Austria Probes EADS Offset Business Amid Corruption Suspicions

The Austrian government said it is evaluating business linked to its purchase of jet fighters from European Aeronautic Defence and Space Co. amid allegations of kickbacks.

The ministry installed a group charged with examining follow-up deals that EADS’s Eurofighter unit commissioned after Austria agreed to buy the jets in 2003, Economics Minister Reinhold Mitterlehner said in a statement today.

“Our goal is complete clarification to be able to have a full assessment of the offset business,” Mitterlehner said, adding the ministry was also cooperating with prosecutors. “We will get in touch with EADS directly and demand that any doubts are removed which emerged over the legality of some of the deals.”

Austria ordered 18 Eurofighter jets for 2 billion euros ($2.6 billion) in 2003 after a heated political debate and cut the order to 15 jets when a new government was elected in 2006.

Under the terms of the purchase, EADS guaranteed that business in the amount of twice the order value would be generated in Austria by itself or its affiliates. Austrian prosecutors are investigating allegations of kickbacks linked to such deals paid to middlemen and raided EADS offices earlier this month.

EADS said it is assisting prosecutors in their investigation.

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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