Rolls-Royce still under investigation in Brazil for corruption, despite plea deal

1 December 2017 9:40am
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24 November 2017. By Rodrigo Russo.

Rolls-Royce is still facing scrutiny in Brazil for alleged corruption, even though the engineering company signed a plea deal with Brazilian federal prosecutors in January.

Earlier this year, Rolls-Royce paid 671 million pounds ($893 million today) to settle bribery and corruption investigations in the UK, US and Brazil.

In Brazil, the company paid $25.58 million to reach an agreement with the Federal Prosecutors Office, but another Brazilian government body, the Ministry of Transparency and Comptroller-General of the Union, is still probing the company, according to court documents seen by MLex.

The Ministry of Transparency has the power to block companies from signing contracts with state-controlled companies for up to five years, and to impose fines for administrative and civil violations of Brazil’s Anticorruption Law.

In a ruling dated Nov. 17, a federal court in the state of Rio de Janeiro granted the Ministry of Transparency access to a whistleblower statement by Julio Faerman, a former Rolls-Royce intermediary in the country.

“I authorize the sharing of the testimonies of Julio Faerman in the procedure, as well as other related pieces of evidence, with the Ministry of Transparency and Comptroller-General of the Union, for the purposes of investigating the procedure targeting the company Rolls-Royce,” said judge Vitor Barbosa Valpuesta in his decision**.

Faerman’s plea deal with federal prosecutors in the state of Rio de Janeiro, signed in May 2015, remains confidential. The businessman allegedly paid bribes on behalf of Rolls-Royce to executives at state-controlled oil company Petróleo Brasileiro, or Petrobras.

Faerman is also a defendant in another Petrobras corruption case, which involves Dutch oil services company SBM Offshore. He allegedly paid bribes to secure Petrobras contracts on behalf of SBM.

The Ministry of Transparency’s probe against Rolls-Royce is still in its early stages, it is understood. In September, the comptroller-general authorized the probe to continue for another two months, according to official documents seen by MLex.

The Ministry of Transparency said it can’t comment on investigations brought under the country’s corruption law.

Rolls-Royce also declined to comment.

Guilty pleas

To US authorities, Rolls-Royce acknowledged it had paid $9.3 million in commissions to an intermediary in Brazil, who then paid $1.6 million in bribes to Petrobras officials.

In return for the bribes, Rolls-Royce won six Petrobras contracts for power turbines to offshore platforms and long-term service agreements between 2003 and 2013.

Several Brazilian authorities can prosecute companies on the basis of the country’s corruption law, adopted in 2014.

Companies also need to secure agreements with the Ministry of Transparency, with the Attorney General's Office, and with the Federal Court of Auditors.

* With additional reporting by Ben Lucas in London

** MLex's translation from a document in Portuguese

Damage Limitation: Trucks & Cartel Claims