Airbus has decided to settle out of court against a corruption probe, paying a fine of $4 billion USD.
What are the details?
Airbus has been facing down a criminal corruption inquiry for the last few years headed by British, French and the United States authorities. They are investigating allegations that Airbus bribed or coerced different firms and agencies for airline sales, through an ‘agent’ network.
This is quite complicated, but we will try to explain as simply as possible.
Airbus alerted regulators to several misleading or incomplete declarations the firm had made to the British Export Credit Agency, specifically to large payments to sales agents. The British Export Credit Agency (BECA) is a government firm that helps companies with UK exports, offering credit, loans, legal advice and more.
Essentially, working with the BECA, a third-party agent network acquired several hundreds of millions of dollars to facilitate Airbus aircraft sales around the world.
What did this money go to? In basic terms, airlines who wanted to buy Airbus aircraft could get a UK government-backed loan (at a local bank) via the agent-network to then purchase the aircraft.
No influence over the actions
Airbus has said that it had no influence over the actions of this third-party network, nor how they may have given financial advice to airlines.
Once the paperwork discrepancies were discovered by Airbus, it shut down the agent system and settled its contracts out of court (costing well over $100 million a year). It also notified the authorities and removed around 100 staff members who oversaw the process.
Initial investigations were performed by Britain’s Serious Fraud Office (SFO) in August 2016, and then early 2017 by France’s Parquet National Financier (PNF), as reported by Reuters.
The U.S. Department of Justice became interested after being alerted by their British counterpart, and opened its own paired investigation into ‘suspected violations of export controls’.
So far, none of the investigations have launched any criminal proceedings into any one specific person, nor any charges have been brought against Airbus as a whole.
Airbus asks for a plea deal
Airbus has approached the joint investigation and said that it is willing to settle out of court.
This would likely involve a massive fine of $3.9 billion USD but would save the airframe builder from losing access to multi-billion dollar government contracts in the United States and the European Union.
Plus, it would bring back certainty for the company who would no longer be ‘looking over their shoulders’ and worried about the future. The stock price of Airbus has risen by 1% from this news.
The deal is subject to approval by all three countries and should be ruled on in the next two days by January 31st.
“Airbus confirms that it has reached agreement in principle with the French Parquet National Financier, the UK Serious Fraud Office and the US authorities,” the company said in a statement to the BBC.
What do you think of the news? Let us know in the comments below.
Simple Flying provides this news as a basic overview and may have greatly simplified some details to quickly summerise the situation. As such, we in no way imply any wrongdoing to any party mentioned in this story and are simply reporting that there may be an out of court settlement. Readers are recommended to do their own research and come to their own conclusions regarding the above news.
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