New problems for Rolls-Royce?

24 October 20236 months ago babelfish

Rolls-Royce Holdings could face a £350m class action lawsuit from shareholders over a corruption scandal dating back to 2017. Here's what the Telegraph has revealed.

New shingle for Rolls-Royce in sight.

The British aerospace and defense multinational could face a potential class action lawsuit from shareholders worth at least £350m. The Telegraph first revealed it.

Investors are working with lawyers to receive compensation, believing the jet engine maker made false representations to the market regarding the bribery and corruption scandal involving Rolss-Royce in 2017. The Telegraph also reported that Rolls- Royce turned to Slaughter & May to avoid litigation, the same law firm she relied on during the bribery scandal.

In January 2017, Rolls-Royce said it would pay £671 million over bribery and corruption allegations with authorities in the UK, US and Brazil to avoid prosecution over irregularities over some of its contracts.

Not a good time for Britain's flagship engineering giant. Just last week the company announced it would cut up to 2,500 jobs in an effort to cut costs. Over the past decade, Rolls-Royce, whose engines and systems are used on the Airbus A350 and Boeing 787 as well as on ships, submarines and in power generation, has gone through several restructurings, eliminating more than 13,000 jobs.

The latest round of layoffs was announced by new CEO Tufan Erginbilgic, who took over at the beginning of the year. In a speech to Rolls-Royce staff not long after taking the helm, Erginbilgic himself described the company as a "burning platform" that was falling behind major competitors and destroying shareholder value.

All the details.

THE SHAREHOLDERS' ACCUSATIONS

Shareholders claim the company made false representations to the market about the corruption scandal and plan to seek £350 million in compensation for losses suffered as a result.

THE SCANDAL OF 2017

In January 2017 Rolls-Royce announced the payment of £671 million after reaching agreements with authorities in Britain, the US and Brazil investigating allegations of corruption involving a series of orders in several countries around the world. The conduct lasted three decades and took place in countries including Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia.

Thanks to the voluntary disbursement by the group, Rolls-Royce avoided legal proceedings.

The highest sum is that paid to the British Serious Fraud Office (SFO): 497 million pounds. The deal involved “12 counts of conspiracy to commit corruption, false accounting and failure to prevent corruption” in its aerospace and energy divisions. As part of its four-year investigation into Rolls-Royce, SFO investigators looked into allegations that Rolls paid millions of pounds in bribes – or used intermediaries to pay them – to secure civil and military deals.

CLASS ACTION IN SIGHT?

But now shareholders are set to demand compensation of at least £350m from Rolls-Royce, claiming the company misled the market about its behaviour.

Proceedings are yet to be launched, but it is understood that charges could be brought against former Rolls chief executive John Rishton, as well as former board members including Michael Terrett, Sir Simon Robertson and Colin Smith, the Telegraph notes.

For its part, Rolls-Royce does not want to be caught unprepared and has already hired Slaughter and May to fend off the potential litigation, the same team of lawyers who worked on the SFO agreement, adds the British newspaper.

THE COMPANY'S POSITION

Finally, a company spokesperson said: “Rolls-Royce today is a fundamentally different business. Rolls-Royce has zero tolerance for corporate misconduct. We have transformed our internal ethics and compliance procedures, which is why in January last year the Serious Fraud Office issued a notice releasing us from the UK's Deferred Prosecution Agreement (DPA).

Rolls-Royce said it would "strenuously defend" any class action and said it had not received any formal request.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/nuove-grane-per-rolls-royce/ on Mon, 23 Oct 2023 11:57:44 +0000.