France joins UK in Air­bus probe

New Straits Times - - Business -

LONDON: French au­thor­i­ties joined the United King­dom in a cor­rup­tion probe of Air­bus Group SE cen­tred on al­le­ga­tions of fraud­u­lent prac­tices re­lated to sell­ing planes and ar­rang­ing air­craft fi­nanc­ing.

The probe by the Par­quet Na­tional Fi­nancier fol­lowed steps by the UK’s Se­ri­ous Fraud Of­fice to look into pos­si­ble fraud, bribery and cor­rup­tion in Air­bus’s civil avi­a­tion busi­ness re­lated to third-party con­sul­tants, said the firm.

The two au­thor­i­ties would co­or­di­nate with one an­other, said Air­bus.

Air­bus, which was co­op­er­at­ing fully, had said it dropped the ques­tion­able mid­dle­men and ex­pected sus­pended fi­nanc­ing guar­an­tees to be re­stored. The in­ves­ti­ga­tions, which may last for years, add to its chal­lenges as the com­pany tries to ex­pand over­seas and counter slow­ing de­mand for new planes. An un­fa­vor­able out­come could also dam­age its rep­u­ta­tion and lead to sig­nif­i­cant fines.

Last year, Air­bus flagged to UK reg­u­la­tors and the Euro­pean Ex­port Credit Agen­cies “mis­state­ments and omis­sions” in­volv­ing out­side con­trac­tors in some ex­port-fi­nanc­ing ap­pli­ca­tions, which it found through an in­ter­nal probe.

Credit agen­cies, in­clud­ing UK Ex­port Fi­nance, sus­pended some of the back­stop fi­nanc­ing the firm uses to help sell com­mer­cial air­craft. Air­bus’s fail­ure to dis­close the use of third par­ties was one of the fac­tors in the UK’s in­quiry.

The UK credit agency is one of sev­eral in Europe that have pro­vided fi­nanc­ing for the com­pany’s over­seas sales. Air­bus builds wings in the UK and as­sem­bles air­craft in coun­tries in­clud­ing France and Ger­many.

Firms of­ten use in­ter­me­di­aries with lo­cal con­nec­tions to help es­tab­lish a pres­ence in new mar­kets, where set­ting up lo­cal of­fices can take years. The prac­tice isn’t il­le­gal, but it can com­pli­cate over­sight. Bloomberg

BLOOMBERG PIC

The in­ves­ti­ga­tions add to Air­bus’s chal­lenges as it tries to ex­pand over­seas and counter slow­ing de­mand for new planes.

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