Manufacturers ignorant of bribery rules as Rolls-Royce investigation continues

Posted on 3 Jan 2013

With Rolls-Royce currently being investigated over allegations of bribery in China and Indonesia, could more manufacturers be set to get an interrogation from the Serious Fraud Office?

The fraud, investigations and disputes services team at financial services firm Ernst & Young found that just half of firms in the Britain had even heard of the UK Bribery Act.

Fewer manufacturing directors knew of the regulation than the national average, with 53% not having heard of it compared to 44% across all business sectors. Automotive firms fared the worst with 75% of companies in the dark.

Although the investigation into Rolls-Royce relates to incidents pre-dating the UK Bribery Act, it has blamed the actions of subsidiaries and third party workers for the breach of the rules that could land them with a multimillion pound fine.

The UK Bribery Act was created to make companies responsible for failing to prevent bribery committed on their behalf by employees, agents or subsidiaries.  This means that British companies are governed by UK law everywhere they operate in the world.

“Manufacturers really need to get to grips with their bribery risks,” blasted John Smart, partner at Ernst & Young. “If the UK is to export itself back to growth, then this carries with it a whole raft of new risks, including bribery.”

It is easy to leave your subsidiary to it and allow them to function in ways that are common in the given market. Russian President Vladimir Putin attacked the levels of corruption in the country just before the New Year.

If growth is to be found then countries need to mark their mark in Russia and the other BRIC nations by learning the culture and not the short-cuts.

“Many firms still don’t know what it is and what the UK Bribery Act means for them,” said Mr Smart. “We shouldn’t need to wait for a company to be fined under the Act before we are spurred into taking the appropriate precautions to manage bribery risk.”