Credit guarantees worth hundreds of millions of pounds given to Rolls-Royce by the government to help it win export deals are being investigated to see whether the engineering giant obtained them fraudulently.
Civil servants are examining support given by UK Export Finance to (UKEF) the company to help it land foreign sales, after Rolls last month admitted using bribes to seal overseas contracts.
The FTSE 100 engineer agreed to pay a total of £671m to the Serious Fraud Office and regulators in the US and Brazil after it admitted decades of making corrupt payments.
State-backed UKEF’s role is to provide financial support to foreign clients of British companies when they make export sales. It gives guarantees to banks which make loans to buyers to pay for goods, meaning the credit agency effectively underwrites the deal if the purchaser defaults.
The review by officials, first reported in The Guardian, into UKEF offering support loans to Rolls is seen as a natural consequence of the company’s admission it paid huge bribes, with the credit agency operating tough anti-bribery controls.
Rolls is one of the biggest users of UKEF services, agreeing to the agency’s conditions which demand that no corruption is involved in the deals it underwrites.
Last month’s High Court judgment against Rolls detailed corrupt dealings in three contracts - sales to Thai Airways, Russia’s Gazprom and Brazil’s Petrobras - in which Rolls applied to UKEF for support. In a fourth case named in the judgment - sale to Indonesia’s Garuda - Rolls itself did not make the application.
If UKEF suffered a loss because it had to pay out when a buyer defaulted and the company which applied for its support had broken the agency’s terms, then the agency could demand the money back. None of the buyers in the deals named in judgment defaulted.
Rolls said it did not expect to have to make payments to UKEF relating to the contracts named in the court judgment, adding that it does not anticipate having UKEF support withdrawn”.
A spokesman for the Department for International Trade, which oversees UKEF, said: “UKEF is not a law enforcement agency and has no statutory investigatory powers. We rigorously follow OECD standards and take all possible precautions to avoid supporting transactions that may be tainted by corruption.
“UKEF will continue to play a vital role in boosting the UK’s jobs and prosperity by supporting British businesses as they export abroad.”
A spokesman for Rolls said: “The behaviour uncovered in the course of the investigations by the Serious Fraud Office and other authorities is completely unacceptable and we have apologised unreservedly for it.
"The past practices that were uncovered do not reflect the manner in which Rolls-Royce does business today. We have taken extensive action to strengthen our ethics and compliance procedures so that high standards of business conduct are embedded as an essential part of the way we do business.”
NIKE AIR HUARACHE
