British engine-maker Rolls-Royce says it has suffered the biggest loss in its history due to bribery scandals and the impact of the UK's withdrawal from the European Union (EU) on the country’s currency.
On Tuesday, Rolls reported a massive £4.6 billion statutory pre-tax loss for 2016, one of the largest amounts in Britain’s history as well.
The loss included a £4.4 billion write-down on the value of financial hedges that Rolls uses to protect itself against currency fluctuations and a £700m charge for the penalties the company has agreed to pay to settle bribery and corruption charges with the UK Serious Fraud Office, the US Department of Justice, and Brazilian authorities.
The multinational company, which sells turbines and engines for passenger jets and military aircraft, will pay £497 million to the UK Serious Fraud Office (SFO) after a high court approval, $169m (£140m) to the US Department of Justice and $25m to the Brazilian authorities.
Since the company, which also builds aircraft engines, made most of its aerospace deals in dollars, it was hit hard by the British pound’s slump in value following last June’s referendum to depart from the EU.
In mid-January, the British sterling dropped to $1.20, a record 31-year low.
Rolls’ profits fell to £813 million, down 49 percent from £1.4 billion the previous year.
The company has been dealing with corruption over the past 25 years. The cases, for which Rolls has apologized “unreservedly” for, involve illegally using local middlemen and paying bribes to win deals in Indonesia, Thailand, China and Russia.
The Derby-based group, which employs about half of its 50,000-strong workforce in the UK has been axing thousands of jobs over the last couple of years as part of a cost-cutting overhaul.
The biggest loss in British history is the £24bn recorded by Royal Bank of Scotland for 2008.
(Source: UK media)