Airbus reaches deal to settle corruption probes

Industry

2020-01-28 / www.ft.com




Airbus has agreed to settle a bribery and corruption probe with regulators in the UK, France and the US, in a move that could see the aerospace group pay billions of dollars in penalties.
Airbus said it has reached an agreement in principle over allegations of bribery and corruption, as well as compliance with US arms trafficking regulations. The agreements still need to be approved by courts in all three countries, and US regulators, the group said in a statement on Tuesday.
Airbus did not provide any further details, but analysts had forecast fines of more than €3bn to follow the complex negotiations between the three agencies. The FT had earlier reported that an agreement was imminent.
The settlement is set to surpass the £671m plea bargain struck by Rolls-Royce in 2017 to settle similar allegations. At the time, the UK share of the settlement, at about £500m, was the largest fine imposed by British regulators on a company for criminal conduct.
People familiar with the matter said Airbus was in the process of reaching a so-called deferred prosecution agreement with the UK Serious Fraud Office, which would mark a significant milestone for the regulator after a string of defeats.
Under a corporate plea deal, companies are able to avoid criminal prosecution if they admit to wrongdoing, agree to overhaul their businesses, and pay a penalty.
So far the SFO has signed six DPAs but has come under scrutiny for failing to convict senior executives of the companies involved.
For Airbus, the deal would mark the end of a corruption probe lasting nearly four years that has claimed the jobs of some senior executives, even though they were not implicated in any wrongdoing. The board took the view that the company would have a better chance of winning a settlement if an entirely new senior management team was put in place. This was helped by the fact that several executives were approaching retirement age. Tom Enders, chief executive, and Fabrice Brégier, chief operating officer, both stepped down last spring.
The company has also overhauled its ethics and compliance procedures, established an independent review panel of outside experts, and significantly cut down the number of third-party agents used to secure deals.
The SFO's investigation was launched in 2016 after Airbus revealed that it had uncovered discrepancies in disclosures about third-party consultants used on certain aircraft deals. Parquet National Financier, the French regulator, launched a probe the following year, and the US Department of Justice opened an investigation in 2018.
Since corporate plea deals were introduced to the UK in 2014, Standard Bank, Sarclad, Rolls-Royce, Tesco, Serco and Güralp Systems have all admitted failures and paid fines in exchange for avoiding a criminal conviction.
The SFO is still expected to pursue charges against individuals in relation to Airbus subsidiary GPT, which has been under investigation for eight years.
The SFO launched an inquiry into GPT after the company was accused of making illicit payments to secure a £2bn UK government contract to provide communications and intranet services for the Saudi National Guard, the kingdom's internal security force which protects the royal family.

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