Judicial authorities overseeing a deferred prosecution arrangement with Airbus have described as “endemic” the bribery linked to its commercial aircraft and defence divisions, as details emerged of activities scrutinised by fraud investigators.
Airbus has agreed to pay a €3.6 billion fine to settle multiple investigations from French, UK and US authorities.
While a French arrangement covers the largest part of the fine, over €2 billion, court approval of the UK portion of the settlement, over €990 million, has been accompanied by an agreed statement of facts about the alleged offences of failure to prevent bribery.
Sponsorship payments to a sports team owned by AirAsia executives, but unrelated to either AirAsia or AirAsia X, were “intended to secure or reward improper favour” for orders covering 180 aircraft, the court document states. The orders included the AirAsia deal for 55 Airbus A330neos unveiled in 2014 plus earlier agreements for 25 A330s, 64 A320neos and 36 A320s.
SriLankan Airlines’ acquisition of six A330s and four A350s has been tied to a $16.8 million payment offer to an airline executive’s wife, through a company which was then approved by Airbus as a business partner, to influence the purchase. The wife’s identity was disguised, the court document says, to mislead a UK export credit agency.
Similar payments were made to executives at Garuda Indonesia, its low-cost division Citilink, and TransAsia Airways’ parent intended to “reward improper favour”, the document adds.
The Garuda orders associated with the agreed wrongdoing cover 15 A330s and 40 A320s, while the TransAsia orders included two A330s and 18 A321neo and A321 jets.
Bizarre communications between Airbus and an intermediary regarding TransAsia took the form of “coded e-mails”, the court document reveals, which referred to participants through aliases – notably discussing “medications and dosages” prescribed by a ‘doctor’ to the ‘patient’ with numbers which actually represented payments from Airbus to the intermediary and onwards to a TransAsia parent executive.
AirAsia, SriLankan Airlines and Garuda could not immediately be reached for comment. TransAsia Airways ceased operations in 2016.
The court document also details Airbus’s making or promising payments, disguised by false papers, in relation to a proposal to sell three Airbus Military C295s.
An indictment charging Airbus with five counts of failure to bribery in these cases was laid at London’s High Court on 31 January, but suspended at the request of the UK’s Serious Fraud Office following Airbus’s entering a deferred prosecution agreement.
In her judgement, the president of the Queen’s Bench Division of the High Court, Dame Victoria Sharp, says the “scale and scope of the wrongdoing” outlined in the court document “demonstrate that bribery was, to the extent indicated, endemic in two core business areas within Airbus”.
“Airbus paid bribes through agents around the world to stack the decks in its favour and win contracts around the globe,” says Serious Fraud Office director Lisa Osofsky.
But she credits the airframer with admitting culpability and taking steps to overhaul its compliance measures.
Airbus board chairman Denis Ranque insists the settlements “turn the page on unacceptable business practices from the past”, adding: ”Strengthening of our compliance programmes at Airbus is designed to ensure that such misconduct cannot happen again.”
The €991 million sanction in the UK case comprises a disgorgement of profit totalling nearly €586 million and a penalty of €398 million.
Details of the findings of the related French investigations, which contributed to the overall €3.6 billion settlement, have yet to be disclosed. The US portion of the settlement totals €526 million.
The US Department of Justice states that Airbus offered to pay bribes to foreign individuals, including Chinese officials, in order to obtain and retain business “including contracts to sell aircraft”.
Assistant attorney general Brian Benczkowski says the scheme was “multi-year and massive” and designed to “corruptly enhance” Airbus’s business interests.