Airbus Comes Under Criminal investigation by UK’s Serious Fraud Office

The commercial airline business of Airbus, the defense and aviation firm, is now at the centre of a criminal investigation by the UK’s Serious Fraud Office. The allegations against the aircraft manufacturing company include fraud, bribery and corruption in the commercial airline business that was confirmed by the Serious Fraud Office.

Launched in July but revealed at the weekend by the European manufacturer, the investigations would be conducted into potential criminal dealings in the sale of commercial planes by the company.

The allegations related to irregularities with third party consultants, the SFO said. Airbus said that it was cooperating fully with the investigation and claimed that it had effectively self-reported to the SFO via UK export agencies and had flagged up the suspect activity itself.

“Airbus Group has been informed by the SFO that it has opened a criminal investigation into allegations of fraud, bribery and corruption in the civil aviation business of Airbus Group relating to irregularities concerning third party consultants. Airbus Group continues to cooperate with the SFO,” Airbus said in a statement issued on Sunday.

Neither Airbus nor the SFO would comment further on the details.

Due to discrepancies in declarations by the manufacturer on the use of outside intermediaries during jet sale negotiations, a UK government agency suspended the issue of export credits to Airbus earlier this year. The mistakes and omissions relating to applications for export credit financing for its customers had been flagged up by itself, Airbus said.

The discrepancies were referred to the SFO for it to take action and start any criminal investigation on the information, the agency, UK Export Finance, had said. Export credits, which support deliveries to airlines with limited access to commercial funds, were also halted for the company by French and German agencies.

They were hopeful that export credits would be restored by the end of the year, Airbus’s group CEO Tom Enders said this month. Noting a tenfold increase compared to 2015, to maintain sale, Airbus itself has extended credit worth €587m to customers in the first half of 2016.

Saying that the discovery of irregularities had emerged “in the context of its internal compliance improvement programme”, Airbus notified investors of the potential issues in April. In the last two years in Germany, Greece and Turkey, investigation had been initiated against offshoots and companies jointly owned by Airbus.

With its current order book valued at just under $1tn (£764bn) at the start of 2016, the Toulouse-headquartered aeroplane manufacturer’s global business sees contracts of staggering proportions. Even though Airbus’ flagship doubledecker superjumbo, the A380, has failed to find many new customers outside the Middle East, the company claims in recent years to have edged US giant and great rival Boeing in the market for the biggest jets.

Airbus’s major aircraft design and manufacturing facilities are based in France, Germany, Spain and the UK, where wings are engineered, while it has subsidiaries in the US, China, Japan, India and the Middle East.

As bribery legislation developed in the US and the UK have demanded higher levels of due diligence from firms in recent years, third-party intermediaries have caused concern among firms in other sectors. Airbus will be keen to avoid the reputational cloud that has settled over Rolls-Royce while the SFO investigation appears to be concerned with third parties.

(Adapted from The Guardian)

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