Rolls-Royce is facing further scrutiny over bribery allegations in Brazil after a high-level congressional commission told the Guardian it will investigate the company in connection with a sprawling corruption scandal.
The beleaguered British engineering group now faces two investigations in Brazil after it admitted last month it is cooperating with investigating bodies, believed to include Brazil’s federal anti-corruption authority.
The commission confirmed the inquiry intends to examine Rolls-Royce’s relationship with Brazil’s state-owned oil company, Petrobras, currently ensnared in a multibillion-dollar bribery scandal which has prompted political turmoil in the country.
Manoel Alvim, the commission’s secretary, said it has requested documents from the UK’s Serious Fraud Office (SFO), which is conducting its own separate investigation into alleged corruption at Rolls-Royce. The SFO has not answered the request.
The inquiry, formed earlier this year and made up of members from Brazil’s lower chamber, could summon Rolls-Royce executives to testify in public hearings.
In Brazil, an inquiry of this kind has broad investigative powers including the authority to compel witnesses to testify under oath and require financial insitutions to provide private banking details. So far, the inquiry has summoned senior politicians and executives from Petrobras and its contractors.
Rolls-Royce was first dragged into the scandal in February after a former Petrobras executive alleged the group paid him and others bribes in exchange for contracts with the oil company.
Rolls-Royce said the company has repeatedly made clear it will not tolerate business misconduct of any kind, but was unable to comment on its cooperation with investigating authorities.
Over the past decade, the Derby-based company has won hundreds of millions of pounds worth of contracts with Petrobras to supply power turbines for offshore oil platforms.
The congressional commission’s inquiry opens up a new front in the corruption inquiries that Rolls-Royce is facing. The company is currently cooperating with Brazilian authorities believed to include the country’s anti-corruption authority, the Office of the Comptroller General (CGU).
CGU officials are currently investigating scores of Petrobras contractors over alleged bribery as part of the sweeping scandal that has hit Brazil’s faltering economy and triggered a domestic political crisis.
A CGU investigation could have serious consequences for Rolls-Royce. If the authority brings proceedings, it could face fines of up to 20% of revenues. The GCU can also strike leniency deals with companies if they pay damages and admit wrongdoing.
The CGU was unable to comment on questions regarding Rolls-Royce. The spokeswoman said: “The CGU is silent on the research work in progress until they are finalised.”
Last month, the Guardian reported that investigations into an influential Brazilian businessman who claimed his consultancy represented Rolls-Royce in Brazil have intensified.
The businessman, Julio Faerman, has struck a plea bargain with prosecutors in Rio de Janeiro. In June he appeared before the congressional inquiry to answer questions about bribery allegations. Faerman has denied any wrongdoing.
Rolls-Royce has been under pressure over corruption allegations since late 2013 after the SFO launched a criminal investigation into alleged bribery in Indonesia and China. The SFO’s director said last year that the investigation concerned several divisions of the company.
The SFO was unable to comment on whether the investigation is now looking at the company’s activity in Brazil.
In March 2014, Rolls-Royce disclosed it is also cooperating with investigators at the US Department of Justice in connection with the SFO’s investigation. The involvement of federal authorities in multiple jurisdictions could increase the range of any fines the company may be ordered to pay.
In response to cross-border investigations, Rolls-Royce has hired New York law firm Debevoise & Plimpton. Meanwhile, the company continues to suffer financially with some investors calling for the group to be broken up.
In July, Rolls-Royce’s new chief executive Warren East was forced to issue a profit warning on his second day in the job - the company’s fourth profit warning in 18 months.
This article was written by Harry Davies, for theguardian.com on Sunday 27th September 2015 17.02 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010