Airbus fined €3.6bn in bribery deferred prosecution agreement

Aaron Woolner
By Aaron Woolner February 3, 2020 16:47

Airbus fined €3.6bn in bribery deferred prosecution agreement

Airbus has been fined €3.6bn as it reached final deferred prosecution agreements (DPA) with French, US and UK authorities over bribery activity in a number of countries including Ghana, Indonesia, Malaysia, Sri Lanka and Taiwan.

The agreement with the French Parquet National Financier (PNF), the UK Serious Fraud Office (SFO), and the US Department of Justice (DoJ) ends authorities’ investigations into allegations of bribery and corruption over the sale of airplanes to those countries and also ends US Department of State (DoS) and the DoJ investigations into inaccurate and misleading filings made with the DoS in relation to the US International Traffic in Arms Regulations (ITAR).

Airbus has agreed to pay penalties of €3,598 million plus interest and costs to the French, UK and US authorities. This breaks down €2,083 million to the PNF, €984 million to the SFO and €526 million to the DoJ. Additionally, it must pay €9 million to the DOS of which €4.50 million may be used for approved remedial compliance measures.

The fine dwarfs the £671 million levied on Rolls Royce in 2017 by Brazilian, UK and US authorities for bribery offences committed in a similar group of countries, and according to the Law Gazette it is the largest DPA fine levied on a corporate so far.

While Airbus received credit from the authorities for its cooperation – the firm handed over 30 million documents to authorities who didn’t find any additional information as part of their investigations – a statement released by the DOJ on the ruling was scathing about Airbus’ prior conduct.

According to the DOJ, Airbus had been conducting a scheme starting in at least 2008 and continuing until 2015 to offer and pay bribes decision makers and foreign government officials to win business, activity which posed a threat to the “national security of the US and its allies”.

“Airbus…engaged in a systematic and deliberate conspiracy, that knowingly and wilfully violated US fraud and export laws,” said special agent in charge of the investigation Peter Fitzhugh of US Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) New York.  

“Airbus’s fraud and bribery in commercial aircraft transactions strengthened corrupt airlines and bad actors worldwide, at the expense of straightforward enterprises.  Additionally, the bribery of government officials, specifically those involved in the procurement of US military technology, posed a national security threat to both the US and its allies. 

The global threats facing the US have never been greater than they are today, and HSI New York is committed to working with our federal and international partners to assure sensitive US technologies are not unlawfully and fraudulently acquired.”

The ruling doesn’t mark an end of the process for the Airbus as Malaysia’s Securities and Aviation regulators both announced investigations related to the ruling. UK authorities concluded that individuals connected to Airbus had paid a number of bribes to secure sales with Air Asia and Air Asia X, which included a $50 million sponsorship for a sports team jointly owned by two unnamed executives at the Malaysian airline but that was “legally unrelated to AirAsia and AirAsia X”. 

As a result, Air Asia shares tumbled to a record low of 11.5 Malaysian cents (0.03 US cents) on the ruling. However, Air Asia put out a statement which denied any being invoiced in bribery and said that it had not been asked to participate in any investigation.

“AirAsia wishes to clearly state that it was neither involved in any way whatsoever with the SFO’s investigation of Airbus nor given any opportunity to provide any information or clarification to the SFO.

Articles…allege that certain agreements by AirAsia to order Airbus aircraft were improperly linked to sponsorship by Airbus of a sports team jointly owned by AirAsia executives. AirAsia vigorously rejects and denies any and all allegations of wrongdoing.”

It’s unclear whether authorities in the other countries would follow Malaysia’s lead. Ghana’s former attorney general Marietta Brew Appiah released a statement which said it was “false and misleading” to state that bribes were paid during the admirations of former presidents John Evans Atta Mills, and John Dramami Mahama.

Deferred prosecution agreements were only introduced into UK law in 2014 and allow organisations to pay fines instead of being prosecuted as long as they fully complied, and the agreement means prosecution of Airbus will be deferred for three years as long as it continues to comply with authorities.

In a statement Airbus said that the amount of fine levied by authorities was linked to the heightened reporting, cooperation and compliance standards at the firm. “Airbus has taken significant steps to reform itself and ensure that this conduct will not reoccur. [It] has significantly enhanced its compliance system under the supervision of an independent compliance review panel. The company is committed to conducting business with integrity”, it said.

Aaron Woolner
By Aaron Woolner February 3, 2020 16:47