• Breaking News

    DISCUSSION OF POLITICS AND ECONOMICS WITH FORAYS INTO PHOTOGRAPHY AND ASTRONOMY

    Search This Blog

    Wednesday, January 18, 2017

    Rolls Royce Takes Us On A World Tour Of Corporate Criminality

    Today's edition of corporate crime literally takes us around the world. The corporate criminal paying the fine today and escaping any real prosecution is Rolls Royce. The company has agreed to an over $800 million fine for violating the anti-bribery laws of the US, the UK, and Brazil. $600 million of that will go to the UK, $170 million to the US, and the remaining $25 million to Brazil. The fines were imposed after it was determined that Rolls Royce bribed officials in at least six countries including Angola, Azerbaijan, Iraq, and Kazakhstan. In Azerbaijan, Rolls Royce paid nearly $8 million in bribes in order to obtain contracts with the state-run oil company. Those contracts resulted in at least $50 million in profit for the company, making the bribes well worth the money. And these were no one-offs. Rolls Royce engaged in this activity for more than a decade and "regularly bribed foreign officials and others in order to secure work".

    The real culprit of this whole bribery scandal is a company called Unaoil. The firm basically was a cutout for major companies like Rolls Royce to bribe local governments without getting their hands dirty. According to the UK's Serious Fraud Office, it is doubtful "that Unaoil conducts any lawful business" other than bribing governments on behalf of other corporations.  Unaoil conducted "business" in more than a dozen countries, most of which are incredibly corrupt or even under sanctions. The map below from the Huffington Post article shows the countries where Unaoil operates.


    There are plenty of other firms besides Rolls Royce that have done business with Unaoil and some of them are huge multinational giants. Samsung, whose president has just been arrested for bribing the now-impeached South Korean President Park Geun-ye, did business with Unaoil, as did the US companies KBR and Honeywell. Unaoil's banking needs were supplied by Citigroup and HSBC who must have been aware of the payments to the regimes where the bribes took place. All of these firms and other smaller outfits that did business with Unaoil are assumed to be currently under investigation. FMC Technologies, Core Laboratories, and KBR have already confirmed that they are cooperating with the investigation.

    The use of Unaoil as a cutout to offer bribes to obtain business is similar in so many ways to other strategies that companies use to avoid any real responsibility for breaking the law and abusing workers. It is really no different from companies in the fast-food business that use franchisees that engage in massive wage theft to drive profits for the company without being held responsible for breaking employment law. It is no different than companies like Uber and so many others who claim their "employees" are merely contractors in order to avoid being constrained by existing labor laws. It is not unlike the mob bosses who run their profits through front companies so they can maintain separation from the actual crimes they order.

    At least in this instance, Rolls Royce was required to admit to its illegal actions and has forced at least seventeen people within the firm who were associated with the bribery scandal to leave the firm. At least that is something. Here in the US, in a totally belated action, the Justice Department announced guilty pleas from three traders involved in the massive manipulation of foreign exchange prices. That was followed by guilty pleas from six executives involved in the Volkswagen emissions scandal. In addition, both Volkswagen and Takata, the maker of knowingly defective air-bags, were forced to plead guilty for their actions. All of this came in the last month of the Obama administration and there is no chance that this kind of aggressive prosecution of individual executives for corporate illegality will continue with the new Trump administration. With Wall Street executives off at least the legal hook for the massive fraud they committed that led to the financial crisis, this really is much too little, much too late. The only positive thing to say is that at least it shows it is possible to hold individuals to account for corporate criminality. It is only the fear of real criminal punishment for individuals within a firm that will restrain corporate corruption.

    No comments:

    Post a Comment