Rolls-Royce is to seek judicial approval for a proposed agreement under which it would pay £671 million ($808 million) to settle a bribery and corruption investigation.

The voluntary agreement would result in a suspension of prosecution conditional on Rolls-Royce’s payment of financial penalties, as well as its fulfilment of other requirements.

Rolls-Royce has been under investigation by the UK Serious Fraud Office as well as the US Department of Justice and Brazil’s Ministerio Publico Federal.

The SFO opened a criminal inquiry into the allegations – which centred on overseas market – after the company started passing information to the agency in 2012, in response to a request over alleged malpractice in Indonesia and China.

Its deferred prosecution agreement with the UK SFO covers a penalty of £497.25 million, plus interest, in a payment schedule covering five years.

Rolls-Royce adds that it will also pay the US DoJ a total of just under $170 million, with a further $25.58 million payment to the Brazilian authority.

Its total outlay over the first year of all three agreements will be around £293 million.

Rolls-Royce is due to disclose full-year financial results on 14 February when, it says, it will give an “appropriate update on the implications” of the penalties.

It says that preliminary indications point to profit and cash figures for the group to be “ahead of expectations”.

Rolls-Royce will seek judicial approval for the proposed agreement, along with the UK SFO, at a court hearing on 17 January. The SFO confirms that a deferred prosecution agreement has been reached with the manufacturer, which is subject to court approval.

Deferred prosecution agreements were introduced as a new power to the SFO in February 2014, and have only been used a handful of times.

The SFO exercised this power for the first time in November 2015, when Standard Bank accepted responsibility for failing to prevent bribery in operations connected to Tanzania.

Under the agreement the bank paid fines and other costs amounting to nearly £17 million, plus £4.7 million in compensation to the Tanzanian government.

Deferred prosecution avoids “lengthy and costly” trials, says the SFO, and are “transparent” and “public”. It adds: "They enable a corporate body to make full reparation for criminal behaviour without the collateral damage of a conviction."

Source: Cirium Dashboard