An Airbus A350-1000 performing at the Farnborough Airshow. (Photo: AirlineGeeks | Fabian Behr)
The long-running probe into Europe’s largest aerospace manufacturer has come to an end and it’s not looking good for Airbus.
The European manufacturer has been ordered to pay a record $4 billion to settle allegations of widespread illicit payments to middlemen across the world in countries such as China, South Korea, Japan, Colombia, Ghana, and more. This agreement comes as a deal with U.S., UK and French prosecutors as part of a so-called deferred prosecution deal, becoming the largest international settlement of bribery allegations ever.
Prosecutors from these companies have said that Airbus has made illicit payments for years to intermediaries to secure contracts for its airplanes and other products. British prosecutors cited a specific case in which Airbus paid $50 million between October 2013 and January 2015 to sponsor a sports team jointly owned by two Air Asia executives in Asia. The British prosecutors allege this was done in order to secure an order for 180 aircraft. Air Asia has denied these allegations
British prosecutors has said in some cases communications related to payments were disguised using fake names and coded emails such as “medications and dosages prescribed by Dr. Brown” with Dr. Brown being an alias for an Airbus executive and the dosages referencing invoices.
According to French prosecutors, Airbus contributed $24.2 million between 2012 and 2017 to the China Aviation Cooperation fund which was supposed to fund activities such as training Chinese pilots, however, some of the money was used as a slush fund to bribe Chinese bureaucrats and air company executives.
The U.S. has also accused Airbus of violating export control laws relating to the sale of defense gear with American companies. It alleged that Airbus hadn’t accurately disclosed political contributions, fees, and commissions and had failed to main records of military equipment subject to U.S. export control rules.
As part of its settlement, Airbus has agreed to a considerable amount of external regulation to ensure compliance. It has agreed to appoint an external compliance officer for at least two years to monitor the company’s handling of its defense-related sales and disclosures. It must also conduct two separate audits of its defense activities during a three year period. Airbus has agreed that it can be prosecuted if it fails to fully comply with the agreement over the period.
French and British prosecutors have also hashed out a deal for their own compliance teams to ensure Airbus follows through with the agreements of the deal.
At the end of the day, Airbus isn’t required to admit or deny specific wrongdoing and avoids criminal charges that would bar it from winning contracts in both Europe and in the U.S. Airbus Chairman Denis Ranque said in a statement that the settlements “turn the page on unacceptable business practices from the past” and “the strengthening of our compliance programs at Airbus is designed to ensure that such misconduct cannot happen again.” Now prosecutors are moving forward with deciding if charges against individual people will be pursued.
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