$99 mn fine for ‘unaccounted payments’ in Eurofighter sale to Austria
Over the preceding week, India’s political landscape has been roiled by accusations that the government favoured French aerospace vendor, Dassault, with a multi-billion dollar order for 36 Rafale fighters, ignoring a cheaper bid belated submitted by European consortium, Eurofighter Jagdflugzeug GmbH (hereafter Eurofighter) for its Typhoon fighter.
But, now Eurofighter, too, is battling damaging scrutiny over corruption allegations. On Friday, German prosecutors ordered Airbus to pay £81.25 million ($99 million) to settle charges that the firm bribed Austrian politicians in 2003 to buy the Typhoon in a contract worth $2 billion.
Eurofighter is made up of aerospace corporations from four European nations. The German and Spanish entities of Airbus Defence & Space own a majority 46 per cent stake, UKheadquartered BAE Systems owns 33 per cent, while Italian corporation, Leonardo SpA — earlier named Finmeccanica, and still banned in India — holds the remaining 21 per cent.
According to Reuters, “The settlement includes an administrative fine of £250,000 and “disgorgement” — which legal experts broadly define as the recovery of ill-gotten gains — of £81 million.”
German prosecutors stated they found no evidence of bribery in the Eurofighter sale to Austria, but Airbus “had been unable to account for over £100 million in payments to two shell companies”.
The prosecutors stated that these funds were sent for “unclear purposes”, evading internal control mechanisms within the company.
This puts a new light on Eurofighter’s “unsolicited bid”, submitted on July 4, 2014, to the newly-elected National Democratic Alliance government, reducing the cost of the Typhoon fighter by 20 per cent, making it in retrospect, significantly cheaper than the Rafale. The bid was apparently offered a path to bypass the deadlock over pricing with Dassault.
In 2011, Dassault's Rafale and Eurofighter's Typhoon fighters were the only two aircraft to have passed Indian Air Force (IAF) flight trials in its global contest to buy 126 medium multirole combat aircraft (MMRCA). In 2012, Dassault's commercial bid was adjudged the lowest offer (L-1 bid) by India's defence ministry.
The Defence Procurement Procedure did not permit the government to reintroduce Eurofighter into the negotiating process after Dassault's bid was declared L-1. However, once the government scrapped the deadlocked MMRCA procurement and opted instead to buy 36 fighters over-the-counter, it had the option to reintroduce Eurofighter into a competitive bidding process. Instead, it opted for a single-vendor procurement from Dassault, under a government-to-government umbrella.
Besides, the financial penalty imposed on Airbus in Germany, a separate investigation is underway in Vienna, where Austrian prosecutors are enquiring into Airbus and its chief executive, Tom Enders, who headed the company's defence business from 2000-2005. Airbus and Enders deny any wrongdoing, and accuse the Austrian government of playing politics. Prime Minister Narendra Modi on Sunday cautioned the world against the misuse of cyberspace to ensure that this does not become a source of radicalisation, asserting that technology should be harnessed as a tool for development, not destruction.
The comments by Modi at the World Government Summit in his plenary address comes at a time when the world community is engaged in efforts to address the misuse and abuse of cyberspace by terrorists and hackers.
During the course of his address, Modi highlighted the importance of assimilating technology with governance to ensure equitable growth and prosperity for all. He emphasised the role technology was playing in India's development.
Modi told the audience that India is aspiring to assume leadership position in Artificial Intelligence, Nano, cybsersecurity and cloud computing.
He received loud cheers when he referred to what he called the 5Es and the 6Rs while talking about governance and technology.
Modi said that even after all the development, poverty and malnutrition have still not been eliminated.
“On the other side we are investing large portion of money, time and resources on missiles and bombs. We must use technology as a means to development, not destruction,” he told the gathering that included Sheikh Mohammed bin Rashid Al Maktoum, the vice-president and Prime Minister of UAE and the ruler of Dubai.
He expressed concern over attempts by some people to radicalise the cyber space with the use of technology, referring to its use by jihadists to recruit cadres online.