Bribery allegations in Brazil further taint Rolls-Royce’s reputation

17 Feb 2015


Rolls-Royce, the FTSE 100-listed engineering giant finds itself dragged into a bribery scandal involving Brazil's state oil producer, Petrobras. The allegation is that the company offered kickbacks to secure a $100 million contract in the country. According to Pedro Barusco, a former Petrobras director turned whistleblower, he personally received $200,000 from Rolls-Royce, via its agents, with additional funds paid to other executives and politicians.

According to the claims, the latest twist in the scandal involved Petrobras, which had itself been engulfed in wider allegations of political corruption. The affair had already seen the oil company's boss, Maria das Graças Silva Foster lose her job. Foster was one of the world's most high-profile female executives and a close ally of Brazil's president, Dilma Rousseff.

The 600-page testimony by Barusco accuses Rolls-Royce and other companies, namely SBM Offshore of the Netherlands and Singapore's Keppel Corporation and Sembcorp Marine.

According to commentators, though the allegations might not be substantiated, they could not have come at a worse time for Rolls-Royce, which had seen clients ranging from oil and gas producers to governments cut back spending on its products. The company yesterday issued its third profit warning in less than a year.

According to a senior business analyst quoted by The Independent yesterday, it was difficult for firms that operated wholly within the UK to appreciate the size of the challenge facing companies operating in countries with poorer standards of business integrity.

Meanwhile, reported that Rolls Royce which manufactures turbines for Petrobras, was named in court documents by Barusco.

According to a spokesperson of the company, no details of the allegations had been received neither had the company been yet been approached by the authorities in Brazil.
''We have always been clear that we will not tolerate improper business conduct of any sort and will take all necessary action to ensure compliance, including co-operating with authorities in any country,'' the company added.

Commentators point out that the company's inclusion in the case intensified the global scrutiny on Petrobras - Brazil's largest company - after it was hit by ongoing boardroom upheaval and corruption allegations.

The scandal had also become a huge problem for Rousseff's government, with several politicians implicated in the corruption allegations.

In addition to many politicians from Rousseff's Workers Party, several from its coalition partners also stand accused of collaborating with corrupt Petrobras executives.

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