Aerospace giant Airbus is now facing corruption allegations in a fifth country.
Airbus, which was already under investigation in the UK, France, Germany and Austria for suspected corruption, has announced that it has found "inaccuracies in filings" made with the U.S. Department of State under the International Traffic in Arms Regulations (ITAR). The French aircraft maker has said it has brought the problem to the attention of the US authorities and has said it will cooperate with investigators.
ITAR require exporters to disclose to the US State Department any payments made to third parties for certain overseas sales.
In 2016, the UK Serious Fraud Office (SFO) opened an investigation into Airbus regarding fraud, bribery and corruption. The SFO stated that the allegations related to “irregularities concerning third party consultants."
In April last year, the UK’s Export Finance agency suspended funding for Airbus because of a lack of transparency regarding its third-party payments. France and Germany also took similar action.
In March this year, it was announced that French investigators had begun investigations into the same allegations that the SFO were probing. Investigators in Germany and Austria are examining possible irregularities in the 2 billion Euros sale of fighter jets to Austria.
Airbus’ problems are not unique. In 2010, BAE paid the US Department of Justice a $400M criminal fine for impeding investigators, making false statements about its Foreign Corrupt Practices Act compliance program and violating the Arms Export Control Act and ITAR. It also paid the SFO a £30M fine in a negotiated resolution. In 2011, BAE was fined $79M by the US State Department for violating the Arms Export Control Act and ITAR. The penalties were due to payments made regarding the sale of fighter planes to Saudi Arabia and Eastern Europe.
But while Airbus’s problems may not be unique, they are certainly major. If it sells aircraft to a country and there is then a suggestion of wrongdoing, there is the possibility of at least two countries conducting investigations. Airbus’ situation (and the international nature of the whole aerospace industry) illustrates the risks of bribery across jurisdictions – and the need to tackle those risks.
There may be many in business who can recount instances from the past where bribery in another country may have gone unpunished, unnoticed and even accepted or encouraged as a way of securing deals.
The Airbus case, like many other recent investigations, shows that there is no way such an outcome is likely anymore. Countries the world over are more alert to the dangers of bribery. Their investigating agencies are swifter to act and more likely to work with similar bodies in other countries. Bribery very often crosses borders – and the authorities are now better at conducting appropriate responses to this. They are more attuned to the signs of bribery and able to share information with foreign counterparts on a far quicker and more regular basis than in previous years. In simple terms, tackling international bribery has become coordinated.
It would be foolish to keep thinking that bribery is a harmless tool to boost foreign trade – something that will be ignored or condoned. Anyone taking such an approach could find themselves facing an international investigation.
If that is the case, they will require legal advice from solicitors who have:
Coordination is crucial to any successful defence against international bribery allegations.
While devising a cross-border defence case and knowing the law in many countries are essential prerequisites for any legal team representing a client facing allegations of international bribery, negotiation is an area which should not be ignored. Its importance should not be underplayed.
Logical, persuasive and informed negotiation with the authorities can be as important as any other aspect of a defence case when looking to obtain the most favourable outcome.
Earlier this year, Rolls-Royce paid £671M to settle allegations that it had used widespread bribery in many countries to win contracts. It did not report the wrongdoing to the Serious Fraud Office (SFO) and the evidence against it was compelling. And yet it avoided prosecution, was given a deferred prosecution agreement (DPA) and received a discount on the fines it had to pay.
This was because Rolls-Royce offered what the DPA settlement called “extraordinary cooperation’’ to the authorities. It helped investigators establish what had happened, removed many senior staff with links to the bribery and devised and introduced tougher preventative measures; even hiring Lord Gold to examine its anti-corruption measures.
But Rolls-Royce also emphasised to the authorities that its 50,000 employees – and many, many more in its supply chain – would be harmed if it as punished too harshly.
Rolls-Royce had little defence to the allegations it faced. But it negotiated itself away from what could have been a potentially catastrophic criminal prosecution.
The international nature of bribery means, as we have outlined here, that companies who face such allegations require skilled international legal representation.
It is an area that may well grow, as many countries start to uncover and act upon evidence of large-scale bribery that has been committed within their borders over the years. The Rolls-Royce case, for example, involved bribery carried out between 1989 and 2013.
For those who find themselves accused of bribery, the right choice of legal representation can make a vast difference to the outcome of the investigation. The likes of Airbus and Rolls-Royce should serve as a reminder of the seriousness of the allegations and the need to make the right legal choices.
But for companies that are certain they have not indulged in bribery anywhere or at any time in their history, such high-profile cases can be a useful reminder of the need to avoid such problems in the future. Anyone doing business abroad faces the risk of being embroiled in – or at least of being asked to be involved in – bribery.
The risks may vary wildly from country to country and from business sector to sector. But all companies must:
Legal help is available for companies looking to take such precautions when trading abroad. The Airbus case alone should make everyone trading across borders think long and hard about their anti-bribery measures.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.