Securities Regulation Daily Airbus slammed with $3.9B in multinational penalties for foreign bribery, export violations
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Monday, February 3, 2020

Airbus slammed with $3.9B in multinational penalties for foreign bribery, export violations

By Lene Powell, J.D.

In determining the penalties for French aviation giant Airbus SE, authorities considered the company’s cooperation and remediation as well as the strong interests of the U.K. and France over the company’s corrupt conduct.

In the largest global foreign bribery settlement ever, Airbus SE has agreed to pay more than $3.9 billion to resolve foreign bribery charges with authorities in the U.S., France and the U.K. as well as U.S. charges of violation of the Arms Export Control Act (AECA) and its implementing regulations, the International Traffic in Arms Regulations (ITAR). Airbus used third-party brokers to pay bribes to foreign officials in multiple countries including China to obtain and retain business, including contracts to sell aircraft. The use of third-party brokers also enabled Airbus to evade export controls for defense articles and services (U.S. v. Airbus SE, January 28, 2020).

"International corruption involving sensitive U.S. defense technology presents a particularly dangerous combination," said Principal Deputy Assistant Attorney General David P. Burns of the Justice Department’s National Security Division (NSD). "The resolution, however, also reflects the significant benefits available under NSD’s revised voluntary self-disclosure policy for companies that choose to self-report export violations, cooperate, and remediate as to those violations, even where there are aggravating circumstances."

Foreign bribery and export violations. Airbus SE, based in France, is the second largest aerospace company worldwide and sells civilian and military aircraft. According to a Department of Justice press release and the charging information, Airbus engaged in a scheme between 2008 and 2015 to offer and pay bribes to decision makers and other influencers, including foreign officials, to win business from both privately owned enterprises and entities that were state-owned and state-controlled.

Airbus engaged certain business partners, in part, to assist in the bribery scheme. For example, Airbus made payments to a business partner in China intended to be used as bribes to government officials in China to gain the approval of agreements in China related to the purchase and sale of Airbus aircraft to state-owned and state-controlled airlines in China. To cover its tracks, the company did not pay the business partner directly but instead made payments to a bank account in Hong Kong in the name of a company controlled by another business partner. This conduct violated the Foreign Corrupt Practices Act (FCPA) as well as foreign bribery laws in France and the U.K.

Airbus also violated U.S. export controls under the AECA and ITAR between 2011 and 2016 by filing numerous applications for the export of defense articles and defense services to foreign armed forces without providing accurate information about commissions the company paid to third-party brokers it hired to solicit, promote or otherwise secure the sale of defense articles and defense services to foreign armed forces.

Airbus voluntarily disclosed the corrupt conduct, cooperated with authorities, and undertook remediation measures. Airbus also agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, and to enhance its compliance program.

Penalties. Airbus agreed to the following penalties:

  • Airbus will pay more than 2 billion Euros (more than approximately $2.29 billion) to the Parquet National Financier (PNF) in France over bribes paid to government officials and non-governmental airline executives in China and multiple other countries.
  • Airbus will pay approximately 990 million Euros equivalent (approximately $1.09 billion) pursuant to an agreement with the U.K. Serious Fraud Office (SFO) over bribes paid in Malaysia, Sri Lanka, Taiwan, Indonesia and Ghana. The agreement also included a deferred prosecution agreement.
  • Airbus will pay $527 million to the U.S. for the FCPA and ITAR violations, and an additional 50 million Euros (approximately $55 million) as part of a civil forfeiture agreement for the ITAR-related conduct, and the department will credit a portion of the amount Airbus pays to PNF. The agreement also included a deferred prosecution agreement.
  • Airbus will pay an additional $10 million penalty to the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC), of which the department is crediting $5 million.

"Airbus’s fraud and bribery in commercial aircraft transactions strengthened corrupt airlines and bad actors worldwide, at the expense of straightforward enterprises," said Special Agent in Charge Peter C. Fitzhugh of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) New York.

"Additionally, the bribery of government officials, specifically those involved in the procurement of U.S. military technology, posed a national security threat to both the U.S. and its allies. The global threats facing the U.S. have never been greater than they are today, and HSI New York is committed to working with our federal and international partners to assure sensitive U.S. technologies are not unlawfully and fraudulently acquired," he added.

The case is No. 1:20-cr-00021-TFH.

Companies: Airbus SE

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