Big business is an international issue that very often crosses borders and involves many countries and jurisdictions….and carries many possible pitfalls.
This may sound blindingly obvious. Maybe a little pessimistic. But in light of certain major companies’ massive cross-border legal problems, it appears that it is a point that needs to be made – and repeated.
In 2018, Airbus agreed to pay an 81 million-euro fine to end a five-year bribery investigation by German prosecutors. The investigation into the 2003 sale of Eurofighter jets to Austria found that Airbus executives were guilty of a "negligent breach of supervisory duties" by failing to implement internal controls.
The aerospace company has made efforts since 2012 to introduce a whole new compliance structure. This is obviously a worthwhile measure that will hopefully prevent any future problems. But it is worth noting that Airbus remained the subject of bribery investigations in the UK, France and US until, in January 2020, it reached a colossal 3.6 billion euro settlement of the allegations. So while its new compliance measures will be useful, it must be said that the company should really have been assessing and preventing the risks of wrongdoing far better many years earlier.
Aerospace’s problems are not unique. Fellow aerospace giant BAE has previously paid out hundreds of millions of dollars in fines to the US authorities over the sale of fighter planes to Eastern Europe and Saudi Arabia. Rolls-Royce paid a £497.25M under a deferred prosecution agreement (DPA) in 2017 to settle allegations that it had regularly used bribery to secure jet deals in a number of countries.
Regardless of the company, the location or the industry, trading in more than one country can bring with it the risks of bribery: either the selling company thinks a bribe would secure the deal or the potential buyer seeks one in return for awarding the contract to the bribe payer. This has gone on for many years in many countries and in many business sectors.
But Airbus’ plight and the earlier problems of BAE and Rolls-Royce have to be seen as a warning: such practices have to be prevented, otherwise more companies will suffer a similar costly fate.
In whichever continent a company trades, countries are more aware of the dangers that bribery poses to their economies and their infrastructure. Investigating authorities are now more determined to identify and punish bribery and more likely to work with their counterparts in other countries if the allegations cross borders. The view that some in business may have held – and some may still hold – that bribery is an essential, harmless way to grease the wheels of business without being punished is simply incorrect now.
What corporates, and possibly individuals, need to know, therefore, is what they should do if they are faced with cross-border bribery allegations. We have previously written at length in numerous articles about how to prevent and identify bribery. Here we are considering what needs to be done if bribery has been discovered by the authorities or you have reported it to them.
Perhaps most importantly, anyone accused of bribery in another country needs legal representation from solicitors who have in-depth knowledge of business crime law in that country. They must be capable of putting together and coordinating a cross-border defence case and be able to identify the best case scenario for their client.
In such cases, it must be remembered that an ability to negotiate with the authorities is a tool that can be of huge value in securing the best possible outcome. Examining the circumstances surrounding the allegations, explaining and emphasising any mitigating factors and taking a calm yet informed and persuasive approach will bring better results in any country than a confrontational attitude.
With the possible complexities that can accompany a cross-border business crime investigation, this can be an invaluable way of making the ordeal less painful for the client. It can often mean knowing when to accept what could be a more lenient penalty and using various approaches to ensure that, if there has to be a punishment, it is a fine rather than a criminal prosecution.
This is not a case of weakly accepting all the allegations and meekly taking any deal that may be offered. It is about viewing the case from all angles, analysing the strength of the authorities’ evidence in the countries where the allegations have been made and making the strongest counter-arguments in a way that makes it clear you welcome discussion and negotiation.
If we consider the Rolls-Royce case we mentioned earlier, the company paid a large amount to settle the allegations. Yet it was not prosecuted, as the Serious Fraud Office (SFO) thought the company was worthy of a DPA.
There was clear evidence of bribery in a number of countries, Rolls-Royce had not self-reported the illegal activity and yet it even received reductions on the fines imposed. But Rolls-Royce had helped investigators find the facts, removed many staff thought to be involved in the bribery and introduced strong preventative measures for the future.
As with Airbus, such measures could have been viewed as locking the barn door after the horse had bolted. But it was part of an approach adopted by Rolls-Royce to minimise the damage. A more confrontational approach over its wrongdoing in various countries could have been the surest way to ensure it faced a criminal prosecution.
As it was, it negotiated its way out of a situation that could have made it increasingly difficult to trade around the world, as a corporate with a criminal conviction is hardly a desirable business partner. The case showed that cooperation and negotiation can bring results in even the most serious circumstances, if managed correctly.
At no stage in the Rolls-Royce case was the company seeking to prove its innocence. But that will be the case for corporates who are adamant that they have not been involved in bribery at any time in any country.
If such companies are accused, they have as much need for the right international legal representation as the Rolls-Royces of this world. While the option to negotiate may not be an attractive one for companies who know they have not been involved in cross-border corruption, they will still require representation from solicitors who know “how things work’’ in the relevant countries.
And wherever a company trades and whatever its line of work, it has to take advice on the risks of bribery that apply to its business and introduce proper preventative measures to stop that risk becoming a reality. That is the most reliable way of ensuring it does not come under investigation in any country.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.