Rolls-Royce: Energy Contracts and the Price of Inside Information

In the Rolls Royce FCPA case, the company admitted under its U.S. criminal deferred prosecution agreement that more than $35 million in adviser commissions and other payments funded bribes for official information and energy contracts. If you know why an adviser was hired, who approved the commission or where the information came from, you may understand the part of the deal that the payment description leaves out.

The Justice Department announced the case on January 17, 2017. In that criminal agreement, Rolls-Royce admitted conspiring to bribe officials in violation of the Foreign Corrupt Practices Act.

The Energy Business Behind the Rolls-Royce Name

The U.S. admissions concern Rolls-Royce’s energy businesses. The company’s aerospace identity can pull attention toward aircraft sales, but the business covered here was energy contracts and the official information that helped secure them.

An international contract can connect a parent company, a local subsidiary, a commercial adviser, a bank and a government purchaser. The adviser may arrange introductions or government contact, while the customer controls the tender, acceptance of goods or financing. An employee who knows those relationships sees more than a vendor name on an invoice.

That distinction matters when the customer holds public power. The person authorizing the supplier’s payment, the intermediary receiving it and the official controlling the business decision can sit in different organizations and countries. We follow those connections because an adviser agreement describes the service the company says it bought, while the official’s action can show what the payment actually achieved.

Rolls Royce FCPA Energy Business Commissions: Buying an Inside Advantage

The admitted Rolls-Royce conduct reached Thailand, Brazil, Kazakhstan, Azerbaijan, Angola, Iraq and elsewhere. The commission was the route through which money reached the corrupt bargain.

Information belongs at the center of that account. A procurement advantage can arrive before the contract award, when someone supplies information that other bidders do not have. An insider may know the origin of that information, the conversation that preceded it or why a commission became urgent at that point in the deal.

The same information-for-money exchange appears in Vitol’s criminal deferred prosecution agreement. Vitol admitted using sham consulting and market-intelligence invoices to buy trading information and a last look at competing bids. For a rival bidding without that inside view, the competition has already been tilted before the winner is announced.

We see the absurdity in calling that a service to the business. The service was getting an official to sell an advantage that the honest bidder could not buy openly.

What the Commission File Can Tell an Insider

The adviser agreement, payment approval and actual work answer different questions. The Justice Department and SEC’s FCPA Resource Guide identifies excessive commissions, vaguely described consulting and payments through offshore accounts among the warning signs surrounding intermediaries. We compare the service promised with the work delivered, the account paid and where the money went next.

For someone in sales or local operations, the most revealing fact may be what the adviser was expected to accomplish. The internal explanation for hiring an adviser can be compared with the introductions, information or official decisions that followed. A commission approval tied to a particular contract carries a different story from a general claim that someone provided business-development support.

Finance and accounting staff may see the other end: who requested payment, which entity approved it and which account received the money. Those details connect the commercial account to the transfer. The name in the engagement letter and the beneficiary on the bank instruction can be different pieces of the same arrangement.

Compliance and audit staff may know what questions the business was asked and how it responded. A diligence file, a request for supporting work or an unresolved question about the recipient can explain what management knew when it approved the next payment. We look at what the business did with what it already knew.

Those are the connections we examine in a whistleblower’s account of the payments. Your knowledge may explain why a document was created, what an apparently ordinary fee was meant to accomplish or who could authorize the next step. That context gives the paperwork its meaning.

The Admitted Purpose Behind the Payment

Rolls-Royce’s admissions under its criminal agreement make the purpose of the commissions central to this case. That gives an insider a concrete point of comparison: what did the business expect the adviser to obtain, and who understood that purpose when the money was approved?

A sales explanation, a payment instruction and an internal question may each tell only part of that story. Together, they can connect the commercial benefit to the people who authorized and received the money.

If your information also concerns false claims for U.S. government money, we work with you to pursue that separate whistleblower opportunity and identify the appropriate whistleblower program. An FCPA tip to the SEC can earn 10% to 30% of sanctions over $1 million; where a government contract is involved, a False Claims Act case can pay 15% to 30% of what the government recovers.

You Know Why the Adviser Was Paid

If you know what an adviser promised, where the information came from or why payments continued after questions arose, speak to one of our whistleblower experts about what those payments bought. We bring in foreign bribery whistleblower lawyers who can follow the payments across borders and stay beside you as we build your strongest case around your understanding of the business.