GSK GSK plc

By Adam Clark

The U.K.'s Serious Fraud Office said Friday that it has closed its long-running investigation into corruption at Rolls-Royce Holdings PLC (RR.LN) without prosecuting any individuals.

The agreement removes the final threat to the engine-manufacturer from an investigation launched in 2013, which resulted in a deferred-prosecution agreement and a 497 million pound ($648 million) fine, the U.K.'s largest ever corruption penalty.

Rolls-Royce reached that settlement in 2017 after admitting its guilt over charges of illegal business practices across three decades and seven countries. The company paid additional penalties to authorities in the U.S. and Brazil.

"Following further investigation, a detailed review of the available evidence and an assessment of the public interest, there will be no prosecution of individuals associated with the company," the SFO said.

Rolls-Royce said it wouldn't be commenting on the decision and noted it had co-operated fully with the authorities since reaching the settlement.

The decision not to prosecute any individuals may raise questions over the SFO's use of deferred-prosecution agreements, in which the government agrees to set aside a case against a company in exchange for cooperation and certain commitments.

"This case is in danger of sending a message to companies that DPAs are a soft option for those engaging in serious corruption and that, at the right price, can buy their way out of punishment giving impunity to those who flagrantly broke the law," said Robert Barrington, executive director of Transparency International U.K., an anticorruption nongovernmental organization.

The SFO suffered a defeat in December when a trial of two former executives of supermarket chain Tesco PLC (TSCO.LN) collapsed after a judge ruled the agency's evidence was too weak to put before a jury. Tesco had agreed to a GBP129 million fine under a deferred-prosecution agreement in the case over a 2014 accounting scandal.

The decision posed a test to recently-appointed director of the SFO, Lisa Osofsky, as to how to handle other pending cases. On Friday, in addition to dropping the Rolls-Royce case, the SFO also said it had closed a four-year investigation into pharmaceutical giant GlaxoSmithKline PLC (GSK.LN) with no further action, and other cases that weren't in the public domain.

"After an extensive and careful examination I have concluded that there is either insufficient evidence to provide a realistic prospect of conviction or it is not in the public interest to bring a prosecution in these cases," Ms. Osofsky said.

Write to Adam Clark at adam.clark@dowjones.com

(END) Dow Jones Newswires

February 22, 2019 13:28 ET (18:28 GMT)

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