Airbus poised for deal with regulators to settle corruption probes

A deal with regulators in the UK, France and the US is expected in the coming days, with analysts forecasting fines of more than €3bn

Kate Beioley and Peggy Hollinger

Airbus is on the brink of settling a bribery and corruption probe with regulators in the UK, France and the US, in a move that could see the aerospace group pay billions of dollars in penalties.

A deal is expected in the coming days, according to people familiar with the matter, with analysts forecasting fines of more than €3 billion to follow the complex negotiations between the three agencies.

The settlement is set to surpass the £671 million (€795 million) plea bargain struck by Rolls-Royce in 2017 to settle similar allegations. At the time, the UK share of the settlement, at about £500 million, was the largest fine imposed by British regulators on a company for criminal conduct.

The so-called deferred prosecution agreement struck with Airbus will mark a significant milestone for the UK Serious Fraud Office.

Under a corporate plea deal, companies are able to avoid criminal prosecution if they admit to wrongdoing, agree to overhaul their businesses, and pay a penalty.

So far the SFO has signed five DPAs but has come under scrutiny for failing to convict senior executives of the companies involved.

For Airbus, the deal would mark the end of a corruption probe lasting nearly four years that has claimed the scalps of some senior executives, even though they were not implicated in any wrongdoing. The board took the view that the company would have a better chance of winning a settlement if an entirely new senior management team was put in place. This was helped by the fact that several executives were approaching retirement age. Tom Enders, chief executive, and Fabrice Brégier, chief operating officer, both stepped down last spring.

Ethics overhaul

The company has also overhauled its ethics and compliance procedures, established an independent review panel of outside experts, and significantly cut down the number of third-party agents used to secure deals.

The SFO’s investigation was launched in 2016 after Airbus revealed that it had uncovered discrepancies in disclosures about third-party consultants used on certain aircraft deals. Parquet National Financier, the French regulator, launched a probe the following year, and the US Department of Justice opened an investigation in 2018.

Since corporate plea deals were introduced to the UK in 2014, Standard Bank, Sarclad, Rolls-Royce, Tesco and Serco have all admitted failures and paid fines in exchange for avoiding a criminal conviction.

The SFO is still expected to pursue charges against individuals in relation to Airbus subsidiary GPT, which has been under investigation for eight years.

The SFO launched an inquiry into GPT after the company was accused of making illicit payments to secure a £2bn UK government contract to provide communications and intranet services for the Saudi National Guard, the kingdom’s internal security force which protects the royal family.

The SFO and Airbus did not comment.

Copyright The Financial Times Limited 2020