Low Cost & Regional

Airbus fined for bribery

Airbus, bribery: Air Asia

Airbus has been hit with penalties of €3,598 million, plus interest and costs for sustained bribery and corruption around the world, associated with sales by its commercial, and defence & space, divisions.

It will pay €984 million to the UK Serious Fraud Office (SFO) in connection with sales in Sri Lanka, Malaysia, Indonesia, Taiwan and Ghana between 2011 and 2015.

This relates to commercial aircraft deals with Air Asia and Air Asia X in Malaysia; Sri Lankan Airlines, TransAsia Airways in Taiwan; and Garuda Indonesia and Citilink Indonesia. Ghana involved a military aircraft.

As a result, Air Asia’s executive chairman Datuk Kamarudin bin Meranun and CEO Tan Sri Anthony Francis Fernandes have relinquished their executive positions for a period of two months while a Non-Executive Independent Board Committee investigates the allegations. They will remain as advisors but have no executive authority.

Airbus has agreed to enter into a Deferred Prosecution Agreement (DPA) with the SFO. This agreement does not amount to an admission of liability. Under this agreement, the SFO has agreed to suspend prosecution of Airbus for a duration of three years.

In the US, it will pay €526 million to the Department of Justice and €9 million to the Department of State, of which €4.50 million may be used for approved remedial compliance measures. The Department of Justice said that between approximately 2013 and 2015, Airbus engaged a business partner in China to make payments that were intended to be used as bribes to government officials in connection with the approval of certain agreements associated with the purchase and sale of Airbus aircraft to state-owned and state-controlled airlines.

In order to conceal the payments and its engagement of the business partner, Airbus made payments to a bank account in Hong Kong in the name of a company controlled by another business partner. Further offences were inaccurate and misleading filings made to the Department of State pursuant to the US International Traffic in Arms Regulations (ITAR). A similar DPA applies.

The French Parquet National Financier (PNF) will receive €2,083 million and Airbus will enter into a Convention Judiciaire d’Intérêt Public, an equivalent of a three-year DOA. It will also submit its compliance programme to targeted audits carried out by the Agence Française Anticorruption (AFA) over the same period.

Chairman of the Board of Directors of Airbus, Denis Ranque, stated: “The settlements we have reached today turn the page on unacceptable business practices from the past. The strengthening of our compliance programmes at Airbus is designed to ensure that such misconduct cannot happen again.

“The agreements also reflect that the decision to voluntarily report and cooperate with the authorities was the right one. The commitment from the Board, and its Ethics and Compliance Committee, to provide full support to the investigation and the implementation of globally recognised compliance standards have paved the way to today’s agreements.”

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