This study aims to analyse Rolls-Royce’s (RR) recent corruption case, its 2017 global anti-bribery and corruption (ABC) manual, and its 2017 annual report to assess whether it has put the best corruption prevention strategies into place.
This is a legal case study based on RR’s 2017 deferred prosecution agreement (DPA) with the UK serious fraud office. It uses the new ISO 37001 standard as a theoretical framework.
RR’s DPA suspends an indictment covering 12 counts of conspiracy to corrupt, false accounting and failure to prevent bribery. RR’s ABC manual exhibits significant shortcomings as compared to ISO 37001’s requirements. RR’s ABC manual does not provide any reference to the setting, reviewing and achievement of measurable anti-bribery objectives; does not state that anti-bribery training is provided at planned intervals to employees and external business associates that pose more than a low risk of bribery; does not explain the authority and independence of its head of ethics and compliance; does not state any maximum for gifts and hospitality given or received; does not provide clear assurances that reports made through its main internal channels will be treated confidentially and that complaints about senior management will be investigated by an outside firm; and does not subject its advisers to a formal due diligence process. RR’s annual report notes that it operates in an industry prone to corruption. Finally, internal control failure and compliance fatigue mean that no anti-bribery management system can be completely effective.
This paper extends previous research by analysing the best corruption prevention strategies that organizations can implement. It does not endeavour to certify whether RR is ISO 37001 compliant, and it analyses only publicly available documents.
This study’s prevention strategies will help deter corruption and improve internal controls within organizations.
No previous study has used the new ISO 37001 standard as a framework for such corruption case analysis.
The author thanks the participants of the 2019 Irish Accounting and Finance Association (IAFA) Annual Conference and the 2019 British Accounting and Finance Association (BAFA) Workshop on Accounting and Finance in Emerging Economies for their helpful comments.
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