Following the Rolls-Royce DPA, Andy Watson, Head of Industry Integrity, asks who are the real victims in a big corruption case like this?
It should have been a triumphant moment for anyone who believes no-one is above the law. Sadly, the ruling on Rolls-Royce’s settlement – following widespread corruption allegations – fell rather short; particularly for their victims.
As a former detective, I have sat through many criminal hearings. No matter how challenging the investigation, or how complex the trial, the judge’s explanation of why the crime is so heinous is often a stirring moment. It reminds the investigators, the jury, the public and the defendant why they are there and provides a moment of pause to consider the crime’s impact. Moreover, it is the time to recognise the victims, and for society to acknowledge the wrongs that have been suffered.
But after three hours of legal argument the victim’s voice was almost entirely absent in Rolls-Royce’s hearing. Sir Brian’s 32 page judgement contained only a brief assertion that because there had been no inflation of the prices of the corruptly purchased equipment, no-one had really lost out. Perversely, the hearing focussed almost entirely on the effects on the company and its dependants. It is a peculiarity of a DPA hearing that the prosecution counsel sets out the case against a prosecution. The unintended consequence was a prosecution counsel making the case for leniency so strongly it left the defence counsel with almost nothing to say; and everyone forgot the victims.
So who were Rolls-Royce’s victims? First, there were the millions of people living in developing countries, such as India, Nigeria and Indonesia, which saw vast sums of public expenditure directed toward Rolls-Royce’s coffers. It might be argued that the cost should be defined as narrowly as the value of the bribe; and divided amongst a population, that might seem like a small price to pay. But bribes corrupt public procurement processes. They can mean products purchased that may never have been needed, are of poorer quality, or purchased in greater volumes; and when we are talking about defence and aerospace, that’s an awful lot of money. For every extra Rolls-Royce product purchased, millions could have been spent on education, healthcare, infrastructure and other defence requirements. In the Indian case, it appears that corrupt intermediaries ensured the government issued a licence fee for £3.5m more than they had budgeted (for which Rolls-Royce agreed to pay the person responsible £1m), just one example of funds which could have been better used elsewhere. Let’s put that figure in terms that victims can relate to, £3.5m could mean between four to six thousand general practitioners for Indian citizens.
Then there’s the long term damage to institutions that fail over decades to put the interests of citizens first. In many developing countries, vital institutions end up repurposed away from providing basic services to people and towards the enrichment of a corrupt elite. This type of corruption prevents many of the countries on Rolls’ list of victims from achieving their full potential. Nigeria is one of the richest countries in Africa but corruption within the establishment is a major factor holding the country back, with nearly half the population without access to clean water and sanitation. Meanwhile despite huge investments in defence, soldiers continue to fight without suitable weapons and equipment.
But there are victims in the developed world too – and I’m not just talking about those employees losing out due to declining Rolls sales. If the UK taxpayer had up until this point been rolling their eyes and wondering what all the fuss was about, it’s time to think again. What about the billions in aid projects which end up in countries which could do a great deal more to help themselves, if they were not squandering their national budgets on gadgetry which they were persuaded to purchase? And then, of course, there’s the companies that missed out on the deal because Rolls-Royce was cheating. In the arms trade, these could easily be British companies; and I doubt whether such leniency would have been tolerated if Britons had been the ones missing out on jobs, thanks to a foreign company bribing their way to success.
In truth, citizens all over the world suffer the indirect consequences of arms trade corruption. It is fuelling arms races, weapons proliferation, organised crime, human rights abuses and fundamentally undermining international stability. Whilst we cannot lay blame for these directly at the door of Rolls-Royce, let us be in no doubt, corruption in this sector has devastating potential. The victims are numerous and the suffering they feel is real, if not always visible.
The proceedings, concerning a flagship case, were a sobering illustration of how little understood the impact of corruption is. My suspicion is that from the outset of the investigation, the victims were ignored because no-one really believed that Rolls-Royce was going to be prosecuted. The level of cooperation from Rolls-Royce may have pre-occupied investigators with achieving the DPA. And without a wounded party for the SFO to answer to, the victims ultimately missed out on the most vital part of the entire process – the court room.
image: flickr.com/Andrew Thomas (CC BY-SA 2.0)