ethical dilemma is covered in the Business Ethics 2 day, which students will sit during the TPE stage of their ICAS studies. Students will learn that there are often a variety of options when making decisions, which will impact on different stakeholders in a manner of ways.

As an ICAS member, making the ‘right’ decision is often not the easiest option, and requires members to act with moral courage – through their ethical behaviour, CAs are a force for good in the organisations in which they work. They can also influence those around them, and thereby help shape the culture and values of their organisation. 

The 'Power of One' webinar is available to view for a detailed look at member responsibility and CA ethics.

Photo credit: Hadrian / Shutterstock.com

Topics

  • CA Student blog

Previous Page