Airbus Corruption Probe Threatens to Spread to U.S.By
Issue concerns unspecified defense contracts, company says
Internal study suggests role of agents wasn’t fully disclosed
Airbus SE alerted U.S. authorities to potential regulatory breaches, opening a new flank in the group’s efforts to resolve a series of probes into the use of payments and middlemen to win new business.
Toulouse, France-based Airbus took the step after an internal review revealed “inaccuracies” in applications for defense-export licenses, it said Tuesday. The development adds to existing investigations by U.K., French, German and Austrian officials concerning commercial and military sales.
Chief Executive Officer Tom Enders wrote a letter this month warning staff that the probes were set to intensify and that Airbus could face serious “significant penalties” as a result. Chairman Denis Ranque was subsequently summoned by the French government to outline the measures put in place to end alleged bribery practices and curb the involvement of third-party sales agents.
Airbus, maker of the A380 superjumbo, is facing probes in the U.K. and France after internal investigations found it hadn’t fully disclosed the role of outside agents in winning some commercial-aircraft and military contracts. The group is also the subject of separate investigations in Germany and Vienna over the sale of 18 Eurofighter warplanes to the Austrian military in 2003.
The latest compliance issue emerged because Airbus is required by the U.S. International Traffic in Arms Regulations policy to submit details on third parties used to secure military contracts that incorporate American parts, Chief Financial Officer Harald Wilhelm said on a press call.
Investors shrugged off the revelation, bidding Airbus shares up to a record high on better-than-expected earnings and signs that the company was getting issues with ramping up its A350 widebody and A320neo single-aisle on track. The stock climbed as much as 5.1 percent to boost its gain for the year to 41 percent.
The company initially informed the State Department in December that it may have failed to include all the necessary information on agents and commission in applications for export licenses. An internal investigation completed in July confirmed that view.
Airbus said it is cooperating with authorities, but can’t estimate the level of any potential fines or say how long a possible U.S. probe may take. The Department of Justice hasn’t so far opened a formal investigation, and the State Department hasn’t moved to block Airbus from receiving licenses for arms exports.