This previous post  looked at the U.K. Bribery Act enforcement action against Airbus.
This post completes the enforcement trilogy, bylooking at the French enforcement action against Airbus.
Like the prior U.S. and U.K. bribery enforcement action, the French enforcement action against Airbus (see here  for the Judicial Public Interest Agreement) focused on the use of business partners in connection with sales or attempted sales in various countries.
The French enforcement action focused on sales campaigns with Air Arabia, Chinese airlines, Korean Air, Nepal Airlines, China Airlines, the Russian Satellites Communications Company, Arabsat, and Avianca.
As to Air Arabia, the enforcement action alleges that “an Airbus Middle East executive had made a ‘commitment’ to pay a concealed compensation to an Air Arabia execution in consideration” of various purchase agreements. The resolution document highlights various means by which Airbus attempted to influence the individual such as “acquisition by Airbus of a company which belonged to the Air Arabia executive,” “acquisition of luxury real estate properties in order to place them at the disposal” of the executive; and “consider[ing] passing on the promised compensation through a fake ‘business partner’ whose actual mission was therefore to pass on the funds while ensuring the opacity of the transaction.” Despite these efforts, the enforcement action notes that “the vigilance of other departments within Airbus contributed to the fact that these attempts were never carried out.”
As to China, the enforcement action concerns various General Terms Agreements (GTA) between Airbus and the Chinese central administration, described as “an essential step without which sales contracts concluded with the airlines could not be executed.” According to the action, Airbus made financial contributions to the China Aviation Cooperation Fund (CACF) whose stated purpose “was to finance cooperation projects with the Chinese aviation industry, such as training for pilots.” Specifically, the enforcement action alleges that Airbus allocated USD $24.2 million to the fund between 2012 and 2017 and that “these funds were primarily used for the benefit of government officials and Chinese airlines executives or Chinese public entities which played a role in the procurement process.” As likewise alleged in the U.S. FCPA enforcement action, the enforcement action alleges that “some of the funds [were] used outside the initial purpose of the CACF to finance seminars, which consisted primarily of leisure activities.” Likewise, the enforcement action alleges:
“In addition to the CACF, the investigation also revealed that Airbus had organised, for the benefit of Chinese public officials, several trips in and outside China, which were primarily or even exclusively composed of leisure activities. Airbus generally incurred the expenses of the participants in these trips, including at times those of their entourage. Finally, the investigation identified numerous gifts and invitations offered to Chinese public officials and airline executives, in particular luxurious gifts and tickets for events.”
As to China, the enforcement action also alleges that in connection with the GTA’s, Airbus recruited a third party to assist and paid approximately EUR 10.3 million to a company “managed by an individual for whom the investigation has revealed that he had on several other occasions been used by [Airbus] to transit funds discreetly, without Airbus appearing directly.” According to the enforcement action, this arrangement allowed the transfer of money to a second company (owned by the same individual and based in Lebanon) that was used to transfer money “intended to be passed on to Chinese public officials.”
As to Korean Air (a private airline), the enforcement action alleges that “Airbus committed to pay an amount of USD 15 million to a former senior executive of the airline” who “appears to have played a very active role” in various purchase agreements. Included in the allegations was that: (i) Airbus “made a USD 10 million investment by purchasing the shares of an entity owed by a company which belonged to this commercial intermediary’s son; and (ii) Airbus made a payment of USD 6 million to South Korean and American academic institutions “in relation to research projects involving these institutions, in which the Korean Air executive had personal interests.”
As to Nepal Airlines, the enforcement action alleges that “Airbus executives liaised with two Nepalese businessmen, who stated that they were in contact with Nepalese public officials and Nepal Airlines executives.”
As to China Airlines, the enforcement action alleges that Airbus engaged two commercial intermediaries to assist on various purchase agreements. The enforcement action states:
“However, the materiality of the advisory services which these intermediaries allegedly provided has not been established. In addition, the agreements with these consultants, which were signed after the successful conclusion of the sales campaign, cite remuneration figures which are substantially lower than those that were actually promised.”
According to the enforcement action, the intermediary “had contacts within China Airlines through whom he was able to obtain confidential information regarding the ongoing negotiations.” Elsewhere, the enforcement action alleges that an intermediary acknowledged “that he was close to a member of China Airlines’ board of directors who provided him information on the ongoing campaign.”
As to the Russian Satellites Communications Company (RSCC), the enforcement action alleges that the involvement of a commercial intermediary “was fictitious and had been a means of channeling funds.” According to the enforcement action, an Airbus department:
“Instructed an external company to conduct due diligence on the company behind which the fictitious commercial intermediary was operating. It revealed that the registered office of this company could not be identified, that no financial accounts were available and that the company’s ability to provide the services offered was questionable. Despite these red flags, an engagement contract was concluded and [Airbus]transferred the funds to the commercial intermediary.”
As to Arabsat (an intergovernmental organization created by the Member states of the Arab League to provide international civil telecommunications services), the enforcement action alleges that Airbus entered into a consultant agreement with the same intermediary used in the RSCC campaign and that “eight payments to this intermediary were identified for a total of EUR 1 million.”
As to Avianca (the national airline of Colombia), the enforcement action alleges that “between 2006 and 2014 Airbus signed several consultant agreements with a commercial intermediary acting through a company incorporated in Colombia, in order for him to assist on Airbus campaigns with Avianca” and that a portion of the compensation due to the commercial intermediary “was contemplated to be transferred secretly to a senior executive of Avianca Holdings.”
Elevate Your FCPA Research
There are several subject matter tags in this post. However, only subscribers to FCPA Professor's premium search feature can see and use them in research. Efficient and cost-effective FCPA research is just a click away.