Readers of Lawyer Watch will be familiar with my posts on the tensions inherent in a lawyers’ duties to their clients and their duties to uphold the rule of law and the proper administration of justice.
Readers interested in the story of Rolls Royce’s DPA will already have picked up:
– the reported levels of ‘full and extraordinary cooperation’ with the SFO that Rolls Royce under its current leadership have provided, and,
-the potential for individual prosecutions to flow from the events covered by the DPA.
That co-operation included the waiving of legal professional privilege over certain information (a reminder that privilege does not provide the fundamental guarantee it purports to for those working within organisations), a point of significant interest to lawyers but not my focus today.
It is perhaps no surprise that cooperation needed to be so fulsome given the litany of events described in the agreed statement of facts (see here for the DPA, the agreed statement and Leveson’s judgment). A series of deals, between 1989 and 2013, involved intermediaries assumed to have paid bribes to ensure Rolls Royce got orders it bid for. Or they involved the disguising of payments to executives (for example to service that executive’s private jet) within some of the organisation. One such deal seems to have ensnared a leading US University (whether blamelessly so or not, we do not know – but it is a salutary warning to University administrators and entrepreneurial academics).
These processes involved (among other things):
-Drafting consultancy agreements, side-letters and contracts to give dubious credits to contracted parties which had the effect of (known or unknown to the individuals) facilitating bribery;
-Advising on tendering processes, and compliance with Indian restrictions on the use of Intermediaries;
-Inadequate due diligence especially where suspicions of bribery were raised by RR employees;
-Deliberate advice to destroy documents when they feared an investigation by Indian authorities;
-Modification of the language of risk reports to minimise understandings of payment regimes;
-Risk procedures not having the benefit of the full information available in the company, and evidence of deliberate vagueness in some of the information (e.g. about the nature of intermediaries business arrangements); and,
-Seeking legal advice from an external law firm without disclosing all the material facts to their instructed solicitors.
Whether such work involved lawyers in Rolls Royce is not generally at all clear from the published information. In the Statement of Facts we are told that Corporate Headquarters, where control was supposed to be exercised, “included, inter alia, the office of the Chief Executive Officer (“CEO”), and General Counsel.”
Other than that individuals are not generally mentioned and very little of the work described in my bullet points is specifically attributed to Rolls Royce Legal or firms instructed by them. Much of the work might be presumed to involve lawyers internally and occasionally externally, but equally much of it might not have so involved them.
Even for work that clearly did or can be assumed to have involved lawyers, we do not know what they were told, and how they responded to any red flags they may have been raised, when engaged in such work. We also do not whether lawyers should have been more involved to meet their professional and contractual obligations. In other words, we cannot see clearly what the sins of omission or commission, if there were any, were.
For the most part, when looking to answer the obvious question that would concern you and I, we would – for the most part – have to guess where the lawyers were. Perhaps this is by design, to protect the conduct of future prosecutions. RR Legal plainly was involved in the contractual arrangements designed to mitigate the risk of, or recharacterise, the provision of funds for an MBA course and associated hospitality which was the subject of one count of failure to prevent bribery; but whether this involvement was problematic or not, we would have to guess at.
We do get a few tantalising glimpses of in-house and outside lawyers describing transactions now labelled as corrupt in terms of risk appetites. The advice is sometimes, it seems, framed in terms of risk rather than clear advice that certain things cannot be done.
The implication might be, but it would be speculation, that dodgy deals were deemed ‘high risk’ rather than plainly illegal. If I am right, and I emphasise, I have to read between the lines of the DPA here, and am not prejudging, some of the lawyers may have found themselves unable or unwilling to say no.
So, from my point of view, which is hardly the most important view even to me, the DPA is a frustrating document. There is however enough in the details to raise a strong presumption that the conduct of at least some of the professionals involved should be scrutinised by the regulator. This leads me to my final points. A series of questions.
-Has Leveson reported any of the personnel involved to the SRA or BSB to have potentially serious misconduct investigated? He has not said he did, but perhaps this is for the same reason that individuals are not focused upon in the DPA. I do not criticise him for not making a public referral, even of unnamed individuals. And of course, being more seized of the facts than I, he may have formed the view that there is no serious misconduct here that should be investigated.
-Have any of the lawyers involved, especially within Rolls Royce Legal and/or Compliance, reported any of their colleagues or former colleagues for serious misconduct?
-Indeed, does this kind of case act as a salutary reminder that in-house legal teams may need the equivalent of a COLP?
-Have the firms who gave advice on anti-bribery and corruption also considered their own exposure to criticism and investigation and, if appropriate, considered making a report?
The answers to these questions may all be anodyne. I am not seeking to raise further speculative criticisms of Rolls Royce. I am, however, suggesting all in-house teams and law firms caught up in scandals like these need to think very carefully about their own exposures and conduct before the regulator comes knocking at their door. Rolls-Royce have partly minimised the damage as a result of doing something similar. That’s just one of the lessons of this sorry tale. The second is, at some point, the detail needs to be more widely known and thought about. In-house lawyers need to learn from the mistakes, if any were made.
Richard Moorhead is professor of law and professional ethics at UCL Faculty of Laws vice dean (research) at the Centre for Ethics and Law. He blogs at Lawyer Watch. Follow Richard on Twitter.
